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Kellogg posts loss on strong dollar, Brexit costs; shares slump

Reuters  |  CHICAGO 

(Reuters) - Co reported a fourth-quarter loss on Thursday as it suffered the effects of a strong dollar, the costs of an ongoing restructuring and preparations for Brexit.

Shares of Kellogg, which makes Pringles chips, waffles and Pop-Tarts, as well as breakfast cereals, slumped 6 percent to $55.57. The stock was the biggest loser on the S&P 500 Products index.

Kellogg, like other packaged companies, has struggled in recent years with intense pricing pressure from retailers and growing consumer preference for healthier, To drive cereal sales, has been spending more on advertising and promotions.

The industry has also had to cope with surging raw material and freight costs over the past year, and global political unrest that is impacting consumer sentiment.

"Brexit is a very, very uncertain geopolitical situation. Probably the most uncertain geopolitical issue that companies are facing right now," told in a phone interview.

Cahillane said was investing to mitigate potential damage from Britain leaving the on March 29.

Britain's economy risks stalling or contracting as Brexit looms and a global economic slowdown worsens, with companies in the British services sector reporting job cuts for the first time in six years and declining new orders.

Battle Creek, Michigan-based freight and raw material costs are expected to continue to rise this year, Cahillane said.

"The key question seems to be whether Kellogg can revive its top line performance while stabilizing its margins," said Bernstein

"This might be tough given the apparent shift in the balance of power toward retailers and the price pressure that the companies are now seeing."

Kellogg announced in November that it would reorganize its North American division and explore a sale of its cookies and fruit snacks units - which include brands such as and - as it sharpens focus on its core businesses.

Net loss attributable to Kellogg was $84 million, or 24 cents per share, compared with a profit of $417 million, or $1.20 per share, a year earlier.

Excluding items, Kellogg earned 91 cents per share, beating expectations of 88 cents, according to Refinitiv data.

Kellogg said net sales rose 4.1 percent to $3.32 billion in the quarter ended Dec. 29, helped by acquisitions, including its 2017 purchase of RXBAR. The company said currency translation hurt sales by 3 percent.

(Reporting by Richa Naidu; Editing by Chizu Nomiyama, and Dan Grebler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 07 2019. 23:21 IST
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