Kellogg Company (K) has reported 42.44 percent jump in profit for the quarter ended Oct. 01, 2016. The company has earned $292 million, or $0.82 a share in the quarter, compared with $205 million, or $0.58 a share for the same period last year. On an adjusted basis, earnings per share were at $0.96 for the quarter compared with $0.85 in the same period last year.
Revenue during the quarter went down marginally by 2.25 percent to $3,254 million from $3,329 million in the previous year period. Gross margin for the quarter expanded 181 basis points over the previous year period to 38.84 percent. Total expenses were 87.40 percent of quarterly revenues, down from 89.97 percent for the same period last year. This has led to an improvement of 257 basis points in operating margin to 12.60 percent.
Operating income for the quarter was $410 million, compared with $334 million in the previous year period.
"Our third quarter earnings exceeded our expectations, on the strength of good operating margin expansion and a favorable tax rate," said John Bryant, Kellogg Company's chairman and chief executive officer. "Our sales were affected by trade-inventory reductions in U.S. cereal, a challenging U.K. market, and portfolio transformations that have taken longer than anticipated to execute. However, we did realize growth in U.S. Snacks, U.S. Specialty Channels, Latin America, and Asia-Pacific, and every Region posted operating-profit margin expansion. Most importantly, we continued to make progress against priorities that will enable improved performance in Q4 and in 2017."
Operating cash flow improves
Kellogg Company has generated cash of $1,021 million from operating activities during the nine month period, up 5.37 percent or $52 million, when compared with the last year period.
The company has spent $381 million cash to meet investing activities during the nine month period as against cash outgo of $963 million in the last year period.
The company has spent $521 million cash to carry out financing activities during the nine month period as against cash outgo of $110 million in the last year period.
Cash and cash equivalents stood at $346 million as on Oct. 01, 2016, up 15.72 percent or $47 million from $299 million on Oct. 03, 2015.
Working capital remains almost stable
Working capital of Kellogg Company was negative $1,705 million on Oct. 01, 2016 compared with negative $1,719 million on Oct. 03, 2015. Current ratio was at 0.66 as on Oct. 01, 2016, down from 0.66 on Oct. 03, 2015.
Cash conversion cycle (CCC) has decreased to 13 days for the quarter from 22 days for the last year period. Days sales outstanding went up to 41 days for the quarter compared with 39 days for the same period last year.
Days inventory outstanding has decreased to 28 days for the quarter compared with 53 days for the previous year period. At the same time, days payable outstanding went up to 82 days for the quarter from 69 for the same period last year.
Debt remains almost stable
Kellogg Company has recorded a decline in total debt over the last one year. It stood at $7,888 million as on Oct. 01, 2016, down 0.77 percent or $61 million from $7,949 million on Oct. 03, 2015. Total debt was 51.49 percent of total assets as on Oct. 01, 2016, compared with 51.22 percent on Oct. 03, 2015. Debt to equity ratio was at 3.59 as on Oct. 01, 2016, up from 2.97 as on Oct. 03, 2015.
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