Published November 01, 2012
Kellogg Co reported higher-than-expected quarterly profit on Thursday as strong performance in its Pringles business offset costs related to a recall last month of Mini-Wheats.
The world's largest cereal maker reported net income of $296 million, or 82 cents per share, for the third quarter, compared with $290 million, or 80 cents per share, a year earlier.
The results included 4 cents per share in integration costs related to the acquisition of Pringles.
Analysts on average were expecting 80 cents per share, according to Thomson Reuters I/B/E/S.
The company said higher commodity costs, a high single-digit increase in brand-building investments, and costs related to the recall last month hurt operating profit.
The maker of Corn Flakes, Eggo waffles and Keebler cookies recalled some packages of Mini-Wheats in October due to the possible presence of fragments of metal mesh.
In 2010, Kellogg had a massive recall of millions of boxes of cereal due to an unusual smell. In 2009 it recalled some Keebler cookies and Special K protein bars.
In 2011, Chief Executive John Bryant said the company had cut too many jobs in recent years, which had led to problems, including food safety issues. It said it would spend an additional $70 million to improve its manufacturing.
It said the latest recall cost it 6 cents per share, which was offset by better-than-expected performance of Pringles.
Net sales were $3.72 billion, slightly above analysts' average estimate of $3.69 billion, according to Thomson Reuters I/B/E/S.
Kellogg reaffirmed its outlook for full-year earnings per share of $3.18 to $3.30.
Its shares rose 44 cents, or 0.8 percent, to $52.76 on the New York Stock Exchange.
(Reporting by Martinne Geller in New York; Editing by Gerald E. McCormick and James Dalgleish)