Kellogg Co. shares briefly climbed to a 52-week high Monday as its first-quarter earnings climbed 17 percent, boosted by stronger snack sales and a tax benefit, and it raised its full-year outlook.
The maker of Rice Krispies cereal, Eggo waffles and Keebler cookies earned $321 million (euro235.94 million), or 80 cents per share, in the three months ended March 31, up from $274 million (euro201.4 million), or 68 cents per share.
Revenue rose 9 percent to $2.96 billion (euro2.18 billion) in the three months ended March 31, up from $2.73 billion (euro2.01 billion) during the first quarter of 2006, Kellogg said.
The latest earnings results also included a $40 million (euro29.4 million) tax benefit. Excluding the tax benefit, earnings were 70 cents per share.
Wall Street was expecting a profit of 68 cents per share excluding one-time items on sales of $2.85 billion (euro2.09 billion), according to a Thomson Financial poll.
Kellogg shares trading on the New York Stock Exchange rose to a new 52-week high of $54 on Monday before dropping to close at $52.91, down 17 cents from Friday's close.
North American sales grew 7 percent, as retail cereal sales rose 4 percent and retail snacks sales grew 11 percent, helped by sales of cookies, crackers and fruit snacks. Frozen foods and custom manufacturing rose 5 percent.
Kellogg International sales grew 12 percent, or 5 percent excluding the benefit of a weaker U.S. dollar.
"We delivered sales and operating-profit growth across most of our global businesses. This shows the strength of our operating principles and the benefit of our commitment to invest in future growth with brand building and innovation," David Mackay, Kellogg's president and chief executive, said during a teleconference with industry analysts.
John Bryant, chief financial officer, said rising costs continue to nibble away at earnings.
"As you know, we've seen a lot of volatility in commodity, fuel, benefits and energy costs over the last few years, and as we told you last quarter, 2007 is forecast to be no exception," Bryant told analysts.
The company lost about 6 cents of earnings per share to increases of such costs during the first quarter when compared with the first three months of 2006, he said.
The Battle Creek-based company raised its full-year profit outlook to a range of $2.70 (euro1.98) to $2.74 (euro2.01) per share, up from prior estimates of $2.68 (euro1.97) to $2.73 (euro2.01) per share. Wall Street is looking for earnings of $2.75 (euro2.02) per share, on average.
"We're entering the second quarter with greater confidence that we will meet our long-term targets in 2007," Mackay said, citing his company's "great start for the year and our continued business momentum."
Kellogg's brands also include Pop-Tarts, Cheez-It, Nutri-Grain, Murray, Morningstar Farms, Austin, Famous Amos and Kashi. The company, which reported sales of $10.9 billion (euro8.01 billion) in 2006, employs about 26,000 around the world.
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