Carlos Gutierrez, CEO of Kellogg, has warmed that the company will face painful times ahead before it emerges stronger. The US cereals group posted disappointing fourth-quarter results on Thursday (25 January).
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Gutierrez was hopeful that the change in its business strategy, including focusing its resources on the US, spending more in marketing to build specific brands and changing its sales infrastructure, would be absorbed by the company over three quarters of this year. Kellogg is also seeking diversify away from its dependence on cereals with the acquisition of Keebler. In October, Kellogg agreed to buy the second-largest US cookie maker for US$4.4bn.
“This will create some near-term pain; but it will make us a stronger company,” said Mr Gutierrez. He added that the Keebler deal should be closed by early March.
In the fourth quarter, Kellogg net earnings were US$142.7m, or 35 cents per share, against US$136.7m, or 34 cents. This beat expectations by 2 cents, and excluded a restructuring charge of US$49.5m after tax. The company cited inventory cuts by retailers and a fall in profits in its convenience foods for the disappointing fourth-quarter results Mr Gutierrez also said he was concerned over the sluggish growth in the critical cereals category.
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