Kellogg Company (NYSE:K) Q1 2018 Earnings Conference Call - Final Transcript

May 03, 2018 • 09:30 am ET


Kellogg Company (NYSE:K) Q1 2018 Earnings Conference Call - Final Transcript


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Good morning. Welcome to the Kellogg Company First Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period.

(Operator Instructions) Please note this event is being recorded. Thank you.

At this time, I will turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kellogg Company. Mr. Renwick, you may begin your conference call.

John Renwick

Thanks, Gary. Good morning and thank you for joining us today for a review of our first quarter 2018 results. I'm joined this morning by: Steve Cahillane, our Chairman and CEO; Fareed Khan, our Chief Financial Officer; and Amit Banati, our President of Asia Pacific, who's calling in from Singapore to update you not only on our strong performance and outlook in that region, but also on some exciting news we have in West Africa.

Slide number 2 shows our unusual forward-looking statements disclaimer. As you are aware, certain statements made today, such as projections for Kellogg Company's future performance, including earnings per share, net sales, profit margins, operating profit, interest expense, tax rate, cash flow, brand building, upfront costs, investments and inflation are forward-looking statements. Actual results could be materially different from those projected.

For further information concerning factors that could cause these results to differ, please refer to the second slide of this presentation as well as to our public SEC filings. A replay of today's conference call will be available by phone through Thursday, May 10. The call will also be available via webcast, which will be archived for at least 90 days.

Before we start, please recall that all year-on-year variances discussed today, both for results and outlook, are calculated off a 2017 base that has been recast for Accounting Standards Updates. For your benefit, we issued an 8-K filing on April 19th, 2018 that provides all of the recast line items.

And now, I'll turn it over to Steve and Slide number 3.

Steven Cahillane

Thanks, John, and good morning, everyone. We're obviously pleased to report such a strong start to 2018, with growth in net sales, operating profit, earnings per share and cash flow. There are three elements I'd like to emphasize. First, returning to top line growth is a priority for us, and it's gratifying to see so much of our portfolio showing improvement. Our on-trend Frozen Foods business has accelerated its strong growth.

In US Snacks, behind the noise of DSD exit impacts, our core brands are gaining share again. And our overall business is increasing its velocities on shelf. And Pringles is growing strongly worldwide. We stabilized our core international developed cereal markets and even showed some improvement. And we've built scale in snacking presence in emerging markets and it's paying off (technical difficulty) accelerated growth in those markets.

Second, we're on track to achieve our full-year guidance. We got off to a strong start in every metric. Our net sales grew ahead of our expected full-year pace.