) recently reaffirmed its guidance for 2012 and also issued fresh
outlook for 2013.
For 2012, Kellogg expects its organic net sales growth to be
in a band of 2%-3%. Internal operating profit for 2012 is
expected to decline in the range of 4%-6%, higher than prior
expectations of 2%-4%. The organic revenue and operating profit
guidance excludes the impact from the Pringles acquisition.
The world's largest cereal maker expects its reported earnings
per share to range between $3.18 and $3.30 in fiscal 2012. The
guidance however includes impact from the Pringles acquisition
and now the product recall costs.
For 2013, Kellogg expects net sales growth to be approximately
7%, while reported earnings are expected to grow between 5% and
Earlier this month, Kellogg had reported results for the third
quarter. Earnings of 86 cents per share beat both the Zacks
Consensus Estimate as well as the prior-year quarter earnings.
Robust organic sales growth performance, which offset the
headwinds from last month's product recall (certain packages of
Mini-Wheats cereals), led to the earnings outperformance.
Organically, revenues increased 2.8% in the quarter. Improving
revenue trends in North America and strong performance of its
Pringles business, acquired from
Procter & Gamble
) in June this year, drove the top-line growth in the
We currently have a long-term Neutral recommendation on
Kellogg. However, the stock jumped to a Zacks #2 Rank (a
short-term Hold rating) following significant positive estimate
revisions after announcement of solid third quarter results.
We are optimistic about Kellogg's solid brand positioning, its
geographic diversity and cost-saving efforts, especially its
supply-chain initiatives. Moreover, we are encouraged by the
growth potential, diversification and international presence that
the Pringles deal provides. However, its sluggish cereal
business, challenges in Europe and rising input costs keep us on
KELLOGG CO (K): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
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