Food-manufacturing companyKellogg K +1.7% may have beat the Street with its third quarter 2013 earnings report Monday morning, but in some bad news for its global workforce, also announced a cost-savings program that will slash 7% of that workforce over the next four years. It also lowered its outlook for the remainder of 2013.
Kellogg reported third quarter net sales of $3.7 billion, a figure just about in line with both consensus estimates and revenue from the quarter ending this time in 2012. The company’s third quarter net earnings (including GAAP measures) increased 2.5% to $326 million, or 90 cents per share. The Street was expecting 89 cents per share, which is what the company reported in the third quarter of 2012.
Excluding special items, third-quarter EPS increased 2.2% to 95 cents per share.
Looking within Kellogg’s products — which include Frosted Flakes cereal, Pop Tarts, Eggo products and Kashi foods — revenue from U.S. Morning Foods declined 2.2% to $883 million for the quarter, and U.S. Snack Foods saw net sales decline 2.5% to $886 million.
The company’s year-to-date net income came in at $989 million, down slightly from the $993 million reported this time last year. Year-to-date free cash flow, however, took a bigger hit, falling $87 million to $1.03 billion. Kellogg attributed the gap to the one-time benefit from the acquisition of Pringles (which Kellogg received from Proctor & Gamble in February 2012 in a $2.7 billion all-cash deal) as well as an expected increase in 2013 capital spending.
In an effort to increase savings, Kellogg also announced a cost-efficiency plan (called “Project K”) that will produce a cash-savings annual run-rate of between $425 million and $475 million by 2018. In the interim, however, Kellogg said it will cut 7% of its global workforce over the next four years.
“[W]e are making the difficult decisions necessary to address structural cost-saving opportunities which will enable us to increase investment in our core markets and in opportunities for future growth,” Kellogg CEO John Bryant said in a statement Monday morning. “The marketplace is constantly changing and evolving and we must adapt,” he added.
Among the areas of Kellogg’s operations that may see job cuts: supply-chain infrastructure, which Kellogg targeted for “consolidation of facilities and the elimination of excess capacity” in an effort to improve efficiency and margins. Kellogg also said that Project K will lead to a consolidation of business services across “multiple regions and functions.”
Kellogg also lowered its full-year 2013 guidance, saying earnings per share will be “toward the lower end of the previously provided range of between $3.75 and $3.84 per share.” Additionally, the company said that reported earnings per share are expected to have a negative impact from foreign currency translation of about 6 cents per share.
In a note published Monday morning, Citi Research CFA David Driscoll reiterated Citi’s “buy” rating on Kellogg, saying, “we believe that the news is better than many had feared (due to weak cereal trends).” Citi’s target price on Kellogg is $73 per share.
Following the earnings release, shares of Kellogg were up 2.5% in pre-market trading Monday morning. Meanwhile, competitors General Mills GIS +0.3%, Nestlé and ConAgra were flat in pre-market activity. P&G, the consumer products company from whom Kellogg received Pringles, also remained unmoved in pre-bell trading Monday morning.
No hay comentarios.:
Publicar un comentario