Profits at Kellogg Co slumped more than 8% in the third quarter as sales at the US cereal manufacturer missed expectations, falling 8.5% to $3.33bn (£2.16bn).
The Frosted Flakes and Special K maker blamed the decline on currency translation as the strong dollar squeezed international sales. However, Kellogg has struggled, like many of its big packaged food producer rivals, as consumer in the US increasingly seek healthier options at meal times.
Kellogg added that on a constant currency basis revenues in the three months to 3 October actually rose 1% thanks to growth in Latin America, Asia, Canada, and the US specialty channels business.
Earnings for the quarter decreased 8.5% to $205m (£133.1m) compared with a year ago as a result of costs related to the ‘Project K’ turnaround plan. The group is aiming to slash 7% of its global workforce, as well as closing plants, as it seeks to save hundreds of millions of dollars a year by 2018.
“The company’s results for the third quarter continued the momentum that we saw earlier in the year,” chairman and CEO John Bryant said. “Our developing and emerging-market businesses performed well, and the trends in our developed businesses continued to show improvement over last year. Our major productivity programs continue to progress well and we remain on track to meet our objectives for 2015 and 2016.”
Kellogg is counting on emerging markets to help turn around the business in coming years, entering a $450m joint venture with Tolaram Africa Foods and acquiring Egyptian cereal company Mass Food Group for $50m in September.
Net sales soared 23.9% in Latin America, by 2.2% in Asia Pacific and 2.1% in Europe, excluding currency headwinds, in the third quarter.
However, European turnover fell 12.8% when costs of currency exchange were included. The Grocer reported last month that UK profits had slumped 17% to £15.8m in the year to 3 January 2015 consumer demand for its cereals waned.
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