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Kellogg Cuts '12 View As Weak US Volume Hurts 1Q Results

Wall Street Journal - Apr 23, 2012

Kellogg Co. (K) cut its 2012 sales and earnings outlook after a weak start to the year, with soft sales volume in the U.S. and lackluster results in Europe.

Kellogg's downbeat announcement, coming ahead of its planned earnings release Thursday, cast doubt on the packaged-food industry's ability to sell more of its products in the U.S. at higher prices. Already this year, General Mills Inc. (GIS), J.M Smucker Co. (SJM), ConAgra Foods Inc. (CAG) and other food makers have said weak domestic sales volumes are stunting earnings growth, a trend some analysts think will persist through the middle of this year.

"We are obviously disappointed with the performance of the company in the first quarter of 2012," Kellogg President and Chief Executive John Bryant said in a statement.

The weaker-than-expected sales are yet another challenge for Kellogg to overcome. The cereal maker is expected to spend up to $100 million this year as it tries to fix a supply chain that suffered from years of cutting costs to deep in recent years, leaving several manufacturing facilities overworked and too few people overseeing operations.

Kellogg also cited its "desire to invest in future growth" as a reason for the lowered view. In addition to fixing its supply chain issues, Kellogg is spending to come up with new products and back its brands with hefty advertising.

Read Full Article from Wall Street Journal

- Posted: 2012-04-23 10:35:01

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