Strong sales boost revenues for Kellogg

By Ahmed AlAmin

- Last updated on GMT

Related tags Cent Kellogg company

Kellogg said yesterday sales jumped by 9 per cent to $3bn (€ 2.2bn)
for the quarter ended 30 June, underlying the company's growth
across all of its cereal and snack segments.

Internal net sales growth, which excludes the effect of foreign-currency translation, was 6 per cent and built on growth of 7 per cent in the second quarter of last year, the company said yesterday. Kellogg's North American sales posted growth of 7 per cent. Internal net sales growth was 6 per cent, driven by growth in each of its business segments. The retail cereal business in the region grew by 3 per cent, which the company attributed to research and development programmes introduced during the past year and strong marketing. The retail snacks business posted 9 per cent internal sales growth. Each of the cookie, cracker, and wholesome snack businesses posted good growth, the company reported. The frozen and specialty businesses posted 8 per cent net sales growth. The frozen food, foodservice and vending, and convenience and drug businesses all posted growth. Kellogg's international sales reported second quarter net sales growth of 13 per cent. Once the effect of currency translation into US dollars is taken into effect, the rate falls to 6 per cent. The Latin American region posted internal sales growth of 8 per cent. Both the cereal and snacks businesses contributed to the results. Internal net sales in the European business increased by 7 per cent, as the result of mid single-digit growth in the cereal business and double-digit growth in the snacks business, the company stated. Meanwhile the Asia Pacific region posted an internal net sales decline of 1 per cent. Gross margin in the second quarter expanded by approximately 120 basis points as the result of operating leverage, cost-savings, and a favorable impact from pricing actions, the company stated. The margin growth benefited from lower marketing spend a difference in the amount of up-front costs, and cost-reductions. This performance led to gross profit growth of 11 per cent, the company stated. Operating profit grew by 12 per cent to $518m in the second quarter. Internal operating profit growth, which excludes the impact of foreign exchange, was 9 per cent. "The company achieved these results despite a significant increase in cost inflation and a double-digit increase in its advertising investment which supported both new and existing brands,"​ Kellogg stated. The company had sales of about $11bn in 2006. Kellogg produces cereal and convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit snacks, frozen waffles, and veggie foods. The Company's brands include Kellogg's, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Morningstar Farms, Austin, Famous Amos, and Kashi. Kellogg has manufacturing plants in 17 countries.

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