Kellogg, the Special K-to-Pringles maker, today (4 May) reported first-quarter earnings that beat analyst forecasts but moved to cut its forecast for its annual underlying sales.

Kellogg Q1 group results

Source: Kellogg SEC filings

The US-based food giant saw its reported net income jump by almost 50%, helped by the company lapping one-off costs it booked in the first quarter of 2016.

Kellogg's adjusted earnings per share was US$1.06, beating the analyst consensus forecast of $0.99.

The Coco Pops and Frosties maker reported operating profit down 17.6% due to higher charges year-on-year from its Project K restructuring programme.

However, Kellogg sought to emphasise its currency-neutral comparable operating profit, which strips out those costs, as well as factors including M&A and exchange rates, increased, pointing to "efficiencies" in its cost of goods sold and its selling, general and administrative expenses.

Kellogg's reported net sales fell 4.1%, with chairman and CEO John Bryant admitting the company had "got off to a slow start" on its top line.

Kellogg Q1 currency-neutral, comparable net sales

Source: Kellogg SEC filings

Kellogg's currency-neutral comparable net sales, which strips out factors like M&A and exchange rates, fell 4.4%.

The company pointed to "softness in underlying consumption, particularly early in the quarter", as well as the timing of shipments from the fourth quarter of last year, which it said resulted in a reduction in trade inventory in the opening three months of 2017.

Kellogg's US morning foods, US snacks and European divisions all saw underlying sales fall. Its four other units - US speciality, the North America "other" arm - taking in frozen foods, Kashi and Canada - Latin America and Asia Pacific reported growth.

The group now expects its currency-neutral comparable net sales to fall by about 3%, compared to its earlier forecast of a decline of 2%.

Kellogg Q1 reported operating profit margin

Source: Kellogg SEC filings

The company's operating profit margin fell year-on-year, with the costs from the Project K programme weighing on margins.

However, Kellogg reported growth in its underlying - or currency-neutral "comparable" - operating profit margin from its four geographic divisions, citing its work on cost of goods sold and SG&A expenses.

Kellogg Q1 segment net sales

Source: Kellogg SEC filings

The sales performance of Kellogg's units was mixed, with three seeing improvements but four reporting declines.

Kellogg said it had seen "an industry-wide softening of consumption trends" that impacted "most of our North America segments in January and February", although it also revealed reductions in trade inventory from the fourth quarter of 2016.

On a reported basis, Kellogg's sales in Europe were affected by exchange rates but the business also reported a decline in underlying sales amid "a persistently challenging environment in the UK". The company also said talks with customers on price, though "since resolved", had affected its business in the region during the quarter.

Kellogg's sales in Latin America were boosted by its acquisition of a controlling stake in Brazilian snack maker Parati Group last year. Its underlying sales were down thanks again to reductions in trade inventory.

In Asia Pacific, sales were up on a reported and underlying basis, with Kellogg highlighting the performance of Pringles across the region.

Kellogg Q1 segment operating profit

Source: Kellogg SEC filings

?The result to call out when looking at Kellogg's operating profit by segment is the loss of $44m from its US snacks business, due in part to a fall in sales but also the Project K work the company made within the unit.

Profits from Kellogg's core US morning foods business rose, with the company citing "productivity initiatives".

Shares in Kellogg were up 0.73% at $69.44 at 10:01 ET.