BATTLE CREEK, Mich. (AP) — Cereal maker Kellogg Co. said Thursday that its fourth-quarter net income rose 23 percent as its investments in its supply chain paid off and higher revenue from North America helped offset weakness elsewhere.
Results beat expectations and shares rose 3 percent in premarket trading. The improvement is a sign that changes Kellogg made following a massive cereal recall and manufacturing problems in its waffle business are working.
The maker of Frosted Flakes cereal, Eggo waffles and Keebler cookies said Thursday that it earned $232 million, or 64 cents per share, for the quarter ended Dec. 31. That's up from $189 million, or 51 cents per share, in the same quarter last year. Analysts expected 63 cents per share, according to FactSet.
Kellogg's revenue rose 5 percent to $3.02 billion from $2.86 billion last year. Analysts expected $2.99 billion.
Food companies such as Kellogg have offset higher ingredient costs by raising prices and passing along costs to shoppers. In addition, Kellogg has been beset by supply chain problems. The Food and Drug Administration found traces of listeria bacteria at its bakery in Augusta, Ga., last year during an inspection. That followed a major cereal recall the prior year and problems at another plant that led to a shortage of Eggo waffles.
Last quarter the company said it was increasing its investment in its supply chain, and that seems to be working.
North American revenue rose nearly 7 percent to $350 million. That offset lower revenue from Europe and Latin America.
For the full year, net income fell 1 percent to $1.23 billion from $1.24 billion. Revenue rose 7 percent to $13.2 billion from $12.4 billion last year.
Kellogg reaffirmed its guidance of annual revenue up 4 percent to 5 percent with net income, excluding currency fluctuation, up 2 percent to 4 percent.
Shares rose $1.69, or 3.4 percent, to $51 in premarket trading. They're down 7 percent in the past 3 months.