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To: Silver Super Bull who wrote (6431)	1/29/2004 12:44:12 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 110194

higher input costs accelerates liquidatn & outsourcing / jw

To: Silver Super Bull who wrote (6431)	1/29/2004 2:11:11 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

<it could lead to the profit squeeze> ""cited rising commodity costs and competitive pressure"" <How companies deal with higher "operating costs" (translate input goods inflation)"> Your answer to this, "the impact of restructuring measures", a euphemism for laying workers off. Kellogg quarterly earnings fall as costs rise Reuters, 01.29.04, 1:43 PM ET By Deborah Cohen CHICAGO, Jan 29 (Reuters) - Cereal maker Kellogg Co. (nyse: K - news - people) on Thursday said quarterly profit fell slightly, as costs to streamline operations and promote products such as Nutri-Grain bars and its Eggo waffles offset higher sales. Battle Creek, Michigan-based Kellogg said it earned $188.0 million, or 46 cents a share, in the fourth quarter, meeting Wall Street estimates, compared with $191.0 million, or 47 cents, in the year-ago period. The company, which bought cookie maker Keebler in March 2001, has been expanding beyond cold cereals and pushing ahead in snack foods such as energy bars. It has also moved away from discounting on its cereal line, adding higher-margin products such as versions of Special K cereal with berries and other fruit. Kellogg Chief Executive Carlos Gutierrez, on a conference call with investors, cited the impact of restructuring measures, rising commodity costs and competitive pressure from rivals like General Mills Inc. (nyse: GIS - news - people) in the quarter. A lower tax rate lifted earnings in the quarter by 7 cents a share. "Carlos Gutierrez is managing the company for sustainability and consistency," said David Kolpak, an analyst with Victory Capital Management, which managed more than 7 percent of Kellogg's 412 million shares outstanding through September. "Everything is oriented around realistic targets and the company just has a very realistic view of its potential and it's not overreaching," he said. Fourth-quarter sales rose 8 percent to $2.14 billion. Before the impact of two small divestitures, sales were up 4 percent, as strength in cold cereal offset weakness in Keebler cookies. International sales rose 17 percent, helped by the benefit of the weak U.S. dollar and gains in Mexico. Retail cereal sales rose 9 percent, helped by extension in product lines such as Fruit Harvest and promotions like a tie-in with the movie "The Cat in the Hat" and "Scooby-Doo." "Cereal had a phenomenal quarter again," said A.G. Edwards & Sons. Inc. analyst Christopher Growe, who rates Kellogg "hold" and does not own any shares of Kellogg, "They're getting volume and pricing and product mix; overall it's a trifecta." Guterirrez said Kellogg will face continued weakness in cookies this year. Keebler and big competitors such as Kraft Foods Inc.'s (nyse: KFT - news - people) Nabisco division have suffered in recent months due to higher sales of store brands in a tight economy and changing consumer tastes as shoppers sought healthier snacks. In addition, Kellogg lost a custom manufacturing account late last year and has been scaling back unprofitable products in the division. Kellogg backed the upper end of its prior 2004 profit outlook for earnings of $2.05 to $2.09 a share. In 2003, the company earned $1.92 a share. Shares in Kellogg rose 50 cents to $38.50 in afternoon New York Stock Exchange trading. Copyright 2004, Reuters News Service