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Kellogg Co. reported strong sales and earnings growth for its first quarter, despite a significant amount of investment in the business.
Battle Creek, Mich.-based Kellogg Co. reported net earnings for the quarter were $254.7 million, a 16 percent increase from last year's $219.8 million. Earnings were 61 cents per diluted share, a 15 percent increase from last year's 53 cents per share. Each of the company’s businesses contributed to the growth, which resulted from successful innovation, brand building, investment and strong execution, the company said in a statement.
"We delivered growth across our businesses while facing continued cost pressures," said Jim Jenness, Kellogg's chairman and CEO. "Most importantly, though, we increased the level of investment we plan to make in our business. These investments are made to drive sustainable growth in the future."
Kellogg North America achieved internal net sales growth of 7 percent. North America Retail Snacks posted internal sales growth of 7 percent, as each of its businesses, cookies, crackers, wholesome snacks, and toaster pastries, posted sales increases. The segment's retail cereal sales rose 4 percent in local currencies, as a result of successful new product introductions and effective brand-building campaigns. The North America Frozen and Specialty Channels businesses collectively posted local-currency sales growth of 12 percent, driven by strong double-digit gains posted by the Eggo brand. The Food-Away-From-Home businesses posted high single-digit sales growth.
Quarterly operating profit was $468 million, an increase of 11 percent from the first quarter of last year. Higher net sales, improved product mix, operating leverage and productivity savings contributed to the growth; these factors more than offset the negative impact of increased benefit costs and significant investment in efficiency initiatives and brand-building activities, the company said. Slightly lower interest expense and a lower tax rate also added to net income growth.
With 2004 sales of nearly $10 billion, Kellogg Co. is the world's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, and meat alternatives. The company's brands include Kellogg's, Keebler, Pop- Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr's, Plantation, Ready Crust and Kashi. Kellogg products are manufactured in 17 countries and marketed in more than 180 countries around the world.