BATTLE CREEK, Mich. - May 4, 2017 - Kellogg Company (NYSE: K) today announced first-quarter 2017 results and updated its financial outlook for 2017.
"In the first quarter, we managed through an unusually challenging environment for packaged food companies, including a period of industry-wide softening of consumption trends," said John Bryant, Kellogg Company’s chairman and chief executive officer. “We got off to a slow start on net sales, as mentioned previously, but we expect sequential improvement in coming quarters, and our productivity initiatives enabled us to stay on track toward our full-year 2017 forecasts for currency-neutral comparable operating profit, earnings and cash flow. We continue to make progress on our 2020 Growth Plan, which directly addresses many of the revenue headwinds we are presently facing, and we have good visibility into continued currency-neutral operating-profit margin expansion."
Q1 Results:
• Kellogg’s first quarter 2017 GAAP (or "reported") earnings per share increased by 51% from the prior-year quarter, due to year-ago interest costs related to a bond tender and a lower tax rate, partially offset by higher up-front costs related to the Project K restructuring program and adverse currency translation. Non-GAAP, comparable earnings per share were up more than 10% from the year-earlier quarter, because of productivity savings and a planned discrete tax benefit, which more than offset the negative impact of currency translation. Non-GAAP, currency-neutral comparable earnings per share increased by more than 13% year-on-year.
• Quarterly reported operating profit decreased because of higher restructuring charges related to the Project K restructuring program, which includes this year's exit from our Direct Store Delivery sales and delivery system. Currency-neutral comparable operating profit increased because of efficiencies in Cost of Goods Sold and Selling General and Administrative expenses related to Zero-Based Budgeting and Project K, driving currency-neutral comparable operating profit-margin expansion across all four of our Regions.
• First-quarter 2017 reported and currency-neutral comparable net sales decreased, owing to softness in underlying consumption, particularly early in the quarter, as well as the timing of shipments from Q4, resulting in a reduction in trade inventory in Q1.
