Kellogg’s profit climbs despite taking $70m peanut butter recall hit
Kellogg’s has reported net earnings for the year rose 4% as net sales grew by 9%, driven by innovation and price hikes, the company advised.
“Kellogg delivered another year of sustainable and dependable results, despite significant cost pressures and the stress the economy is placing on consumers,” said David Mackay, Kellogg’s chief executive officer. “We also continued to focus on cost savings initiatives and added to our platform for future growth with acquisitions in Russia, China, the U.S. and Australia.”
Private label has made inroads but Kellogg’s expects growth of the cereal market to counter private label gains in the future. “We are seeing retailers…push private label pretty hard,” Mr Mackay noted, adding that there was room for Kellogg’s to make greater inroads.
Asia Pacific internal sales rose 8%, the company said, with their acquisition of Specialty Cereals completed in Australia last year.
The world’s largest cereal manufacturer believe they remain well positioned to “drive sustainable and dependable performance”, however the peanut butter recall would have an adverse six cent impact on earnings per share. It remains to be seen if they will foot the bill for the recall, with their CEO unsure whether they would be able to recoup their estimated US$70m in losses. “At this point we’re assuming these costs will be ours to bear, and we’ll see how it plays out,” Mr Mackay said.
“We remain confident in our ability to deliver another year of sustainable and dependable performance. For 2009, we will focus on driving solid top-line growth as well as further cost-savings initiatives,” Kellogg’s Chief Executive concluded.
