Kellogg Co. said Friday that its first-quarter profit rose 6%, in line with estimates, but the nation's largest cereal maker warned that second-quarter results could be hurt because it will expand price discounting amid stiff competition.
Kellogg said net income rose to $170.7 million, or 42 cents a diluted share, a penny more than analysts forecast, from $160.6 million, or 38 cents a share. Revenue fell 3% to $1.69 billion, as sales of its Pop Tarts and other convenience foods offset declines in cereal sales. Global volume fell 6% in the quarter.
Chairman Arnold Langbo called the dip in sales "disappointing" and vowed to increase marketing spending for the rest of the year. He declined to discuss specific pricing plans but said the Battle Creek, Mich.-based company will not go overboard on promotions.
Industry competition also may take a bite out of Kellogg's second-quarter results, Langbo warned.
"Depending on competitive conditions and the impact of foreign currency, our results could include a decline in second-quarter earnings per share," Langbo said in a news release.
At a Glance
Other companies reporting earnings, excluding one-time gains and charges unless noted, included:
* Hershey Foods Corp. said first-quarter earnings rose 10% to $75.4 million, or 52 cents a diluted share, from a year ago, matching expectations. Revenue gained 10% to $1.10 billion. The candy maker warned, however, that it would face "significant challenges" in boosting earnings in the second half of the year because year-ago results were so strong.
* Washington Mutual Inc., the nation's largest thrift, said first-quarter earnings rose 29% to $261.8 million, or $1.04 per share, from a year ago, fueled by gains in interest income and fees. The profit, which excludes merger-related charges, beat analysts' estimates of $1 per share. Net interest income rose 8% to $713 million and non-interest income rose 3% to $193.8 million. Washington Mutual is acquiring Irwindale-based H.F. Ahmanson & Co., owner of Home Savings of America, in a transaction it expects to complete later this year. Last year, Washington Mutual acquired Great Western Financial Corp. of Chatsworth.
* Washington Post Co. reported better-than-expected profit of $44.6 million, or $4.40 a diluted share, in the first quarter, down 6% from a year ago. Analysts had forecast earnings of $4.27 a share. Revenue rose 7% to $484 million. The publisher of the Washington Post and Newsweek said increases in advertising spending failed to offset increased newsprint costs and higher depreciation for expanded printing facilities at the Post.
A gain of $162.8 million, or $16.07 a share, from the sale of its 28% stake in Cowles Media Co. to McClatchy Newspapers Inc. resulted in net income after payment of preferred dividends of $207.4 million, or $20.47 a diluted share.
* Knight Ridder Inc., the nation's second-largest newspaper publisher, said first-quarter profit rose 20% to $56.5 million, or 57 cents a diluted share, from a year earlier, topping analysts' expectations by 6 cents. Revenue rose 24% to $743.9 million. Overall advertising revenue rose 6.2%. Its newspapers in Detroit and Philadelphia showed the biggest gains, while revenue fell in San Jose.
* CyberMedia Inc. reported a net loss of $16.0 million, or $1.27 per diluted share, in the first quarter, contrasted with net income of $1.3 million, or 10 cents per diluted share, a year earlier. The Santa Monica-based company's revenue plunged to $4.7 million from $16.5 million.
* US West Communications Group said first-quarter earnings rose 6% to $347 million, or 71 cents a diluted share, two cents higher than estimates, from a year earlier. The phone and data communications unit of US West Inc. said revenue increased 5% to $2.71 billion.