Kellogg’s swings to profit in Q4 2013

US-based food company Kellogg’s has swung to a profit of $818m for the fourth quarter of 2013, compared to a loss of $32m in last year’s period.

Net earnings during the quarter were driven by a benefit from mark-to-market adjustments associated with Project K and the acquisition of Pringles.

For the quarter that ended 28 December 2013, net sales dipped by 1.7% to $3.5bn, compared with $3.56bn a year ago due to a dip in cereal sales in the US.

Kellogg’s president and CEO John Bryant said, "Our Pringles business had an excellent year in 2013, although we continue to face challenges in some of our developed cereal businesses.

"We are executing our strategy, and we are also progressing very well with Project K, our four-year efficiency-and-effectiveness programme."

Bryant added, "Our expectations are that, over time, Project K will begin to provide us the fuel we need to drive growth in our categories, and across our businesses, in the years to come."

Launched in November, Project K is a four-year efficiency and effectiveness programme to achieve cost savings and involves plan to cut 7% of Kellogg’s workforce by 2017.

For the full year, net sales increased 4.2% to $14.8bn, compared with $14.19bn in the previous year, while income rose to $1.8bn from $961m.

For fiscal 2014, Kellogg’s expects its internal net sales to grow approximately 1% and the internal operating profit to increase up to 2%.

Cash flow is expected to be around $1.1bn including all capital spending and the additional cash required by Project K.

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Image: Kellogg World Headquarters. Photo: courtesy of Battle Creek CVB.