Despite the improvement in its cereal business, Kellogg's overall operating profit fell 5 percent in the quarter because of rising costs for ingredients, stepped-up marketing and a recall of its Mini-Wheats cereal last month after a metal mesh was found in the cereal.
In a call with analysts, Bryant said the company had been using the type of equipment involved in the recall for 20 years and had never seen that type of failure. Kellogg also had a major recall two years ago because of an odd smell in cereals such as Apple Jacks, Corn Pops and Froot Loops, which the company had said was the result of elevated levels of chemicals.
Bryant said Thursday the company would give an update on its progress in improving its supply chain at an upcoming investor conference. He said he was confident the company had turned a corner on the matter.
For the period ended Sept. 29, Kellogg says it earned $296 million, or 82 cents per share. That compares with $290 million, or 80 cents per share, a year ago. Not including integration costs, the company said it earned 86 cents per share. Analysts on average expected a profit of 81 cents per share, according to FactSet.Total revenue rose 12 percent to $3.72 billion, above the $3.7 billion analysts expected. Internal sales, which exclude the impact of Pringles, rose by 2.8 percent. The increase was mostly the result of a more profitable mix of products, while sales volume rose just 0.1 percent. The North American unit, not including Pringles, saw sales grow by nearly 4 percent. International sales rose 15 percent to $1.3 billion. Not including Pringles, the figure rose just 1 percent. The company's European unit continued to struggle, with sales down 2.5 percent, but Kellogg noted that was an improvement from the previous quarter. Latin America saw core sales rise 4 percent, while the Asia Pacific region rose by 7 percent.
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