Kellogg’s profits out of “cocooning” trend
Kellogg Company, the world’s largest cereal maker, reported higher first quarter profits overnight, as more consumers opt for low cost ‘at-home’ breakfast options.
First quarter net sales decreased 3% to $3.2 billion (A$4.4b), but internal net sales growth, which excludes the effects of foreign currency translation and acquisitions, rose a robust 4%.
The producer of Corn Flakes and Coco Pops advised that their relatively recession-resistant product range and strong focus on cost reduction had assisted in overcoming the worst of the troublesome economic environment.
“By remaining focused on our business model and strategy, we performed ahead of our expectations during the first quarter despite cost pressures and the difficult economic environment,” said David Mackay, Kellogg’s CEO. “We also continue to focus on cost-savings initiatives and reinvestment for the future. We now plan to increase our up-front cost investments to achieve our ambitious $1 billion savings target.”
Their Asia Pacific division, which includes Australia, Asia and South Africa, saw internal net sales rise by 11%, but currency fluctuations put a dampener on the results.
The Company maintained a positive outlook for the remainder of the year, with 3-4% internal net sales growth expected for 2009 and mid-single digit profit growth to be assisted by cost reduction initiatives.
“Our strong start increases our visibility with respect to another year of sustainable and dependable performance. For 2009, we will focus on driving solid top-line growth, considerable cost savings and strong reinvestment,” Mr Mackay concluded.
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