Kellogg profit falls on wheat, advertising costs

CHICAGO (Reuters) - Kellogg Co (K.N: Quote, Profile, Research, Stock Buzz) on Wednesday posted lower quarterly profit, hit by rising costs for wheat and other commodities and increased spending on advertising.

The world's largest breakfast cereal maker said profit fell to $176 million, or 44 cents a share, in the fourth quarter, down from $182 million, or 45 cents a share, a year earlier.

Earnings matched the average analyst estimate compiled by Reuters Estimates.

Like many food companies, the maker of Frosted Flakes cereal, Eggo waffles and Keebler cookies has been hit by soaring prices for ingredients and energy. The company has increased prices and looked for ways to cut costs to try to offset higher commodity costs.

The company said fourth-quarter results included a double-digit increase in advertising investment and significantly higher costs for commodities, energy and benefits as well as up-front investment charges of 3 cents a share, down from 8 cents a share in the year-ago period.

Sales rose 8.1 percent to $2.79 billion. Internal sales, which exclude currency fluctuations and acquisitions, increased 5 percent.

Fourth-quarter North American internal sales rose 8 percent in the cereal business, 2 percent in the snack business and 6 percent in the frozen and specialty channels business.

Kellogg's international business saw internal sales rise 6 percent, driven by a 6 percent gain in Latin America, a 4 percent gain in Europe and a 2 percent gain in the Asia Pacific region.

Strong performance in Japan, South Korea, India and South Africa offset continued weakness in Australia.