BATTLE CREEK (AP) -- Kellogg Co.'s fourth-quarter net income climbed 7 percent as the world's biggest cereal maker raised prices.
Many businesses are deciding to boost prices to contend with higher costs. On Wednesday appliance maker Whirlpool Corp. and Swedish rival Electrolux AB both said they were increasing prices because of higher raw material costs.
Consumer product makers Colgate-Palmolive Co. and Procter & Gamble Co. said last week that commodity costs are rising more than they expected, and they are likely to increase prices on some of their products. Kellogg said it raised prices to offset higher ingredient costs.
Kellogg, which makes Frosted Flakes, Pop Tarts, Eggo waffles and other foods, also affirmed that it expects its 2011 earnings to fall below Wall Street expectations.
The company based in Battle Creek, Mich. earned $189 million, or 51 cents per share, during the fourth quarter. This compares with $176 million, or 46 cents per share, a year ago.
The performance met the expectations of analysts surveyed by FactSet.
Revenue for the quarter that ended Jan. 1 dipped 1 percent to $2.86 billion from $2.9 billion, but still topped the average forecast of analysts surveyed by FactSet for revenue of $2.85 billion.
Kellogg's stock rose 32 cents to $50.68 in premarket trading.
North American revenue was flat due to competition in cereal. International revenue fell 4 percent.
For the year, Kellogg's net income rose 3 percent to $1.25 billion, or $3.30 per share, from $1.21 billion, or $3.16 per share, in the prior year.
Annual revenue dropped 1 percent to $12.4 billion from $12.58 billion.
The food product company has said that 2010 was one of its most difficult years as it struggled with lower sales, intense competition and significant food recalls. Its CEO, David Mackay, retired Jan. 1 and was replaced by Chief Operating Officer John Bryant.
Bryant is a 12-year employee of Kellogg who has worked closely with Mackay and isn't likely to upset shareholders with brash moves. Mackay, also Kellogg's president and a board member, is staying through March to aid the transition.
Bryant said in a statement that the company will look to leverage its brands in 2011 and make some operational enhancements to improve its supply chain.
Kellogg still expects 2011 earnings of $3.33 to $3.40 per share. Analysts predict $3.47 per share for the year.
Published: Fri, Feb 4, 2011
