Kellogg slashes long-term sales forecast as cereal sales continue falling

Kellogg said Thursday that its cereal unit suffered another quarterly sales decline, and the company cut its long-term revenue forecast.

The maker of Frosted Flakes, Pop Tarts and Special K said it now expects core revenue to rise between 1 to 3 percent over the long-term, down from the previous forecast of 3 to 4 percent.

In its flagship North American division, sales for the breakfast foods segment fell 7.7 percent for the period ending Jan. 3. Kellogg Co., based in Battle Creek, Michigan, has been struggling to grow cereal sales as Americans increasingly reach for alternative like Greek yogurt and breakfast sandwiches. CEO John Bryant has also conceded that Special K in particular has been hurt by changing attitudes toward health and dieting, with people showing more interest in overall ingredients, rather than just calories.

In a conference call after the earnings results were issued, Bryant called 2014 a "disappointing" year.

To improve results, the company has been slashing costs under a program called Project K.

The European and Asia Pacific units each saw sales fall by 1.2 percent. In Latin America, comparable sales rose 7.2 percent.

For the quarter, Kellogg was also hit with mark-to-market adjustment of $822 million, driven by changes interest rates had on its pension plans. The company said it lost $293 million, or 82 cents per share. Excluding one-time items, it earned 86 cents per share, which was still short of the 92 cents per share analysts expected, according to Zacks Investment Research.

Revenue was $3.51 billion, also falling short of the $3.65 billion Wall Street expected.

For the year, the company reported profit of $632 million, or $1.75 per share. Revenue was reported as $14.58 billion.