Corn Flakes maker Kellogg reported a better-than-expected quarterly profit, helped by cost-cutting and lower cost of goods sold, but sales fell for the seventh straight quarter. The company, whose products also include Pringles chips and Cheez-It crackers, raised its 2016 adjusted earnings forecast to $4.16-$4.23 per share in constant currency terms, from $4.11-$4.18.
Kellogg, responding to weak demand for its processed foods, launched “Project K” in 2013 to save up to $475 million annually by 2018, by cutting jobs and optimizing production.
The company also rolled out zero-based budgeting, under which managers have to justify expenses for each budget period.
Net income attributable to Kellogg rose to $292 million, or 82 cents per share, in the third quarter ended Oct. 1, from $205 million, or 58 cents per share, a year earlier.
Excluding items, the company earned 96 cents per share, beating the average analyst estimate of 87 cents per share, according to Thomson Reuters I/B/E/S.
Net sales fell 2.3 percent to $3.25 billion, missing analysts’ average estimate of $3.28 billion.
Sales fell due to weak demand for breakfast cereal in the United States and the UK.
The company’s shares were up 2.2 percent at $76.80 in light premarket trading on Tuesday. Up to Monday’s close, the stock had risen 4 percent since the start of the year.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D’Couto)