U.K. helps bolster Kellogg’s Q1 results
Kellogg’s North American first quarter results were solid, but its performance overseas, particularly in the U.K., helped bolster its results. The company reported net sales of $4 billion, an increase of 12%. Meanwhile, internal net sales, which exclude the effects of foreign currency translation, acquisitions, dispositions and integration costs, rose by 2.2 percent over the same period.
Kellogg’s operating profit was $503 million, a reported decrease of 4.5%. The company’s underlying internal operating profit, which excludes the effects of foreign currency translation, acquisitions, dispositions, mark-to-market accounting and integration costs, decreased by 6%. The company cites considerable cost-of-goods-sold inflation in the quarter as the reason for the decline in its internal operations profits. Results in the first quarter included a majority of the inflation, net of cost savings, which the company expects to recognize for the full year.
"Results in the first quarter were broadly as we expected, and we're pleased to have a solid start to the year," said John Bryant, Kellogg Company's president and CEO. "We saw good comparable revenue growth in many regions around the world and the Pringles business continued to post strong results. As a result, we're also pleased to report that we're on-track to meet our guidance for the full-year."
Kellogg’s North America net sales were $2.6 billion in the first quarter, a reported increase of 8%, while internal net sales increased by nearly 2%. The U.S. Morning Foods segment posted internal net sales growth of 1.6%. Internal net sales in the U.S. Snacks segment declined by 1.7%. The U.S. Specialty Channels segment posted 3.4% internal net sales growth in the quarter and the North America Other segment, which is comprised of the U.S. Frozen Foods and Canadian businesses, achieved 7.4% internal sales growth. Reported operating profit in North America increased by 1.2% while internal operating profit declined by 3.5%, again largely as the result of the cost-of-goods-sold inflation.
The company reported a net sales increase of nearly 29% in Europe in the quarter, while internal net sales increased by 2.6%, primarily as the result of good growth in the United Kingdom. In Latin America, reported net sales increased by nearly 14%, and internal net sales increased by 7.4%. Reported net sales in Asia Pacific increased by nearly 15%, and internal net sales increased by 0.3%, although consumption increased at a faster rate.