NEW YORK (AP) — Kellogg's appetite for salty snacks is helping fatten its profits.
The world's biggest cereal maker — best known for its Frosted Flakes, Pop-Tarts and Eggo waffles — says its recent acquisition of Pringles chips boosted its net income in the third quarter. Kellogg Co., based in Battle Creek, Mich., bought the brand earlier this year in hopes of becoming a global player in the salty snacks market. The deal instantly made Kellogg the world's second-biggest salty snack food maker, behind only PepsiCo Inc.'s Frito-Lay.
In the U.S., the company said Pringles sales rose by 10 percent in the quarter.
A big part of that growth was driven by improved displays in supermarkets and expanded distribution in dollar stores, drugstores and other channels, CEO John Bryant said in an interview with the Associated Press. He noted that Pringles' profile wasn't being optimized under its previous owner, Procter & Gamble Co., the maker of consumer products that exited the food business.
As for keeping pace with Frito-Lay in terms of new products and flavors, Bryant said Kellogg will be limited in the near term because Pringles only has two major manufacturing plants in the world. Those plants — in Tennessee and Belgium — are already running around the clock. As a result, he said the company will focus on improving production capacity at the plants, rather than focusing on new products. An expansion of production capacity could come in another year or two, he said.
Since Pringles gets two-thirds of its revenue from overseas, Kellogg is also hoping Pringles can give it inroads into the emerging markets where the ranks of people with disposable income are growing. The company's stable of other salty snacks include Cheez-Its and Special K crackers.
For its flagship U.S. breakfast foods unit, the company said net sales rose 5 percent, with new products such as a chocolate-filled cereal called Krave helping it gain market share in both cereals and breakfast pastries. Like Special K with berries, the cereal was first introduced in France, where Bryant said customers' taste expectations are higher.
Despite the improvement in its cereal business, Kellogg's overall operating profit fell 5 percent in the quarter because of rising costs for ingredients, stepped-up marketing and a recall of its Mini-Wheats cereal last month.
In a call with analysts, Bryant attributed the recall to "failure of a piece of equipment" that he said was 20 years old. The cereal had been prompted by the possible presence of a metal mesh. Kellogg also had a major recall two years ago because of an odd smell in cereals such as Apple Jacks, Corn Pops and Froot Loops, which the company had said was the result of elevated levels of chemicals.
Bryant said Thursday the company would give an update on its progress in improving its supply chain at an upcoming investor conference. He said he was confident the company had turned a corner on the matter.
For the period ended Sept. 29, Kellogg says it earned $296 million, or 82 cents per share. That compares with $290 million, or 80 cents per share, a year ago. Not including integration costs, the company said it earned 86 cents per share. Analysts on average expected a profit of 81 cents per share, according to FactSet.
Total revenue rose 12 percent to $3.72 billion, above the $3.7 billion analysts expected.
Internal sales, which exclude the impact of Pringles, rose by 2.8 percent. The increase was mostly the result of a more profitable mix of products, while sales volume rose just 0.1 percent.
The North American unit, not including Pringles, saw sales grow by nearly 4 percent.
International sales rose 15 percent to $1.3 billion. Not including Pringles, the figure rose just 1 percent. The company's European unit continued to struggle, with sales down 2.5 percent, but Kellogg noted that was an improvement from the previous quarter. Latin America saw core sales rise 4 percent, while the Asia Pacific region rose by 7 percent.
Kellogg stood by its outlook for the year, with earnings expected to range between $3.18 and $3.30 per share. But it said operating profit will fall between 4 and 6 percent as a result of the Mini-Wheats recall.
Its shares were up about 2 percent at $53.38 Thursday afternoon.
Company says Pringles helped drive its sales
NEW YORK (AP) — Kellogg's appetite for salty snacks is helping fatten its profits.
High School Sports Scoreboard: 03/07/2014
A roundup of scores from today's boys district basketball tournament games:Continued ...
Benzonia woman accused of prescription fraud
A Benzonia woman faces a felony charge after authorities said she fraudulently obtained hundreds of prescription pills.Continued ...
Panthers roar in regional final
Tim Reznich is hoping Frankfort can have a reunion with Nicole Marshall. And history says the Panthers may very well do that.Continued ...
Dispatch: Smart911 worth the price
An online service that gives Grand Traverse County 911 responders potentially vital information about callers cost taxpayers almost $19 per call in its first half-year of operation.Continued ...
TC native joins Team Blake on TV's 'The Voice'
Ryan Whyte Maloney finally can spill the beans: he’s a bona fide contestant on “The Voice.”Continued ...
Editorial: Beach testing grant exposes state's lack of commitment
The issue: GT Band to fund beach testing program for 2014. Our view: Grant points up state's failure to act.Continued ...
Passengers wrongly told TC airport was ‘closed’
Len Price and his family just wanted to get home. The Traverse City resident, 72, his wife, Linda, and son Logan were headed home from a Montana skiing vacation March 1 when weather caused long delays to their United Airlines flight.Continued ...
Pastor sues former church over contract
A controversial pastor’s public schism with his former church moved into the legal realm.Continued ...
OTP revives 'Sound of Music' after 20 years
Kathy Verstraete unearthed some familiar artifacts while she packed her mother’s home two years ago.Continued ...
Letters to the Editor: 03/07/2014
Where was Snyder?; Time to fight back.Continued ...
Building Permits: 03/07/2014
Building permits issued in Grand Traverse County:Continued ...
Frankfort coach elected president of coach association
A pair of girls basketball victories and a regional championship weren’t the only things Tim Reznich won this week.Continued ...
McBain captures Class C regional title
McBain rebounded from a poor shooting performance in the first half to overtake Beaverton and secure a 61-44 decision Thursday in a Class C girls regional championship game.Continued ...
And the Oscar (contest) goes to ...
Holly MacAulay did her homework and it showed when she her Oscar contest entry landed among four with perfect scores.Continued ...
The Record: 03/07/2014
Assumed names issued in Grand Traverse County:Continued ...
Downtown boat ramp hits bump
A plan to redesign a Boardman River boat launch in Traverse City is temporarily grounded because some local environmentalists weren’t consulted about changes.Continued ...
Back to school — for parents
Traverse City area parents will have a chance to go back to kindergarten at Grand Traverse Academy on March 13.Continued ...
Former TC student teacher returns as singer-songwriter
Josh Rose found musical inspiration in some unusual places growing up on a sheep farm in Michigan’s Upper Peninsula.Continued ...
Weekend in Brief: 03/07/2014
"Pure A Cappella" showcase; Mel Larimer concert series continues; and more.Continued ...
NMC's Birmley Road observatory open to public tonight
Two realms of science fascinate all types of people, regardless of age, said Jerry Dobek, a science and math instructor at Northwestern Michigan College.Continued ...
Night Life Calendar: 03/07/2014
What's going on after dark:Continued ...
Sports in Brief: 03/07/2014
Coach Mike Krzyzewski is out of the hospital and at practice with No. 4 Duke after feeling light-headed during a loss at Wake Forest. (Plus more)Continued ...
Movie Capsules: 03/07/2014
New this week — 300: Rise of an Empire — Greek general Themistokles leads the charge against invading Persian forces led by mortal-turned-god Xerxes and Artemisia, vengeful commander of the Persian navy.Continued ...
Community in Brief: 03/07/2014
Mexican Dinner Party benefit; Titan Student Choreographed Dance Concert; Grand Traverse Humanists meet; A Matter of Honor (AMOH) event; and more.Continued ...
- Poll: Does state set aside enough money to test beaches?
- High School Sports Scoreboard: 03/07/2014