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Kellogg stock down after weak Q3 earnings report

The food company's revenue is up, but earnings are down in Q3.

Food shopping
Source: Bloomberg

Kellogg stock dropped after releasing a disappointing thirdquarter (Q3) earnings report. The food manufacturing company delieverd a lackluster revenue report to shareholders.

Kellogg earnings miss mark

Kellogg’s earnings per share (EPS) was $4.34, less than the $4.52 that analysts hoped for in Q3. While earnings per share were down, the corporation’s revenue grew. The companys pfits rose to $3.47 billion, an increase from $3.25 billion in 2017.

The conglomerate said it expected to have a dip in earnings due to additional spending on packaging of compact foods that appeal to customers, like crisps brand Pringles and cracker snack Cheez-its. The investment in the single-serve snacks hurt Kellogg's profits.

Chief executive officer (CEO), Steve Cahillane, said that the commitment to on-the-go snacks is a worthy one to improve Kellogg’s revenue.

‘Despite their near-term impact on profit, we'll continue making these investments in Q4 because we know they are putting us on a path for sustainable growth over time,’ said Cahillane.

The corporation also had a hike in its shipping costs, which made its profits decrease in Q3. Kellogg survived a troubling incident earlier this year when the cereal Honey Smacks was recalled after a salmonella outbreak.

Kellogg’s sweet success

Even though earnings slumped, sales jumped 7% for the food conglomerate’s products. Last year’s acquisition of the protein bar company RXBAR helped Kellogg’s profits surge. Purchases of the RXBAR brand helped the corporation’s strategy of reaching out to consumers who want healthier snacks.

While some customers wanted nutritious protein, others wanted simple sweets. Sales of toaster pastry Pop Tarts and Eggo waffles were up in Q3. Kellogg also found success with its limited edition Unicorn cupcake-based cereal.

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