Kellogg has reported a 17.8% drop in year-on-year operating profit in its 2018-19 full-year results, negating a third consecutive year of net sales growth.
According to Kellogg, the company’s full-year operating profit fell to $1.40 billion from $1.71 billion in 2017-18, as the business was “impacted by the absence of results from its divested businesses and higher one-time charges”.
Kellogg divested several businesses in 2019, as it aimed to refocus on its core operations. The most significant divestiture was the sale of its cookies business and a range of fruit and fruit-flavoured snacks, pie crust, and ice cream cone brands to Ferrero Group for approximately $1.3 billion.
However, Kellogg did achieve its primary objective of net sales growth, as it reported net sales of $13.57 billion for the full year, a 0.2% increase compared to last year’s annual results. Kellogg attributed the rise to improved organic growth and the consolidation of Multipro, the company’s distributor in West Africa.
Kellogg North America – the company’s largest division – reported a full-year net sales decline of 3%, as the growth of snacks and frozen food brands such as Cheez-It, Pringles and Pop-Tarts did not make up for a decline in cereal sales. The division’s full-year operating profit also fell by 13%.
Despite this, the company reported strong growth figures in its Kellogg Asia Pacific, Middle East and Africa’s (“AMEA”) unit, as the division recorded a year-on-year net sales rise of over 20%, thanks to the aforementioned integration of Multipro’s business, the growth of Kellogg branded noodles in Africa and the Middle East, and the growth of Pringles and cereal sales across Asia and Australia.
In the fourth quarter of the year, the company registered net sales of $3.22 billion, a year-on-year decline of 2.8%, though the company’s year-on-year Q4 operating profit did increase 10.5% to $360 million.
Commenting on the results, Steve Cahillane, Kellogg Company’s chairman and CEO said: “In 2019, our primary financial objective was to deliver sales growth, and we did exactly that.
“By executing our Deploy For Growth strategy, we posted sales growth for the full year, across key brands and categories. Importantly, we delivered this growth and our other financial commitments while realigning our organisational structure, reshaping our portfolio, and investing in our supply chain.
“These actions are building a foundation for steady, reliable growth in sales, profit, and cash flow for years to come.”
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