Kellogg Co., the largest U.S. maker of breakfast cereal, increased its forecast for sales growth for the year after raising prices on some products.
So-called internal sales growth, which excludes currency shifts, will be as much as 4 percent in 2011, Kellogg said today. The Battle Creek, Michigan-based company previously predicted growth of no more than 3 percent. Fourth-quarter profit rose to 51 cents a share, meeting analysts’ projections.
Chief Executive Officer John Bryant has boosted prices on many cereals to help make up for surging ingredient costs, joining rivals like General Mills Inc. Bryant, promoted to the top job last month, is working to revive North American cereal sales after a recall that pushed revenue in that business down 5 percent last year.
"It’s a welcome sign to see cereal players take pricing higher as that is what needs to happen," Matt Arnold, an analyst at Edward Jones & Co., said in an interview. The St. Louis-based analyst recommends buying the shares.
The shares advanced $1.05, or 2.1 percent, to $51.41 at 10:01 a.m. in New York Stock Exchange composite trading. They had dropped 9 percent over the past 12 months before today.
Fourth-quarter net income increased 7.4 percent to $189 million from $176 million, or 46 cents a share, the company said in a statement. Revenue fell 1.4 percent to $2.86 billion last quarter, capping the second straight year sales have slumped.
The company’s products include Froot Loops cereal and Keebler cookies. Bryant has introduced new products like Crunchy Nut cereal in North America to lure shoppers. Bolstering sales may help the 45-year-old executive partly make up for rising costs for ingredients like wheat and sugar.
Kellogg said 2011 earnings per share would probably be $3.33 to $3.40, excluding the impact of foreign currency fluctuations. Currency swings will probably add 6 cents to that forecast, according to the company. Analysts surveyed by Bloomberg anticipated $3.45 on average.
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