By Matt Andrejczak
SAN FRANCISCO (Dow Jones) -- Kellogg Co., maker of Frosted
Flakes cereal and Pop-Tart pastries, said Thursday its net income
sweetened by 2% on a boost in sales helped by price increases.
Kellogg (K) said fourth-quarter net income rose about $3 million
to $179 million, or 47 cents a share, from $176 million, or 44
cents a share, in the year-ago period.
Sales for the quarter increased 5% to $2.93 billion.
The food maker said its voluntary recall of peanut-related
products clipped earnings by 6 cents a share. No illnesses from the
salmonella outbreak were tied to Kellogg products.
Based in Battle Creek, Mich., Kellogg sells products in 180
countries, ranging from Special K cereal to Cheez-It crackers to
Nutri-Grain bars.
Its results come after rivals Kraft Foods Inc. (KFT) and Sara
Lee Corp. (SLE) cut their profit forecasts Wednesday. Inventory
draw-downs at food retailers are part of the problem for Kraft,
while cheaper brands are hurting Sara Lee's business in Europe.
Kellogg said its sales were the strongest in North America.
Sales declined in Spain and Italy due to retailer inventory
reductions and weak consumer spending.
On Jan. 18, Kellogg raised cereal prices by a percentage in the
"low-to-mid single-digit range" to help cover manufacturing costs.
It also hiked prices for Pop-Tarts.
Kellogg said its North American cereal market share dipped in
the fourth quarter because of "aggressive" price and promotion
strategies by its main rival in that segment, General Mills Inc.
(GIS).
For 2009, Kellogg forecast its per-share profit growth will be
in the high single digits, with sales increasing 3% to 4%. Based on
Kellogg's reported 2008 earnings of $2.99 a share, that puts next
year's earnings estimate at $3.26 a share at the high end. However,
analysts were looking for 2009 earnings of $3.20 a share, according
to the average estimate in a FactSet Research survey.
Kellogg shares fell 9 cents to $43.40 in early trading. The
stock is down 10% over the past year.