Kellogg reports profit drop, flags up challenging EU market

By Jane Byrne

- Last updated on GMT

Related tags: Will keith kellogg, United kingdom, European union, Uk, Kellogg

Kellogg’s said it expects Europe, and the UK in particular, to be its most challenging operating environment this year, as it reports first-quarter net income drop of 12 per cent citing higher ingredient costs and increased marketing and new product spend.

The leading cereal manufacturer noted earnings of $366m for the quarter, compared with $418m a year earlier but reported a revenue climb of 5 per cent to $3.49 billion on better global sales.

The company notes a highly competitive retail landscape in the UK combined with a “tough economy”.​ It said its cereal category in that market was flat in the quarter, in line with most UK food categories, while cereal consumption was down 2 per cent.

However Kellogg’s points to growth trends in other European markets.

“During the quarter, we began to see positive trends on the continent. Within our French business, consumption increased 6 per cent, yielding a share gain of 0.6 points.

"The Tresor and Miel Pops Cereal brands helped drive this growth,”​ said John Bryant, Kellogg company president and CEO during a conference call on the financial results.

The CEO reveals that the US cereal business posted a 2 per cent increase and that this was driven by "stronger innovation and higher promoted prices."

Kellogg said it plans to launch more than $800m worth of new products during the year.

2010 was a difficult period for the world’s biggest cereal maker, with a massive recall of breakfast cereal due to tainted packaging being a major factor behind a profit drop last year.

Related topics: Manufacturers, Kellogg

Related news

Show more