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Post Earnings Coverage as Kellogg's EPS Surged 51%

Upcoming AWS Coverage on Ingredion Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 18, 2017 / Active Wall St. announces its post-earnings coverage on Kellogg Co. (NYSE: K). The Company posted its first quarter fiscal 2017 financial results on May 04, 2017. Cornflakes maker surpassed earnings expectations. Register with us now for your free membership at:

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One of Kellogg's competitors within the Processed & Packaged Goods space, Ingredion Inc. (NYSE: INGR), reported on May 03, 2017, its results for Q1 2017. AWS will be initiating a research report on Ingredion in the coming days.

Today, AWS is promoting its earnings coverage on K; touching on INGR. Get our free coverage by signing up to

http://www.activewallst.com/register/

Earnings Reviewed

Kellogg's revenue for the first quarter ended April 01, 2017 totaled $3.26 billion, down compared to revenue of $3.40 billion in Q1 2017, and below analysts' consensus estimates of $3.28 billion.

Kellogg reported Q1 2017 net income of $262.0 million, or $0.74 per share, up from $175.0 million, $0.49 per share, for Q1 2016. The Company's reported quarter GAAP earnings per share increased by 51% on a y-o-y basis, 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. On an adjusted basis, Kellogg reported EPS of $1.06, beating Wall Street's estimates of $0.99 per share. Non-GAAP, comparable earnings per share, were up more than 10% on a y-o-y basis because of productivity savings and a planned discrete tax benefit, which more than offset the negative impact of currency translation.

Segment Results

During Q1 2017, Kellogg's North America sales fell 4% on a y-o-y basis to $2.29 billion, attributed to an industry-wide softening of consumption trends. The Company also experienced trade-inventory reductions from the previous quarter. The regions volumes decreased 4.9% on a y-o-y basis while price/mix was up 0.5%. North America's operating profit declined to $261 million for the reported quarter compared to $362 million in the prior year's same quarter.

For Q1 2017, Kellogg's sales in Europe fell 14% to $512 million. Currency headwinds impacted sales numbers by 6.5%. In addition to a persistently challenging environment in the UK, Europe's results in the reported quarter were further affected by customer negotiations related to pricing actions. Operating profit declined on a reported basis to $66 million compared to $70 million in Q1 2016, due to sales decline and adverse currency translation, but reported and currency-neutral comparable-basis profit margins continued to increase.

Kellogg's Latin America revenue surged 15% to $222 million. Latin America, reported net sales increased due to the December 2016 acquisition of Parati in Brazil, while currency-neutral comparable net sales were down slightly, as trade-inventory reductions related to distributor transitions offset cereal growth in Mexico and Pringles growth led by Mexico and expansion in Argentina and Chile. Comparable operating profit increased to $33 million in the reported quarter versus $23 million in the year earlier comparable quarter.

During Q1 2017, Kellogg's Asia/Pacific region posted revenues of $232 million, up 7.3% y-o-y, led by strong growth across Asia, and growth across the Region for Pringles. The Company's business in Australia continued to show improvement, increasing its cereal consumption and share. Asia/Pacific increased its operating profit to $22 million compared to $17 million in the prior year's same quarter.

Outlook

For FY17, Kellogg expects revenues to decline approximately 3% on a currency-neutral comparable basis. The Company expects adjusted constant currency earnings in the range of $4.03–$4.09 per share. Adjusting for currency impact, Kellogg's is forecasting adjusted EPS in the band of $3.91 and $3.97. The Company also affirmed its guidance for 2017 cash flow. Specifically, it forecasts cash from operating activities should be approximately $1.6 billion -1.7 billion, which after capital expenditure translates into cash flow of $1.1 billion-1.2 billion.

Stock Performance

At the close of trading session on Wednesday, May 17, 2017, Kellogg's stock price slightly rose by 0.26% to end the day at $70.53. A total volume of 2.52 million shares were exchanged during the session, which was above the 3-month average volume of 2.41 million shares. The Company's shares are trading at a PE ratio of 31.99 and have a dividend yield of 2.95%. The stock currently has a market cap of $24.66 billion.

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SOURCE: Active Wall Street