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Kellogg Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2011 09:30PM
Kellogg Company (K) filed Quarterly Report for the period ended 2011-04-02. Kellogg Company has a market cap of $20.69 billion; its shares were traded at around $56.41 with a P/E ratio of 17.1 and P/S ratio of 1.7. The dividend yield of Kellogg Company stocks is 2.9%. Kellogg Company had an annual average earning growth of 6.2% over the past 10 years. GuruFocus rated Kellogg Company the business predictability rank of 4.5-star.
Highlight of Business Operations:
For the quarter ended April 2, 2011, our reported net sales increased 5%. Consolidated operating profit decreased 10%, while internal operating profit decreased 12%, compared to internal growth of 17% in the prior period. Diluted earnings per share (EPS) declined 8% to $1.00, compared to $1.09 in the comparable prior year quarter. EPS on a currency-neutral basis was down 10%. Our performance was ahead of our expectations for the quarter. We had strong top-line growth and invested in brand building and in our supply chain.
We view our continued spending on cost reduction initiatives as part of our ongoing operating principles to provide greater visibility in achieving our long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a five-year period of completion. Each cost reduction initiative is normally up to three years in duration. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation. Certain of these initiatives represent exit or disposal plans for which material charges will be incurred. See further discussion in Note 3. We include these charges in our measure of operating segment profitability. In 2009, we announced our intention to achieve $1 billion plus of annual cost savings in three years (beginning in 2012). These initiatives are integral to meeting our $1 billion plus savings challenge.
In the first quarter of 2011, we incurred approximately $2 million of consulting costs associated with this program in our North America operating segment. To date, we have incurred $11 million in program costs. These costs impacted our operating segments as follows (in millions): North America-$10; and Latin America-$1. The additional cost and cash outlay in 2011 through 2014 for this program is expected to be approximately $60 million.
For the quarter ended April 2, 2011, interest expense was $67 million, as compared to the quarter ended April 3, 2010 with interest expense of $65 million.
For the full year 2011, we expect gross interest expense to be approximately $235 to $245 million, compared to 2010s full year amount of $248 million.
Stocks Discussed: K,