Kellogg’s Earnings Drop with 36.5% in the First Quarter of 2019

Higher input costs and effective tax rate contributed to lower earnings, Kellogg Company mentions in its First Quarter 2019 Results report.

The earning dropped 36.5%, recording an USD282m net income and revenue of USD3.52bn.

Kellogg Company posted improved net sales, driven by acquisitions (the May 2018 consolidation of Multipro), improving consumption performance in many businesses around the world, the return to a positive contribution from price/mix, and good momentum in revitalized key brands. While its North American business faced unexpected headwinds, Kellogg’s international businesses collectively drove the net sales growth in the quarter, reflecting in part the company’s expanded presence and diversified product line in emerging markets. As expected, higher input and distribution costs contributed to lower operating profit in the quarter, while productivity and revenue growth management benefits will gradually improve as the year progresses, the company says.

Kellogg did lower its 2019 outlook due to the sale of some brands, including Keebler. Net sales growth is expected to be around 2%, down from the previous growth of 2% to 4% that the company had expected.

“We improved our top-line growth through more and better innovation, momentum on revitalized brands, and continued expansion in emerging markets. We also restructured our organization for greater agility, and further reshaped our future portfolio by reaching an agreement to sell certain brands later this summer. Meantime, we overcame some unexpected headwinds in our North America business in Q1, and delivered earnings that keep us on track for the year’s financial targets,” said Steve Cahillane, Kellogg Company’s Chairman and Chief Executive Officer.

The company has also announced that it is replacing its chief financial officer. The Battle Creek-based breakfast foods and snacks maker said Amit Banati, president of Kellogg Asia Pacific, Africa & Middle East, will replace CFO Fareed Khan on July 1. Khan and Banati will work together in a formal transition through the end of June, the company said in a news release.