Kellogg Company (NYSE:K) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 09:30 am ET


Kellogg Company (NYSE:K) Q4 2018 Earnings Conference Call Transcript


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Good morning. Welcome to the Kellogg Company Fourth 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 limit yourself to one question during the Q&A session. Thank you.

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

John Renwick

Thank you, Gary.

Good morning, and thank you for joining us today for a review of our fourth quarter and full year 2018 results. I'm joined this morning by Steve Cahillane, our Chairman and CEO; and Fareed Khan, our Chief Financial Officer.

Slide number two shows our usual forward-looking statements disclaimer. As you are aware, certain statements made today such as projections for Kellogg Company's future performance 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, February 14th. The call will also be available via webcast which will be archived for at least 90 days.

As always, when referring to our results and outlooks we will be referring to them on a currency neutral adjusted basis unless otherwise noted. And now I'll turn it over to Steve and slide number three.

Steven Cahillane

Thanks, John, and good morning, everyone.

Our fourth quarter came in as we had indicated, completing a very important year for Kellogg Company. We launched Deploy for Growth, a strategy that gives us very clear priorities and has resulted very quickly in tangible, often bold, actions for pivoting us back to growth. Our portfolio is more shaped toward growth today. We acquired RX in late 2017 and in 2018 we expanded its distribution, doubled its small brand awareness and extended its product line. This is a new growth platform for us.

In early 2018, we increased our stakes in our West Africa operations, moving emerging markets up to almost 20% of our Company's sales. Emerging markets will be a growth driver for years to come and in 2018 we accelerated our organic growth in these markets to a high single digit rate.

We also invested heavily in our brand and capabilities in 2018. Our brand building investment was increased at a high single digit rate in 2018 and it was invested behind better commercial ideas at higher ROIs. We are not just spending. We are revitalizing brands and even launching some new ones. We also invested in capabilities from e-commerce and digital social marketing to new pack formats to execution in high-frequency stores. All of these are investments in building a long-term foundation for growth.

We are seeing progress in the forms of better net sales and consumption performance around the world. This wasn't easy and