Kellogg (K, $63.39) beats Q3 earnings and revenue estimates; but divestitures and currency headwinds affect performance

Kellogg reported its latest quarter results, which revealed better-than-expected adjusted earnings per share and revenue.

The breakfast cereal maker’s adjusted earnings came in at $1.03, ahead of the 91-cent FactSet consensus expectation. 

Sales fell - 2.8% year-over-year to $3.37 billion in the quarter, but still exceeded analysts’ estimate of $3.35 billion (based on FactSet poll).

The  decline in sales were largely due to the divestiture of the cookie, fruit snack, pie crust and ice cream cone businesses. Unfavorable foreign-currency translations also affected performance. However, organic sales rose more than +2%.

Within North America, Kellogg’s organic growth was bolstered by brands including Pringles potato chips, Cheez-It snacks, Rice Krispies Treats and Pop-Tarts.

Currency headwinds hurt net sales in Europe, Latin America, and Asia-Pacific-Mideast-Africa.

Kellogg expects its currency-neutral adjusted earnings per share  to decline by about -10%, vs. prior expectation of a reduction of -10% to -11% -  the modified outlook follows a lower expected tax rate and higher-than-expected other income.

The company projects full-year net sales growth of +1% to +2% from the year earlier.

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.