Kellogg and Sara Lee beat Street
(Reuters) - U.S. food companies Kellogg Co (K.N) and Sara Lee Corp SLE.N reported better-than-expected quarterly results on Thursday and stood by their 2012 outlooks even as both companies go through significant changes.
Kellogg, the world's top cereal maker with brands including Corn Flakes and Rice Krispies, is investing heavily in its manufacturing after too many job cuts in recent years left it vulnerable to problems including food safety issues.
Sara Lee is preparing to split into two companies, one focused on North American meat brands like Jimmy Dean, Ball Park and Hillshire Farm and one focused on international coffee and tea brands including Senseo and Douwe Egberts.
Sara Lee said it remains on track to complete the spin-off of its drinks business in its fourth quarter. Newly named CEOs of both businesses are assessing further changes in each business to strengthen their organizations, Sara Lee said.
Following "course corrections" that markedly improved performance in Sara Lee's meat business, and an "upward trend" in the coffee and tea business, Sara Lee affirmed its full-year forecast calling for earnings per share of 89 cents to 95 cents and sales of $7.9 billion to $8.15 billion.
Likewise, Kellogg stood by its 2012 sales forecast, which calls for growth of 4 percent to 5 percent, above its long-term annual targets, as it expects benefits from new products and price increases.
Kellogg said it expects full-year operating profit to be flat or up slightly due to continued investments. Earnings per share are expected to grow between 2 percent and 4 percent, lifted by share buybacks and other factors.
In November Kellogg said it was spending an additional $70 million in the second half of 2011 to improve its manufacturing.
Last June, U.S. regulators found listeria at a Kellogg plant producing Keebler and Famous Amos cookies and warned the company about "significant violations" of good manufacturing practice regulations. That followed a recall of millions of boxes of cereal in 2010 due to an unusual smell and a recall of some Keebler cookies and Special K protein bars in 2009.
"While we recognize that 2011 and 2012 are transition years, we are confident that we are making the right investments in the company, and in future growth," said Kellogg Chief Executive John Bryant.
Net income was $232 million, or 64 cents per share, in Kellogg's fourth quarter, up from $189 million, or 51 per share, a year earlier. Net sales rose 5 percent to $3.02 billion.
Analysts, on average, were expecting earnings of 62 cents per share on sales of $2.99 billion, according to Thomson Reuters I/B/E/S.
Kellogg shares were up 4 percent to $51.29 while shares of Sara Lee were up 3 percent at $19.60 in early trading on the New York Stock Exchange.
Earlier on Thursday, European consumer goods group Unilever (ULVR.L) (UNc.AS) said 2012 would be a difficult year as growth in emerging markets slows and demand in Europe and North America stays flat at best.
(Reporting By Martinne Geller in New York; editing by Mark Porter and Dave Zimmerman)
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