Cereal Maker Kellogg Misses Earnings, Cites European Weakness
It was revealed on Monday that cereal maker Kellogg (NYSE: K) has reduced its full-year earnings forecast, largely because of weaker-than-expected first quarter results.
The numbers are down partially because of the acquisition of Pringles chips. Earnings per share will be between $3.18 to $3.30, according to Kellogg, based in Battle Creek, Michigan.
The company had previously predicted $3.25 to $3.37. Meanwhile, analysts projected $3.48.
So why the dramatic decline in the first quarter? Well, it was apparently driven by European business as well as weak volume growth in some U.S. categories. Net sales for the first quarter declined roughly 1.3%.
Shares in Kellogg dropped 6.6% to $50.44 on Monday morning in New York. Before Monday, the shares had gained 6.8%.
On April 16, Deutsche Bank published a research report stating that its positive view on Kellogg is due partly to the LT benefits likely from the Pringles deal, a greater emphasis on global snacks combined with leading market share in key product areas such as global cereal.
Deutsche also stated that investors will likely focus on top line trends, particularly the core U.S. cereal outlook, along with new product contributions and the competitive environment. Performance in international markets (particularly Europe) will also be of interest.
Finally, questions may arise around the expected Pringles integration and updates to initial targets.
Follow me @BCallwood.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.