About Us  |   Contact Us  |   Register  | Login  |   

Follow HedgeWorld on Twitter HedgeWorld on LinkedIn






HEDGEWORLD NEWS
Search the News
Advanced News Search
HedgeWorld News by Region
United States / Americas
Europe
Asia / Australia
International
HedgeWorld News Sections
Managed Futures & Derivatives
Daily News
Regulatory/Legal
Strategies/Analysis
Technology
Opinion
People
Indexes
Other News Features
Most Popular
LexisNexis Headlines
Reuters Headlines
The HedgeWorld Blog
Alternative Advantage Daily Newsletter
RSS Service
Sign Up For Email News Alerts
Reprints



WRAPUP 2-Kellogg, Hillshire sales light as Americans skip sweets
05/02/2013 Email this story  |  Printable Version

* Kellogg, Hillshire both miss quarterly revenue estimates

* Kellogg stands by '13 view; Hillshire guides near high end

* Both companies cite weakness in desserts

* Kellogg, Hillshire shares fall 3 pct in afternoon trading

By Martinne Geller

May 2 (Reuters) - Kellogg Co and Hillshire Brands reported weaker-than-expected quarterly sales on Thursday, as budget-conscious U.S. consumers cut back on desserts, sending the food companies' shares lower.

Kellogg, which makes Keebler cookies, posted a quarterly profit in line with estimates and stood by its full-year outlook. Hillshire, which owns Sara Lee frozen cakes, reported a better-than-expected profit and said 2013 earnings would be at the high end of its forecast.

Still, a 21 percent gain in food sector stocks this year has given food makers very high multiples, which demands better performance. Investors have been enticed by the promise of high-yield investments and hope for more deal-making following the buyout of H.J. Heinz Co and speculation of a merger between PepsiCo and Mondelez.

Specifically, Kellogg shares rose nearly 16 percent and Hillshire shares rose more than 26 percent through Wednesday, fueling expectations of strong results.

"When you go on big runs like that, you have to beat and raise guidance," Edward Jones analyst Brian Yarbrough said, adding that for Kellogg, "This is just a ho-hum quarter, so I think there could be a little profit-taking."

Kellogg sales rose to $3.86 billion, but missed analysts' average estimate of $3.94 billion, according to Thomson Reuters I/B/E/S.

Shares of Kellogg, which also makes Corn Flakes cereal and Eggo waffles, fell 2.8 percent to $62.81 on the New York Stock Exchange, while Hillshire, which also makes Ball Park hot dogs and Jimmy Dean sausages, fell 3 percent to $34.49.

Hillshire, which separated last year from D.E Master Blenders 1753 and is now seen as a potential takeover target, reported quarterly revenue of $924 million, which was below analysts' average estimate of $953.3 million, according to Thomson Reuters I/B/E/S.

SKIPPING DESSERT

Kellogg said net income was $311 million, or 85 cents per share in the first quarter, down from $351 million, or 98 cents per share, a year earlier.

The decline in profit was largely due to the rising cost of commodities, Kellogg said, adding that the first quarter included most of the inflation it expects for the full year.

Excluding items including a hit from the devaluation of Venezuela's currency, earnings were $1.02 per share, in line with analysts' average estimate, according to Thomson Reuters I/B/E/S.

Kellogg Chief Executive John Bryant said the one business that was softer than he would like was cookies, where consumption fell 5.5 percent in the quarter.

For Hillshire, sales in its foodservice business declined due to weakness in frozen bakery products.

"Consumers continued their retreat from desserts amidst challenged household budgets," Sean Connolly, Hillshire CEO, said on a conference call.

Slow sales of cookies and sweets could bode poorly for Mondelez, which will report quarterly results next week.

Kellogg, the world's biggest cereal maker, said it was on track to meet its goal for the full year, which calls for profit growth of 5 percent to 7 percent. That would translate to earnings of $3.82 to $3.91 per share.


Email This Story to a Friend   |   Display Printable Version of This Story

Story Copyright © 1999-2014 Reuters HedgeWorld All rights reserved.

HedgeWorld News is sponsored by:






Lipper    Privacy   User Policy  Legal Disclosure Copyright/DMCA  Site Map    FAQ    Glossary  Thomson Reuters for Hedge Funds
All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of HedgeWorld content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. HedgeWorld is a registered trademark of Thomson Reuters.