Kelloggs third quarter results were hit by falling sales in the US and internationally

Kellogg's third quarter results were hit by falling sales in the US and internationally

Falling sales in the US and overseas have hit third-quarter profits at US food group Kellogg.

The cereal giant said today (2 November) that net earnings dropped 6% to US$338m for the quarter to 2 October.

Kellogg's operating profit fell 4.5% to US$541m. Operating profit in North America dropped 3% due to lower sales and higher advertising costs.

The Crunchy Nut maker's operating profit from its overseas businesses decreased 11% due to lower earnings in Latin America and Asia Pacific.

Kellogg's top-line also worsened during the quarter. The company's reported net sales slid 4% to $3.2bn on the back of a 3% fall in sales in North America and a 2% decrease in international sales.

"We are disappointed with our third quarter performance which was due to softness in our businesses as well as a tough operating and deflationary environment driven by intense competition," said CEO David Mackay. "2010 has been a challenging year, and as a result, two weeks ago, we lowered our full-year guidance to reflect the operating challenges."

For 2011, Kellogg expects internal net sales to grow in the "low single-digits", in-line with its long-term growth targets.

However, the company said internal operating profit is expected to be flat or, at worst, down 2% reflecting its need "to reset incentive compensation levels". Earnings per share on a currency-neutral basis are expected to grow by low single-digits.

Click here for the complete statement from Kellogg and click here for insight into the company's conference call with Wall Street analysts.