(Reuters) - Kellogg Co beat Wall Street expectations for quarterly sales and profit on Thursday, boosting the food maker’s shares 12% as investments in marketing and product development drove higher demand for snacks and frozen food in North America.
Battle Creek, Michigan-based Kellogg, which makes Pringles, Pop-Tarts, Eggo Waffles and a wide range of breakfast cereals including Corn Flakes, has been spending more on advertising and developing new products to suit changing consumer preferences for healthier food and smaller portions.
Net sales from North America, which accounts for nearly two-thirds of Kellogg’s revenue, rose 1% in the second quarter ended June 29. The North America unit has not grown sales by this much since the first quarter of 2013, according to J.P.Morgan analyst Ken Goldman.
Kellogg shares jumped about 12% in morning trade on the New York Stock Exchange to $64.93.
Kellogg’s 2018 acquisition of a 50 percent stake in Multipro - a sales and distribution company in Nigeria and Ghana - helped drive a 23 percent jump in sales from the company’s Asia, Middle East and Africa unit.
Total net sales increased 3% to $3.46 billion, beating the average analyst estimate of $3.41 billion, according to IBES data from Refinitiv. On an organic basis, excluding acquisitions, divestitures and foreign exchange impact, sales rose 2.3%.
Excluding items, the company earned 99 cents per share, beating expectations of 92 cents.
Net income attributable to the company tumbled 52% to $286 million due to restructuring and divestment costs and a lower tax rate in the prior-year period. Kellogg sold Keebler biscuits and a handful of other brands for $1.3 billion in April, and announced plans in May and June to revamp its European and North American operations.
Second-quarter earnings were also hurt by higher input costs and a strong dollar, Kellogg said. Consumer goods companies have struggled for over two years with a surge in commodities and transportation expenses.
Reporting by Richa Naidu in Chicago and Soundarya J in Bengaluru; Editing by Arun Koyyur and David Gregorio