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Kellogg Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 7, 2012 05:28PM
Kellogg Company (K) filed Quarterly Report for the period ended 2012-06-30. Kellogg Company has a market cap of $18 billion; its shares were traded at around $50.27 with a P/E ratio of 15.1 and P/S ratio of 1.4. The dividend yield of Kellogg Company stocks is 3.4%. Kellogg Company had an annual average earning growth of 4.8% over the past 10 years. GuruFocus rated Kellogg Company the business predictability rank of 5-star.
Highlight of Business Operations:For the quarter ended June 30, 2012, our reported net sales increased by 3% and internal net sales increased by 2%, in line with our expectations communicated with the announcement of 1st quarter earnings. Operating environments in Europe and Australia continued to be difficult, resulting in internal net sales decline of 1% for the International business. Reported operating profit, which includes the impact of transactional and integration costs related to the acquisition of Pringles, decreased by 11%. Internal operating profit, which was negatively impacted by timing of supply chain investments, anticipated commodity inflation and soft performance in Europe and Australia, declined by 5%, in line with our expectations communicated with the announcement of 1st quarter earnings. Diluted earnings per share (EPS) of $.84 was down 10.6% compared to the prior year EPS of $.94. EPS includes $.07 negative impact of transaction and integration costs as well as a $.02 one-time, below-the-line benefit due to a lower tax rate which was partially offset by hedging losses related to the acquisition of Pringles. This EPS performance was in line with expectations communicated with the announcement of 1st quarter earnings.
The following tables provide analysis of our net sales and operating profit performance for the year-to-date periods of 2012 as compared to 2011. Our internal net sales increase of 1% was the result of favorable pricing/mix across most reportable segments, which was partially offset by unfavorable volume in all reportable segments except Asia Pacific. Our internal operating profit decline of 6% was due primarily to timing of supply chain investments, continued higher input costs and weak performance in Europe and Australia. This decline in internal operating profit was partially offset by improved pricing/mix.
On a year-to-date basis, gross profit margin is down 140 basis points. This is primarily due to the timing of supply chain investments, the impact of commodity inflation, lower production intended to reduce levels of inventory, and the acquisition of Pringles in the second quarter. Our SGA expense as a percentage of net sales reflected no change compared to the prior year as the negative impact of transaction and integration costs related to the acquisition of Pringles was offset by declines in brand-building which reflects the timing of our investment across the year and a difficult year-ago comparison.
Our net cash used in investing activities for the year-to-date period ended June 30, 2012 amounted to $2.823 billion compared to $238 million in the same period of 2011. The year-over-year increase was primarily attributable to $2.674 billion acquisition of Pringles. For full-year 2012, we project capital spending of approximately 4 to 5% of net sales.
Stocks Discussed: K,