US cereal maker Kellogg Company has reported lower fourth-quarter net earnings, due to investment in brands and assets write-offs.
The Battle Creek, Michigan-based company posted net earnings of US$188.0m, or 46 cents per share, for the fourth quarter to 27 December, compared to $191.0m, or 47 cents per share, a year earlier. Fourth-quarter net sales rose to $2.14bn from $1.98bn in the year-ago period.
Kellogg said the expected earnings decline was due to a significant increase in brand building investment, as well as the absorption of substantial asset write-offs and up-front costs related to cost-savings initiatives.
For the full year, Kellogg posted net earnings of $787.1m, or $1.92 per share, compared to $720.9m, or $1.75 per share, in the previous year. Full-year net sales rose 6% to $8.8bn.
“This was an outstanding year, featuring momentum and reinvestment,” said Carlos Gutierrez, Kellogg’s chairman and chief executive officer.
“We remained focused on our strategy and our financial model. We delivered solid sales growth in every quarter and across our portfolio. We invested for future growth by increasing advertising and promotion and absorbed costs related to several cost-savings projects. We exceeded our initial earnings forecast, and our strong cash flow was used to dramatically improve our financial flexibility. All of the above should contribute to dependable, sustainable growth in the years to come,” he added.