Kellogg to replace CFO, earnings dive 36.5 percent; shares fall
By Richa Naidu
CHICAGO (Reuters) – Kellogg Co said Thursday it will replace its CFO, and the breakfast food and snack maker reported a 36.5 percent decline in the first quarter, with a strong US dollar and higher costs.
Stocks were down 3.9 percent in the morning trading for the maker of Pop Tarts, Eggo Waffles, Pringles snacks and a wide range of cereals including Rice Krispies and Froot Loops.
Battle Creek, Michigan-based Kellogg says CFO Fareed Khan will be replaced on July 1 by Amit Banati, the company's Asia Pacific, Africa, and Middle East business. Banati started working at Kellogg in 2012 and has held positions with Mondelez International and Procter & Gamble Co.
In addition to the stronger dollar, revenues were hit by increased expenses for divestments, transport and commodity costs. Kellogg's results came off with analytical estimates.
Kellogg's results weighed on competing packaged food stocks, with Kraft Heinz down 2.7 percent and Campbell Soup down 1.2 percent.
In recent years, packaged food companies have struggled with high costs, while consumers have moved to healthier foods and trendy upstart brands. Price pressure has been strong as grocery stores competed aggressively against Amazon.com Inc.
Sales in North America, Kellogg's largest unit, fell 1.8 percent, damaged by a recall of some RxBar protein and lower grain and frozen foods. [19659009] "Our recall of certain RXBARs requires stock depreciation from our customers and pushed net sales and profits," CEO Steve Cahillane said on a call to discuss earnings.
Cahillane said Kellogg increased prices in the region in the quarter, which may contribute to sales in the current period.
Net income attributable to Kellogg fell to $ 282 million, or 82 cents per share in the quarter of March 30. Only Kellogg's earnings were $ 1.01 per share, estimated estimates for 95 cents analysts, according to IBIN data from Refinitiv.
Net sales increased by 3.6 percent to $ 3.62 billion. Kellogg's 2018 acquisition of a 50 percent stake in Multipro, a sales and distribution company in Nigeria and Ghana, helped drive a 60 percent jump in the Asia, Middle East, and Africa business areas.
Organic sales – excluding M&A and exchange rate impact – increased 4 percent to strong sales of Pringles snacks. Sales at all Kellogg's other businesses declined in the quarter.
In a move to focus on the core cereal and snack business, Kellogg last year decided to sell Keebler biscuit brand and other assets to Nutella maker Ferrero for $ 1.3 billion. [19659015] Sales could help Kellogg pay off debts and reinvest in their brands, wrote Bernstein analyst Alexia Howard in a note. Kellogg said sales would reduce 2019 net sales by about 2-3 percent.
(Reporting by Richa Naidu; Editing Sonya Hepisntall and David Gregorio)