by Holly LaFon
Kellogg Co. shares climbed Thursday after the cereal maker, with growth in its offshore markets helping offset softening domestic demand, turned in stronger-than-expected third quarter earnings.
In the latest quarter, net income dropped 31 percent to $224 million, or 62 cents per diluted share, from $224 million, or 90 cents per diluted share, in the year-ago quarter. Revenue declined by 2.1 percent, to $3.6 billion from $3.7 billion in last year’s quarter.
Excluding various one-time items, Kellogg’s said its earnings per share were 94 cents, 2 cents higher than analyst estimates.
The producer of such cereals as Rice Krispies and Frosted Flakes has in recent years had to adjust its strategy and products as fewer people sit down to eat traditional breakfast. Kellogg’s U.S. sales of morning foods fell 4.7 percent, and U.S. snack foods fell 4.2 percent in the quarter.
“Our international business did well in the quarter, although we continued to face the challenges in developed regions and categories that we’ve seen all year,” Kellogg’s CEO John Bryant said.
Last November, Kellogg launched the largest restructuring program in its history, known as “Project K,” to cut costs and free up cash for investments in other businesses.
The company expects the four-year plan to result in improved revenue, gross margin, operating margin and cash flow. But it is taking a toll on current results. In the most recent quarter, restructuring costs lowered earnings per share by 19 cents.
In New York Stock Exchange trading Thursday, Kellogg shares rose $1.57, or 2.5 percent, to close at $64.04.