Kellogg hit by weak demand in the US

Continued weak demand for cereals and snacks in the United States weighed on Kellogg, the maker of Corn Flakes, which reported a bigger-than-expected drop in quarterly net sales on Tuesday.

Sales in the company’s US snacks business – its biggest – fell 1.5 per cent, while sales in its US morning foods business, which includes cereals, fell 2.6 per cent.

Sales in both businesses fell for the third straight quarter, while total net sales posted their eighth decline in nine quarters.

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The company also said it was expecting earnings per share of 6 per cent to 8 per cent in 2016, excluding impacts from currency and acquisitions.

JP Morgan analyst Ken Goldman called the results “slightly negative,” noting that 2016 earnings per share guidance was lower than expected and that revenue growth for the year may be closer to the lower end of the company’s forecast of 1 per cent to 3 per cent, excluding currency and acquisitions.

Kellogg has been working to make its products more attractive to consumers, who are becoming increasingly conscious of what goes into their food and where it comes from.

The company is using savings from a cost-cutting programme to launch healthier products such as granola and muesli in new markets.