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Kellogg's adjusted profit beats estimates as costs fall

Kellogg's Corn Flakes
Daniel Acker | Bloomberg | Getty Images

Kellogg, the world's largest maker of breakfast cereals, reported a higher-than-expected adjusted quarterly profit and extended its "Project K" restructuring program by another year.

The program, launched in 2013, is now expected to save the company $600 million to $700 million through 2019, the company said.

Investors cheered the announcement, pushing the stock up 3.7 percent to $76.21 in morning trading on Thursday.

The "Project K" restructuring program, initially estimated to run through 2018 and help save $425 million to $475 million annually, was launched to counter declining sales as more Americans shunned processed foods in favor of healthier options.

The program involves job cuts and production optimization among other things. To cut costs further, the company said on Wednesday it would switch to a warehouse delivery model for its U.S. snacks business and stop distributing products directly to stores.

Kellogg's selling, general and administrative expenses fell more than 12 percent to $878 million in the quarter. The company posted an operating profit of $98 million, compared with a loss of $39 million a year earlier.

Excluding charges related to its Venezuelan business and Project K, the company earned 92 cents per share, beating analysts' average estimate of 85 cents, according to Thomson Reuters I/B/E/S.

The company's overall net sales fell slightly to $3.1 billion, edging past the average analyst estimate of $3.08 billion, according to Thomson Reuters I/B/E/S.

Kellogg forecast 2017 adjusted earnings per share of $3.91-$3.97, largely below the estimate of $3.97.