story by Duane D. Stanford
Kellogg Co., the maker of Corn Flakes cereal and Keebler Cookies and a major supplier to Wal-Mart Stores Inc., reported third-quarter profit that beat analysts’ estimates amid price increases.
Net income rose 2.1% to $296 million, or 82 cents a share, from $290 million, or 80 cents, a year earlier, the Battle Creek, Mich.-based company said today (Nov. 1) in a statement. Excluding some items, profit was 92 cents a share. The average of 21 analysts’ estimates compiled by Bloomberg was 81 cents.
CEO John Bryant is looking to boost profit by selling cereal and Pringles chips in China, overhauling the company’s supply chain and acquiring new brands. Global pricing increased 2.7% in the quarter, driven by North America.
“While we believe the foundation for getting back to sustainable long term growth is clearly in place, we continue to expect this process to take hold over the next year or so,” Christopher Growe, an analyst at Stifel Nicolas & Company in St. Louis, said today in a note.
Kellogg rose 2.3% to $53.50 at the close in New York. The shares have gained 5.8% this year.
Third-quarter sales rose 12% to $3.72 billion, helped by better-than-expected sales in its Pringles unit, which the company acquired in May. The average estimate of 18 analysts was $3.69 billion.
Lower profitability from Pringles reduced the company’s overall gross margin by 40 basis points.
A recall of Mini-Wheats cereal reduced per-share earnings by 6 cents in the quarter, Kellogg said.