Kellogg sees pre-tax profits increase fivefold to €43m

PRE-TAX profits at the main Irish subsidiary of cereal giant Kellogg last year increased fivefold to €42.9 million.

Accounts just returned to the Companies’ Office show that US-owned Kellogg Europe Trading Ltd delivered the increase in pre-tax profits in spite of the company’s revenues declining by 6.6% from €1.49 billion to €1.39bn in the year to the end of January 1, 2011.

The company produces some of the world’s best known cereal brands including Corn Flakes, Coco Pops, All-Bran, Rice Krispies and Special K.

The main activity of the Dublin-based company is the production and marketing of ready-to-eat cereals in Europe, the Middle East and Africa (EMEA) area, while affiliated enterprises act as consignment manufacturers and as local market distributors.

Kellogg established its Irish base in Swords, Co Dublin, in 2004 to serve the company’s EMEA operation.

According to the directors’ report, the company’s revenues are considered satisfactory, while gross profit and administrative expenses were in line with expectations.

On the future outlook for the company, the directors state that “the outlook for 2011 is for marginal turnover decline due to the current deflationary economic environment and no growth in operating profit. Marketing support/pressure for our brands will be in line with previous year in real terms.

“The overall cost base is expected to be lower than previous year thanks to notable efficiencies achieved in this area offset by commodity price increases.

The filings show that the company’s operating profits increased 35% from €98m to €133m.

However, the operating profits were hit by interest payments totalling €91m and this followed interest payments on group undertakings of €91m in 2009.

Last year, the company’s cost of sales reduced from €1.06bn to €932m, while administrative expenses dropped marginally from €335m to €333m.

The accounts show that the largest proportion of the company’s sales is in Europe with 57% or €592m of sales with €750.8m or 42% of sales in Britain with the remainder in the “Rest of World”.

The accounts show that the company’s staff costs last year decreased by 19% from €34m to €27m with staff numbers increasing from 133 to 165.

Remuneration to directors for management services decreased by 30% from €1.96m to €1.76m. The company’s accumulated profits at the end of the year was €48.7m.

Established in 1906, the Kellogg corporation is headquartered in Michigan. The corporation manufactures in 18 countries and sells its products in more than 180 countries.

Worldwide, the company recorded sales of nearly $12 billion last year.