Kellogg's 2008 view lags Street

By Nichola Groom

LOS ANGELES (Reuters) - Kellogg Co (K.N: Quote, Profile, Research, Stock Buzz) reported a 9 percent rise in quarterly profit on Monday but forecast 2008 earnings below Wall Street estimates due to higher commodity costs and expenses for reinvesting in its business.

Shares of the world's biggest maker of breakfast cereal fell 4 percent following the announcement.

Like many food companies, the maker of Frosted Flakes cereal, Eggo waffles and Keebler cookies has been hit by soaring prices on wheat and other ingredients, employee benefits and fuel. It also boosted spending on advertising.

The company also said its 2008 calendar will include a 53rd week, which is expected to add 5 cents a share to its earnings. That windfall is expected to be used to invest in its business or speed up growth in emerging markets, the company said.

Kellogg also said that next year it plans to spend about 14 cents a share in "upfront costs" to cut its long-term expenses.

Even with the benefit of the weaker dollar, which boosts the dollar value of sales in other currencies, the company still faces uncertainty in 2008, Morningstar analyst Gregg Warren said.

"They're going to get some benefit from international, but especially when wheat is your big cost, you don't want to say we're going to do stellar numbers next year and it's going to be fantastic, because you really don't know," Warren said.

Third-quarter net income was $305 million, or 76 cents per share, compared with $281 million, or 70 cents, a year ago. Analysts on average forecast 73 cents, said Reuters Estimates.