Kellogg cuts outlook; shares fall 5.9 percent

(Reuters) - Kellogg Co cut its full-year outlook on Monday after a disappointing first-quarter performance, and its shares fell nearly 6 percent in premarket trading.

The world's largest cereal company cited weakness in its European business and in some categories in the United States, and said it would continue to invest in future growth.

Kellogg now expects operating profit to fall 2 percent to 4 percent in 2012, from its prior forecast of flat or up slightly. It said sales should rise 2 percent to 3 percent, down from a prior forecast for growth of 4 percent to 5 percent.

Kellogg, which makes Corn Flakes cereal, Cheez-It crackers and Eggo frozen waffles, expects full-year reported earnings to range from $3.18 to $3.30 per share. That is below analysts' average estimate of $3.48 per share, according to Thomson Reuters I/B/E/S.

In the first quarter, Kellogg said net sales fell 1.3 percent, with earnings of $1 per share.

Excluding a 5 cent-per-share benefit from hedging activities, Kellogg's profit was 95 cents per share. Analysts on average were expecting 99 cents per share, according to Thomson Reuters I/B/E/S.

"We are obviously disappointed with the performance of the company in the first quarter of 2012," Kellogg Chief Executive John Bryant said in a statement. "We faced more significant challenges in both Europe and in some categories in the U.S. than we expected."

Last November, Kellogg said it was spending an additional $70 million in the second half of 2011 to improve its manufacturing after it suffered several blows, including food safety issues.

Kellogg shares fell to $50.81 in premarket trading from Friday's close of $53.99.

(Reporting By Martinne Geller in New York; Editing by Dave Zimmerman and Maureen Bavdek)

WhatsAppFacebookTwitterLinkedinBeloudBluesky