Kellogg to replace CFO; earnings drop 36.5% in first quarter – Crain’s Detroit Business

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Rising costs and shifting tastes continue to create hurdles for Kellogg Co., which posted a 36.5 percent profit decline in the first quarter. The company also said Thursday that it is replacing its chief financial officer.The Battle Creek-based breakfast foods and snacks maker said Amit Banati, president of Kellogg Asia Pacific, Africa & Middle East, will replace CFO Fareed Khan on July 1. Khan and Banati will work together in a formal transition through the end of June, the company said in a news release.The packaged-food giant reported first-quarter earnings of $282 million and revenue of $3.52 billion, shy of the $3.54 billion analysts had estimated. On Thursday, CEO Steven Cahillane said the company remains “squarely on strategy and on plan.””We also restructured our organization for greater agility, and further reshaped our future portfolio by reaching an agreement to sell certain brands later this summer,” he said. “Meantime, we overcame some unexpected headwinds in our North America business in Q1, and delivered earnings that keep us on track for the year’s financial targets.”Kellogg (NYSE: K) did lower its 2019 outlook due to the sale of some brands, including Keebler. Net sales growth is expected to be around 2 percent, down from the previous growth of 2 percent to 4 percent that the company had expected.David Driscoll, an analyst with Citi, said organic revenue trends should lead to improvements in the current quarter.”Kellogg indicated that it remains on track to hit its 2019 goals (guidance was adjusted for the Keebler divestiture) and continues to forecast full year organic sales growth of 1 percent to 2 percent, which implies good acceleration over the coming quarters,” Driscoll wrote Thursday.Outgoing CFO Khan joined Kellogg (NYSE: K) in February 2017, following stints as CFO at US Foods and United Stationers, as well as in a variety of finance, business and leadership roles at USG Corp. Khan arrived at Kellogg at a time when the company was undergoing significant cost restructuring under its Project K and Zero-Based Budgeting programs, and played a key role in the completion of those programs, the release stated. He also helped to drive the adoption of a new strategy, which included revitalizing key brands through targeted investment, and reshaping Kellogg’s portfolio through M&A, Kellogg said in the release.Banati joined the maker of Frosted Flakes, Pop Tarts and Eggo waffles in March 2012 as president of the company’s Asia Pacific operations, and his responsibilities expanded into the broader AMEA region in July. Under his leadership, AMEA has stabilized developed markets and expanded Kellogg’s portfolio and presence in emerging markets, Kellogg said. He began his career in finance at Procter & Gamble, before moving to Cadbury Schweppes, where he was the CFO of Cadbury Schweppes Asia Pacific, the release stated. Thereafter, he served in a variety of general management roles at Cadbury Schweppes, Kraft Foods and Mondelez.— The Associated Press and Reuters contributed to this report.
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