Kellogg has posted an increase in net sales of 3.6% to $3.21 billion in its fourth-quarter results, which the company said was partly thanks to its acquisitions of Rxbar and Parati.
In the three months to the end of December, operating profit was up 586% to $669 million.
For the whole of 2017 net sales were down 0.7% to $12.92 billion and operating profit rose 39.5% to $1.95 billion.
In its fourth quarter, Kellogg’s US snack unit, which includes brands such as Pringles, reduced its workforce and exited leases for its distribution centres, in a bid to boost profit. Its US morning food business struggled with net sales declining as consumers shift away from sugary breakfast cereals.
Fourth-quarter net sales were up in Europe, which was driven by gains in both snacks and cereals. Meanwhile, in Latin America, comparable net sales were hit as a result of hurricanes in Central America and the Caribbean.
Finally in its Asia Pacific unit, sales were up in the fourth quarter thanks to its business in Australia and demand for breakfast cereals in India and South Korea.
Kellogg CEO Steve Cahillane said: “We’re pleased to report a good finish to an important year. We delivered on our financial guidance for the year, by continuing to improve our sales performance from a soft first half, and by executing productivity initiatives that continued to boost our profit margins, even as we stepped up investment in our brands.
“We also continued to make significant progress on several strategic imperatives that will contribute to better performance ahead. Our transition out of direct store delivery in US snacks freed up resources that we are reinvesting behind our brands.
“We continued to expand our emerging markets scale and presence, via the integration of Parati, which tripled our size in Brazil; the investment in rapid growth for our joint ventures in Africa and China; and the expansion of Pringles across the globe.
“We continued to stabilise our core developed international cereal markets, and we completed the acquisition of Rxbar, a new growth platform for us in health and wellness.”
He added that the company enters 2018 on sound financial footing: “Net sales guidance for 2018 reflects roughly two quarters of negative DSD-transition impacts and the prudent assumption that it will take some time for our investments to take hold. Our commercial ideas are stronger, and we are putting increased investment where the growth is.
“We have strong enough cost-savings that we can boost investment in growth, while still delivering margin expansion and solid growth in profit and earnings.”
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