Cereal maker Kellogg Co topped Wall Street estimates for quarterly sales and profit and raised its full-year outlook on Thursday, betting on its recent acquisition of protein bar RXBAR and Nigeria's Multipro.
Kellogg, struggling with shifting trends as more consumers opt for low-sugar options, protein bars and yogurt for breakfast over cereals, has been buying smaller snack brands that promote healthy eating and expanding in emerging economies.
Strategic Investment
Kellogg bought RXBAR for $600 million in 2017 and Brazil's Parati for $429 million in 2016. It also made a $400 million investment in Nigeria's Tolaram Africa Foods to enter west African markets.
"This is starting to show up in our net sales and our in-market performance, and puts us in a position to raise our full-year guidance," Chief Executive Officer Steve Cahillane said in a statement.
Kellogg said it expects net sales to rise 4-5% in fiscal 2018, and earnings per share to grow 11-13%. The company had previously forecast a sales rise of 3-4% and earnings per share growth of 9-11%.
Its net income rose to $596 million, or $1.71 per share, in the second quarter ended June 30, from $283 million, or 80 cents per share, a year earlier.
Excluding items, Kellogg earned $1.14 per share, beating analysts' average estimate of $1.05, according to Thomson Reuters I/B/E/S.
Net sales rose 5.8% to $3.36 billion, topping the estimate of $3.30 billion.
Improved Top-Line Performance
"We're pleased to report another quarter in which we delivered improving top-line performance and strong earnings growth, even after a significant boost in brand investment,” said Cahillane.
“We've strengthened our portfolio with acquisitions and expanded emerging markets presence, and we've reinvigorated our biggest brands."
Callihane added that the group is "still in the early days" of its Deploy for Growth strategy, which the company launched in February with a view to focusing on long-term growth areas.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
