Kellogg announces strong 2008 performance

The world has changed – and our company must change, too.

That was one of the main messages delivered by President and CEO David Mackay during a recent employee meeting held in Battle Creek, but linked to Kellogg employees around the world via a video teleconference and audio bridge. While some may view this change as overwhelming, he continued, we should instead look at it as a great opportunity to build the Kellogg of the future.

"Change makes people nervous, but change is critical – it's good. We can embrace change and be part of making it successful. Or we can fight change and hurt ourselves," David noted.

"The global economy has gone soft, and there's not much we can do about that – we can't change the economy," David said. "But what we can do in this sort of environment is challenge ourselves. Are there things we can do better? How are we managing the company? Is there a better way? Are there things we can do to simplify and standardize all that we do, in order to make ourselves more effective and efficient?"

As always, Kellogg continues to look at ways to do things more efficiently and effectively to stay competitive in the marketplace. While the current environment is particularly challenging, the company's strategy is to remain focused on its business model. 

Position of strength

The great news, David noted, is that Kellogg is solidly positioned as a company.

"Our business model is working, and we have great momentum, relatively speaking. If you look at 2008, for many companies the back half of the year really slowed. But we continued to go forward very strongly. So, we're coming from a position of strength," he explained.

On Thursday, February 5, Kellogg announced strong sales and earnings growth for 2008 – and reiterated that our company is well positioned to drive continued sustainable and dependable performance this year. Chief Financial and Operating Officer John Bryant echoed those sentiments at the recent employee meeting.

"As we go to 2009, we expect to continue to have momentum as a company," John said. "We had signaled we'd do mid-single digit growth for internal sales for 2009, and that's 4 to 6 percent. However, with the economy slowing and with some of the international business coming under pressure, we've actually lowered that guidance in our latest analyst call to 3 to 4 percent internal sales growth, excluding the impact of foreign exchange."

He continued, "And for internal operating profit growth, we're expecting about 4 to 6 percent growth in 2009 – mid-single digits. Again, the fact that we're talking about growth as opposed to 20 or 30 percent declines makes us an abnormality in the U.S. right now."

Although Kellogg definitely continues to face definite economic and marketplace pressures, the health of our global business remains strong, John added.

"Our fundamental strengths are still there," he said. "We're in a very good position and, given the environment that we're operating in, the business is doing well."