Kellogg Company has issued a statement ahead of its Q1 FY 2012 results warning that it is lowering its full-year sales and earnings guidance. The Q1 report is scheduled for April 26.
The company said that, although Q1 earnings-per-share are flat with last Q1 ($1 per share), Q1 net sales declined 1.3% and operating profit declined 6.5% as a result of weak volume growth in certain categories (not yet specified) in the U.S., weakness in Europe, and investments in future growth.
Those investments include its $2.7 billion acquisition of Pringles from Procter & Gamble, supply-chain improvements, and more advertising to support product launches.
Kellogg now expects reported full-year earnings of $3.18 to $3.30 per share, reflecting internal net sales growth (which excludes impacts of foreign exchange rates and acquisitions/divestitures) of 2% to 3% and an internal operating profit decrease of 2% to 4%. It said that the Pringles acquisition is expected to lower earnings-per-share by between $0.06 and $0.11.
The Wall Street Journal reported that analysts were expecting $3.48 per share on 6% sales growth for 2012.
Previous guidance had been for 4% to 5% sales growth and flat operating profit.
"We are obviously disappointed with the performance of the company in the first quarter of 2012," Kellogg president/CEO John Bryant said in the warnings release. "We faced more significant challenges in both Europe and in some categories in the U.S. than we expected. We have recognized and are addressing these issues, and have provided revised guidance that allows us to continue to invest in the business. This investment is at the core of our operating principles, it's the right thing to do for the health of the business, and it will help drive future growth."