Kellogg cuts outlook; shares fall 5 percent

(Reuters) - Kellogg Co cut its full-year outlook on Monday after a disappointing first-quarter performance in Europe and in some product categories in the United States, and its shares fell 5 percent.

The world's largest cereal company said it would still invest in future growth.

Kellogg now expects operating earnings 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 earnings per share to range from $3.18 to $3.30. That is below the analysts' average estimate of $3.48, 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 one-time benefit, Kellogg's profit was 95 cents per share, missing the analysts' average estimate of 99 cents.

"We are obviously disappointed with the performance of the company in the first quarter of 2012," 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 problems.

Kellogg shares were down 5 percent at $51.27 on the New York Stock Exchange.

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

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