Kellogg (NYSE:K) posted weaker-than-expected fourth-quarter earnings and predicted tepid growth on Thursday as it continues to face challenges in its traditional North American cereal business.
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The Frosted Flakes and Froot Loops maker, which competes in the cereal category with General Mills (NYSE:GIS), reported net income of $818 million, or $2.24 a share, compared with a year-earlier loss of $32 million, or 9 cents.
Excluding one-time acquisition costs for Pringles and adjustments related to its pension plans, the Battle Creek, Mich.-based snacks company said it earned 83 cents, topping average analyst estimates in a Thomson Reuters poll by a penny.
"Our Pringles business had an excellent year in 2013, although we continue to face challenges in some of our developed cereal businesses," Kellogg CEO John Bryant said in a statement.
However, revenue for the three-month period ended Dec. 28 fell 1.7% to $3.5 billion from $3.56 billion a year ago, a sliver below the Street’s view of $3.52 billion. Sales declined by 2.8% in its key North America segment as demand dwindled in its breakfast category.
Kellogg projected internal net sales growth of 1% in fiscal 2014, with profits staying flat or rising by 2%. Its shares were down about 1% to $56.82 in recent trade, flirting with a 52-week low.
The company continues to execute its four-year restructuring strategy dubbed Project K designed to improve efficiencies. Bryant said the expectation is that over time Project K begins to provide Kellogg the fuel needed to drive growth across its business “in the years to come.”