Snacks dominate Kellogg quarter growth

By Neil Merrett

- Last updated on GMT

Related tags: Cent, Snack foods

Cereal giant Kellogg this week said it had stronger
than expected first quarter results as net sales rose nine per cent
to $3bn.

The company attributed the rise to increased innovation, particularly in its snack operations, which maintained strong growth in its US and international operations up to 31 March. Kellogg joins a growing number of multinational food groups expanding into new regions and product ranges to offset potential uncertainty in its key markets and brands. As a result, operating margins were down by about a percentage point to 20 per cent as the company faced increased operating costs and advertising charges related to the launching of new brands. David Mackay, Kellogg's chief executive officer, remained encouraged by the results, expecting the performance to maintain the group's full year strategy. "Last year's momentum continued in the first quarter of 2007,"​ he stated. "Importantly, we posted these positive results while following our business model and making considerable investment in our brands, and in future growth." ​Net sales in the group's US operations rose by seven per cent to $2bn as snack foods racked up an 11 per cent growth. This was more than double the rate of the group's core cereal ranges that grew steadily at four per cent. The company attributed the trend in part to its health and fruit snacks ranges. Internationally, Kellogg fared similarly well, with combined revenue in Asia, Europe and Latin America driving a 12 per cent growth in sales to $961m over the period. This growth was led by Latin America, where an equally strong performance within both cereal and snacks units was attributed to an eight per cent gain in sales overall. Europe, like America, saw snack growth reach double figures, with cereals also up by six per cent, the company said. Kellogg's international success was undercut by some poor performances within its Asian Pacific markets, which overall posted a net sales decline of two per cent.

Related topics: Kellogg, Processing & Packaging

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