* EPS 53 cts ex-recall charge; Wall St EPS view 50 cts
* Sees high-single digit 2009 EPS growth, ex-currency
* Says currency could cut 2009 EPS by 9 pct
* Shares dip 0.3 percent
(Adds analyst comment, currency forecast)
By Brad Dorfman
CHICAGO, Feb 5 Kellogg Co (K.N), the world's
largest cereal maker, posted higher-than-expected quarterly
profit on Thursday, though it also cautioned that 2009 earnings
could be hit hard by the stronger U.S. dollar.
The maker of Kellogg's Frosted Flakes and Keebler cookies
said earnings per share could be reduced by as much as 9
percent at current exchange rates, due to the stronger dollar
in relation to currencies like the British pound, euro, and
Australian dollar. Shares of the company were down slightly in
On Wednesday, rival food maker Kraft Foods Inc KFT.N cut
its 2009 earnings forecast, in part due to the impact of the
stronger dollar, which reduces the dollar value of sales booked
outside the United States. [ID:nN04515573]
The trend has strengthened among food makers with
significant overseas exposure, in some cases offsetting an
easing in commodity costs that had been a major issue for the
sector in the past two years.
"It shouldn't be a surprise that many of the multinational
food companies are going to see most of their earnings gains
wiped out by currency," said Edward Jones analyst Matthew
Arnold. He also cited rising pension costs as pressuring
But he also noted that Kellogg stood by its earnings
forecast, excluding the impact of currency fluctuations and said
on the whole the company has produced consistent earnings
Kellogg still expects a high single-digit increase in
earnings per share, excluding the currency impact. Kellogg gets
about one-third of its sales from outside North America.
PEANUT RECALL TAKES TOLL
Kellogg fourth-quarter profit rose to $179 million, or 47
cents a share, compared with $176 million, or 44 cents a share,
a year earlier. Results for the 2008 quarter include a charge of
6 cents a share for a recall of peanut-related products.
Excluding the recall charge, earnings were 53 cents a
share. Analysts on average forecast 50 cents, according to
Kellogg and other food companies have had to pull some
foods containing peanut products due to a salmonella outbreak
at a Peanut Corp of America plant, which supplies peanut paste
and other ingredients.
The 2009 forecast includes another 6 cents related to the
peanut product recall, the company said.
Sales rose 5 percent to $2.93 billion. Excluding the impact
of the stronger dollar, as well as an extra week in the quarter
and acquisitions, sales rose 3 percent.
The company estimated that it lost 1 percentage point of
market share in the U.S. cereal market in the fourth quarter,
and said it is continuing to see lower prices from a
Kellogg expects commodity costs to rise 4 to 5 percent this
year, the company said during a conference call with analysts.
That is still well below the 10 percent increase it saw in 2008,
when prices for wheat, corn and other commodities soared.
The company also said it expects 2009 sales to rise 3 to 4
percent excluding the impact of currency exchange rates and
other items, rather than the mid-single digit increase it
Kellogg shares were down 12 cents or 0.3 percent at $43.37
on Thursday morning on the New York Stock Exchange, after rising
as much as 1.7 percent earlier in the day.
(Reporting by Brad Dorfman, editing by Dave Zimmerman and