Recently, the company declared a dividend of $0.375/share, payable on September 15, 2009, to shareholders of record at the close of business on September 1, 2009. This is the 339th consecutive quarter since 1925 that Kellogg Company has paid a dividend. The current yield based on the new dividend is 3.15%.
The world's largest cereal maker said its profit rose 13 percent to $353 million, or 92 cents per share for the quarter, from $312 million, or 82 cents per share last year.
Kellogg, which makes Frosted Flakes, Cheez-Its, Eggo waffles and other popular foods, said commodity prices for key ingredients stabilized, which helped its margins, though the stronger dollar hurt the company's sales.
Revenue fell 3 percent to $3.23 billion from $3.34 billion last year.
The results beat analyst expectations of 83 cents per share in profit, as measured by the Thomson Reuters poll, but fell short of analysts' average revenue forecast of $3.27 billion. Analysts estimates typically exclude one-time items.
Kellogg saw strong sales of cereal products, particularly in North America where the category grew 4 percent. North American frozen and specialty channels rose 5 percent and North American snacks rose 3 percent.
Internationally, sales fell 13 percent but rose 2 percent excluding the stronger dollar.
The Battle Creek, Mich.-based company said it is on track to save $1 billion annually by the end of 2011. It now expects to take a charge of 26 cents per share for the cost-cutting plan in 2009, up from the 14 cents it originally expected.
Some of the savings will be reinvested in advertising, which the food maker said it plans to step up in the near term. Kellogg also announced Thursday that it will modify some of its popular products with the addition of fiber to lines like Fruit Loops.
Kellogg's widely recognized brands have proved resilient during the economic downturn and CEO David Mackay said that the company expects that strength to carry through the year.
Kellogg now expects its earnings per share to grow 8 percent to 10 percent in 2009, sharpening its earlier forecast of high single-digit growth.
That implies earnings of $3.23 to $3.29 per share -- or $2.97 to $3.03 excluding the 26 cents per share related to its cost cutting plan. Analysts predict annual earnings of $3.11 per share.
It affirmed guidance of 3 percent to 4 percent growth in revenue, excluding the effect of the stronger dollar.
Standard & Poor's reiterated its "hold" rating on Kellogg and raised its 2009 earnings estimate to $3.08 from $3.05 and its 2010 estimate to $3.36 from $3.35.
S&P Packaged Foods Analyst Tom Graves said he expects the cereal category to benefit from more people eating at home during the recession and he expects cost pressures to ease in the second half of the year. But he expects the dollar's strength to keep cutting into Kellogg's profit.
Shares of Kellogg fell 38 cents to close at $47.66.
Disclosure I am long K shares.
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