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UPDATE 1-Kellogg revenue misses as cereal sales stay soggy

Thursday, 6 Feb 2014 | 9:25 AM ET

(Adds forecast, details, updates shares)

Feb 6 (Reuters) - Kellogg Co, the world's largest maker of breakfast cereals, reported lower-than-expected quarterly revenue as sales for cereals fell for the third time in a row in North America.

The maker of Kellogg's Corn Flakes, Froot Loops, Special K and Rice Krispies cereals has been battling intense competition from General Mills Inc and cheaper private-label cereal brands.

Increasing popularity of yogurt, frozen egg sandwiches and other breakfast items has also hit Kellogg's U.S. Morning Foods business in North America, where sales fell 4 percent in the fourth quarter, internally.

Internal sales exclude the effects of foreign currency translation, acquisitions, dispositions, and integration costs.

The company also sells Pringles chips and Keebler cookies under its snack foods business.

"Our Pringles business had an excellent year in 2013, although we continue to face challenges in some of our developed cereal businesses," said Chief Executive John Bryant.

Total sales in North America, which contributed about 63 percent to overall revenue in 2012, decreased 2.8 percent in the fourth quarter.

The company said it expected 2014 adjusted earnings to rise 1-3 percent on internal sales growth of 1 percent.

Net income attributable to the company was $818 million, or $2.24 per share, in the fourth quarter ended Dec. 28, compared with a loss of $32 million, or 9 cents per share, a year earlier.

Kellogg earned 83 cents per share, excluding items, helped by cost cuts.

Revenue fell 1.7 percent to $3.50 billion.

Analysts on average had expected a profit of 82 cents per share on revenue of $3.53 billion, according to Thomson Reuters I/B/E/S.

The company's shares fell nearly 1 percent in premarket trading. They closed at $57.37 on the New York Stock Exchange on Wednesday.

(Reporting by Siddharth Cavale in Bangalore and Lisa Baertlein in Los Angeles; Editing by Kirti Pandey, Maju Samuel)

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