Kellogg Co. (K) - Get Kellogg Company Report posted stronger-than-expected third quarter earnings Thursday, and lifted its full-year sales forecast, but cautioned that supply constraints and "labor challenges' would keep profits near the lower end of its prior guidance.
Kellogg said adjusted earnings for the three months ending in September were pegged at $1.09 per share, up 19.8% from the same period last year and 16 cents ahead of the Street consensus forecast. Group revenues, Kellogg said, rose 5.6% from last year to 3.622 billion, again topping analysts' forecasts of a $3.5 billion tally.
Looking into the final months of the year, the Corn Flakes and Fruit Loops cereal maker said organic sales should rise between 2% and 3%, while repeating its guidance for "operating profit, earnings per share, and cash flow to reflect a current business environment of supply challenges and higher costs."
The reference to labor costs comes just hours after Kellogg said union leaders rejected its revised employment contract -- which the company called its "last best final offer" -- in a move that would extend industrial action by 1,400 Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) union members at plants in Michigan, Nebraska, Pennsylvania and Tennessee.
"I'm incredibly proud of how our organization has executed through an extremely difficult operating environment, marked by economy-wide bottlenecks and shortages and high cost inflation," said CEO Steve Cahillane. "That we could deliver strong third-quarter results and reaffirm our full-year earnings guidance in this environment is a testament to our strategy, our portfolio, and our people."
"These business conditions do not get any easier in the fourth quarter, especially with the added challenge of a current labor disruption," he added. "However, our underlying business momentum remains strong, particularly for our biggest snacking and frozen foods brands, and for our businesses in emerging markets. And we will continue to navigate through the various supply challenges, with an eye to sustaining balanced financial growth over time."
Kellogg shares were marked 1% lower in late-morning trading following the earnings release to change hands at $62.72 each.