UPDATE: ASIA-PACIFIC: Kellogg eyes JVs, acquisitions
Kellogg chief David Mackay today (26 July) declared his confidence in the company's business in Asia-Pacific despite its sales in the region falling over the last three months.
Kellogg saw sales from its Asia-Pacific business - which includes Asia, Australia and South Africa - dip 1% during the second quarter of the year.
The company's performance there was the only weakness in a set of robust second-quarter figures. For the three months to the end of June, Kellogg saw operating profit jump 12% on the back of a 9% increase in sales.
Mackay, Kellogg's president and CEO, said "weakness" in the company's snack business in Australia had been the key factor in the decline in sales in Asia-Pacific. Sales in South Africa and Asia had risen by "double-digits" during the quarter, he said.
Mackay said Kellogg is looking at possible joint ventures or acquisitions to boost its presence in the region.
"We do believe that South Africa and Asia represent a significant opportunity and there are some markets across the geography where we do not have a presence," Mackay said.
"We've done a lot of work looking at it and when we've got something that's accretive to shareholders in the short term, we will talk about it. The thrust of our strategy in developing markets is either through joint ventures or acquisitions… similar to bolt-on type acquisitions."
During the second quarter, Kellogg's international sales rose by 13% with growth in Europe and Latin America. The company's sales in North America grew by 7% thanks to growth across the business.
For the first half of the year, Kellogg posted an 8% rise in profits for the six months to the end of June, on the back of 9% increase in revenue. Operating profit reached US$1.02bn; net sales climbed to just under $6bn.
"We now enter the second half of the year with additional confidence and the flexibility to increase our investment in future growth," Mackay said.
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