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Kellogg cuts outlook, sending shares lower

Kellogg's chief executive officer said the company faced 'more significant challenges' in Europe and in some categories in the United States than it had expected.

John Raoux/Associated Press/John Raoux/Associated Press

Kellogg Co. cut its full-year outlook on Monday after a disappointing first-quarter performance in Europe and in some product categories in the United States, and its shares fell 5 per cent.

The world's largest cereal company said it would still invest in growth.

Kellogg now expects operating profit to fall 2 per cent to 4 per cent in 2012, from its previous forecast of flat or up slightly. It said sales should rise 2 per cent to 3 per cent, down from a previous forecast for growth of 4 per cent to 5 per cent.

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Kellogg, which makes Corn Flakes cereal, Cheez-It crackers and Eggo frozen waffles, expects full-year earnings per share to range from $3.18 (U.S.) to $3.30. That is below the analysts' average estimate of $3.48, according to Thomson Reuters I/B/E/S.

In the first quarter, Kellogg said, sales fell 1.3 per cent, with earnings of $1 a share.

Excluding a one-time benefit, Kellogg's profit was 95 cents a share, missing the analysts' average estimate of 99 cents.

"We are obviously disappointed with the performance of the company in the first quarter of 2012," Kellogg chief executive officer John Bryant said in a statement. "We faced more significant challenges in both Europe and in some categories in the U.S. than we expected."

Last November, Kellogg said it was spending an additional $70-million in the second half of 2011 to improve its manufacturing after it suffered several blows, including food safety problems.

Kellogg shares were down 5 per cent in afternoon trading to $51.27 on the New York Stock Exchange.

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