Kellogg Company Reports Q2 2015 Results, Improvement In Total U.S. Cereal Category Sales
BATTLE CREEK, Mich., Aug. 4, 2015 /PRNewswire/ -- Kellogg Company today announced second-quarter results; earnings per share were in-line with the company's expectations. The Asian, Latin American, and European Snack businesses posted currency-neutral comparable net sales growth and the North American business benefited from improving trends.
Improvement in total U.S. Cereal category sales and Kellogg's U.S. Cereal share trends in the second quarter.
Good sales growth in Asia, Latin America, and some North American businesses.
On-track to meet expectations for the full year; building momentum through the year.
Kellogg expects to achieve its long-term targets for currency-neutral comparable sales and operating profit growth in 2016
Second-quarter 2015 reported net sales decreased by 5.1 percent to $3.5 billion, largely as the result of currency translation. Currency-neutral comparable net sales increased by 0.1 percent in the second quarter; sales increased in the Latin American and Asia Pacific regions and in the Frozen Foods and Canadian businesses in North America. Second quarter 2015 reported operating profit was $412 million, a decline of 11.6 percent; this decrease was driven primarily by up-front costs associated with Project K, a remeasurement of the Venezuelan business at the SIMADI rate of 198 Venezuelan bolivars per U.S. dollar (see Exhibit 9), and foreign-currency exchange. Currency-neutral comparable operating profit declined by 6.8 percent due to higher distribution costs, costs associated with the timing of production, and the resetting of incentive compensation.
Reported earnings for the second quarter of 2015 were $223 million, or $0.63 per share, a decrease of 23 percent from the $0.82 per share reported in the second quarter of last year. This quarter's reported earnings per share included negative impacts from the remeasurement of the Venezuelan business of $0.37 per share, costs associated with the Project K efficiency and effectiveness program of $0.18 per share and $0.01 per share of integration costs related to the acquisition of Pringles and Bisco Misr. In addition, reported results included a benefit of $0.06 per share from mark-to-market and a benefit of $0.21 per share from the deconsolidation of a variable interest entity (see Exhibit 15). Excluding all of these items, comparable second-quarter 2015 earnings were $0.92 per share. This result included a negative impact of $0.05 per share from currency translation; currency-neutral comparable earnings per share were $0.97 per share.
North America
Net sales posted by Kellogg North America were $2.3 billion in the second quarter, a reported decrease of 2.8 percent; currency-neutral comparable net sales decreased by 1.8 percent. The U.S. Morning Foods segment posted a currency-neutral comparable net sales decline of 2.3 percent, although trends in the cereal business continued to improve. Currency-neutral comparable net sales in the U.S. Snacks segment decreased by 1.8 percent. The U.S. Specialty Channels segment posted a 1.2 percent decline in currency-neutral comparable net sales in the quarter. The North America Other segment, which is composed of the U.S. Frozen Foods, Kashi, and Canadian businesses, posted a 1.3 percent decrease in currency-neutral comparable net sales. Reported operating profit inNorth America decreased by 2.5 percent; currency-neutral comparable operating profit declined by 12.7 percent, due to lower sales, higher distribution costs, costs associated with the timing of production, and the resetting of incentive compensation. Full report here.
