Dragged down by rising ingredient costs, cereal giant Kellogg (K) revealed a first-quarter earnings dud on Thursday, although the maker of Raisin Bran and Eggo waffles reaffirmed its full-year guidance.
Shares of the food company retreated about 1% in premarket trading in response to the weaker-than-expected top and bottom-line results, which were somewhat offset by new buyback plans.
Kellogg said it earned $311 million, or 85 cents a share, last quarter, compared with a profit of $351 million, or 98 cents a share, a year earlier.
Excluding one-time items, it earned 99 cents a share, trailing the Street’s view by 3 cents.
Kellogg blamed the declining profits on the fact it had to recognize “considerable cost-of-good-sold inflation,” although the company said it believes the first quarter represented the bulk of these costs for the full year.
Revenue jumped 12.2% to $3.86 billion, but that also missed consensus calls for $3.94 billion.
North American sales rose 8.1% to $2.6 billion as its frozen foods and Canadian business offset dipping snacks sales.
Overseas, Kellogg generated a 28.7% leap in European sales as well as 13.7% growth in Latin America. Sales in the Asia-Pacific region rose 14.7%.
"Results in the first quarter were broadly as we expected, and we're pleased to have a solid start to the year," CEO John Bryant said in a statement.
Looking ahead, Kellogg is standing by its prior call for 2013 non-GAAP EPS of $3.82 to $3.91, which is largely in-line with the Street’s view of $3.86. Full-year net sales are seen growing 7%.
Kellogg said its board of directors approved a $1 billion share buyback plan that expires in April 2014, superseding the existing authorization.
Shares of Battle Creek, Mich.-based Kellogg slumped 1.72% to $63.50 ahead of Thursday’s opening bell, putting them on track to trim their 2013 gain of 15.7%.