Hurt by high commodity costs and softness in Europe, Kellogg (K) narrowed its second-quarter profit by 10%, but still reaffirmed on Thursday its fiscal 2012 guidance, citing optimism around the newly-acquired Pringles brand.
The cereal and snacks maker reported net income of $301 million, or 84 cents a share, compared with a year-earlier $343 million, or 94 cents, matching average analyst estimates in a Thomson Reuters poll.
Revenue for the three-month period climbed 2.6% to $3.47 billion from $3.39 billion a year ago, topping the Street’s view of $3.38 billion.
"We've taken significant actions in the first half of the year and our second quarter performance reflects some of the improvement that has resulted," Kellogg CEO John Bryant said in a statement.
The operator of the Cheez-It, Keebler and Frosted Flakes brands said sales in the U.S. grew by 5.9% to $2.4 billion, led by breakfast foods such as Pop-Tarts and cereal and Kashi. In its international market, sales fell by 3.8% to $1.1 billion.
While revenue improved in Latin America, it was offset by weaknesses in Europe and declines in the Asia Pacific region. On an internal sales basis, which excludes foreign exchange rates, sales in Europe fell by 3.6%.
However, Kellogg still reaffirmed its fiscal 2012 guidance with earnings between $3.18 to $3.30 on sales growth between 2% and 3%. Analysts on average are looking for earnings of $3.28.
The company, which announced plans in February to buy Pringles for $2.7 billion, said the inclusion of the chip business has given it “improved visibility” into its outlook.
Kellogg, Bryant said, remains "optimistic regarding the significant, long-term potential" of the business.