Milling & Baking News Corporate Profiles - October 2011 - (Page 98)

Company Overview The Kellogg Co. Strength in cereal and snacks helps company rebuild momentum I nnovation, brand-building and solid execution were key to solid second-quarter results at the Kellogg Co. The Battle Creek, Mich.-based company, which was coming off a difficult end to 2009 and start to 2010 marked by flood damage at a plant in Atlanta and a major voluntary cereal recall, began to rebuild momentum in the first half of fiscal 2011. Net income in the quarter ended July 2 was $343 million, equal to 94c per share on the common stock, up 14% from $302 million, or 80c per share, during the same quarter of the previous year. Sales for the quarter were $3,386 million, up 11% from $3,062 million during the same quarter of the previous year. For the six months ended July 2, the company had income of $709 million, or $1.95 per share, down 2% from $720 million, or $1.89 per share, during the same period of the previous year. Sales for the period were $6,871 million, up 8% from $6,380 million. In a July 28 conference call with financial analysts, John Bryant, president and chief executive officer, spoke positively about the company’s North America cereal business, which experienced internal net sales growth of 13% in the second quarter. Specifically, he mentioned the recent launch of Crunchy Nut, Mini-Wheats Touch of Fruit, Fiber Plus Caramel Pecan Crunch and Rice Krispies Gluten Free. Mr. Bryant said Rice Krispies Gluten Free was Kellogg’s No. 1 selling product on Amazon in June. Things also looked brighter in the company’s Eggo waffle lineup during the first half. After production snags limited availability of Eggo products during 2010 Kellogg in 2011 made up ground with the launch of several new products, including Eggo FiberPlus Waffles and Eggo Thick & Fluffy. In the back half of 2011 Kellogg was set to introduce Eggo Nutri-Grain Honey Oat waffles and two stock-keeping units of Eggo Mini Muffin Tops. “I think we’re seeing the volume performance that we expected to see, so we’re right on track from our internal expectations,” Mr. Bryant said. “We have had some benefit in the first half of the year from a volume perspective as we lapped through the Eggo disruption and the cereal recall. We do have more price/mix coming in the back half of the year, and so we do expect that volume to be softer in the back half of the year than the front half of the year.” Other headlines at the company during the first part of fiscal 2011 included an agreement to pay $5 million as part of a class action in the U.S. District Court Central District of California involving immunity claims on Rice Krispies cereal. John Bryant Kellogg originally agreed to remove the immunity claims from its Rice Krispies products in late 2009 after the Oregon Department of Justice challenged the claims. In June 2010, Kellogg settled with the Federal Trade Commission over the same claims, though it stood by them. Following the F.T.C. action, several class actions were raised, which now have been settled. In addition to the Rice Krispies settlement, Kellogg in 2010 agreed to a $10.5 million settlement in a class action claiming Kellogg falsely advertised its Frosted Mini-Wheats cereals as “clinically shown to improve children’s attentiveness by nearly 20%.” As part of that suit, class members received $2.75 million and $5.5 million was given to charities. CP F ast acts Kellogg’s cereal business experienced 13% sales growth in the second quarter. Rice Krispies Gluten Free was Kellogg’s No. 1 selling product on Amazon in June. Kellogg agreed to pay $5 million as part of a class action in the U.S. District Court Central District of California involving immunity claims on Rice Krispies cereal. 98 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - October 2011

Milling & Baking News Corporate Profiles - October 2011