Kellogg (K) Posts Surprise Q2 'Miss', Weak Cereal Sales a "Shocker" Say Analysts
K Hot Sheet
EPS Growth %: 0.0%Financial Fact:
Other income (expense), net: 13M
Today's EPS Names:
TARO, BRLI, TLB, More
Kellogg Co. (NYSE: K) posted lower-than-expected profit on Thursday for the second quarter and slashed its outlook for the full year, pushing shares down more than 4 percent in early market movement.
The world’s largest cereal maker reported second-quarter earnings of $302 million or 79 cents per share, down from $354 million or 92 cents per share in the same quarter last year.
Excluding the impact of a voluntary recall of millions of boxes of cereal, Kellogg earned 89 cents per share, 5 cents shy of the analyst estimate of 94 cents per share.
Revenue for the maker of Pop-Tarts and Keebler cookies fell to $3.06 billion in the three month period ended July 3 from $3.23 billion last year. The company cited a weakness in cereal sales along with decreased demand for its Eggo waffles for the drop in sales.
"Our second quarter results reflect the deflationary environment in the cereal category, particularly in the U.S. and UK, softer Eggo sales, and the voluntary cereal recall," said David Mackay, Kellogg Company's chief executive officer. “However, we are anticipating a stronger back half driven by increased innovation, reinvestment in our business, and gradual improvement in category trends."
Looking forward, the company lowered its earnings growth guidance for the full year to a range of 8 percent to 10 percent from a range of 11 percent to 13 percent, while forecasting internal sales growth as remaining flat to up 1 percent.
Analysts at Janney Montgomery Scott said "the shocker here is -13% in cereal sales, only "about 5%" of which is the recall, another -3% of trade reduction, 1-2% in SKU reduction. They said looking at the shipment data and the general state of the category, this feels us like a "kitchen sink quarter." The firm maintains their Neutral rating.
Goldman Sachs note that sales growth came in much weaker than expected, down 4% versus their estimate of -1%. The firm expects shares to be under pressure.
Shares of Kellogg are down 4.19 percent to $46.36 in early market movement Thursday.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
The world’s largest cereal maker reported second-quarter earnings of $302 million or 79 cents per share, down from $354 million or 92 cents per share in the same quarter last year.
Excluding the impact of a voluntary recall of millions of boxes of cereal, Kellogg earned 89 cents per share, 5 cents shy of the analyst estimate of 94 cents per share.
Revenue for the maker of Pop-Tarts and Keebler cookies fell to $3.06 billion in the three month period ended July 3 from $3.23 billion last year. The company cited a weakness in cereal sales along with decreased demand for its Eggo waffles for the drop in sales.
"Our second quarter results reflect the deflationary environment in the cereal category, particularly in the U.S. and UK, softer Eggo sales, and the voluntary cereal recall," said David Mackay, Kellogg Company's chief executive officer. “However, we are anticipating a stronger back half driven by increased innovation, reinvestment in our business, and gradual improvement in category trends."
Looking forward, the company lowered its earnings growth guidance for the full year to a range of 8 percent to 10 percent from a range of 11 percent to 13 percent, while forecasting internal sales growth as remaining flat to up 1 percent.
Analysts at Janney Montgomery Scott said "the shocker here is -13% in cereal sales, only "about 5%" of which is the recall, another -3% of trade reduction, 1-2% in SKU reduction. They said looking at the shipment data and the general state of the category, this feels us like a "kitchen sink quarter." The firm maintains their Neutral rating.
Goldman Sachs note that sales growth came in much weaker than expected, down 4% versus their estimate of -1%. The firm expects shares to be under pressure.
Shares of Kellogg are down 4.19 percent to $46.36 in early market movement Thursday.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
You May Also Be Interested In
- UPDATE: Bristow Group (BRS) Reports Better-Than-Expected Q4 Results; Offers FY13 Outlook
- Signet Jewelers (SIG) Tops Q1 EPS by 5c; Guides Q2 Below the Street
- Flowers Foods, Inc. (FLO) Reports In-Line Q1 EPS; Adjusts FY12 EPS Growth Outlook
Create E-mail Alert Related Categories
Earnings, GuidanceRelated Entities
Janney Montgomery ScottSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
