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Kellogg Co. announced solid operating profit growth for the full-year and fourth quarter 2009. Reported earnings for full-year 2009 were $1.2 billion, or $3.16 per diluted share, an increase of 6 percent from full-year 2008 of $1.1 billion, or $2.99 per diluted share which included a 53rd week in the fourth quarter of 2008. On a currency neutral basis, full-year 2009 earnings per share grew 13 percent. Reported earnings in the fourth quarter of 2009 were $176 million, or $0.46 per diluted share, compared with $179 million, or $0.47 per diluted share in the fourth quarter of 2008.

"We continued our momentum in 2009, delivering another year of growth despite facing one of the most challenging economic environments in decades," said David Mackay, the Kellogg Company's chief executive officer in a prepared statement. "We maintained our focus on building and strengthening our core business, while successfully completing the first year of our three-year billion dollar plus cost reduction challenge."

Full-year 2009 reported net sales were $12.6 billion, a 2 percent decline compared with the year earlier which includes currency impact and a 53rd week in the fourth quarter of 2008. However, internal net sales increased 3 percent year-over-year. For the same period, operating profit increased 2 percent to $2.0 billion on a reported basis and grew 10 percent on an internal basis. As anticipated, 2009 up-front costs associated with the cost reduction initiatives totaled $0.26 per share. 2009 reported gross margin expanded 100 basis points year-over-year to 42.9 percent as continued cost management and positive price and mix more than offset increased cost pressures.

During the fourth quarter 2009, reported net sales declined 1 percent to $2.9 billion compared with the fourth quarter in 2008 which included currency impact and a 53rd week. Over the same period, internal net sales increased 2 percent. Compared to the fourth quarter a year ago, reported operating profit rose 2 percent to $352 million, and increased a solid 10 percent on an internal basis. Reported gross margin for the quarter improved 350 basis points as continued cost management and positive price and mix more than offset increased cost pressures.

Kellogg North America posted a year-over-year 2009 full-year reported net sales increase of 1 percent to $8.5 billion, while internal net sales grew 3 percent. On an internal basis for the full-year 2009 compared to a year earlier, North America Retail Cereal posted positive net sales growth of 4 percent, and North America Retail Snacks' net sales increased by 3 percent. North America Frozen and Specialty Channels full-year internal net sales declined 1 percent as a result of challenging industry trends in the food service business and supply disruptions of Eggo® waffles. Top-line growth combined with the positive impact of the three-year billion dollar plus cost savings program contributed to full-year 2009 North America operating profit of $1.6 billion, an 8 percent increase on a reported basis, and double-digit growth of 11 percent on an internal basis.

Fourth quarter 2009 Kellogg North America's net sales of $1.9 billion fell 4 percent on a reported basis compared to the same period in 2008 primarily due to the impact of the 53rd week in the fourth quarter of 2009, but rose 2 percent on an internal basis. Operating profit for the fourth quarter 2009 of $325 million improved 15 percent year-over-year on a reported basis, and grew a robust 25 percent on an internal basis. The increase is attributed to both sales growth and cost savings.

Kellogg International posted a full-year 2009 reported net sales decline of 7 percent year-over-year to $4.1 billion. However, on an internal basis, net sales gained 3 percent. Compared with the year earlier, full-year 2009 internal net sales in Europe increased approximately 2 percent. Latin America internal net sales grew 7 percent, and Asia Pacific internal net sales rose 5 percent. Reported 2009 operating profit for the Kellogg International business declined by 12 percent compared with 2008. On an internal basis, operating profit rose mid-single digits to 5 percent driven by sales growth.

Fourth quarter 2009 Kellogg International sales increased by 6 percent on a reported basis to $964 million compared with the same quarter in 2008, while internal sales increased by 2 percent. International operating profit for the fourth quarter 2009 decreased by 23 percent on a reported basis and declined by 23 percent on an internal basis driven by increased advertising spending, higher up-front costs, and timing of overhead.

In 2009, Kellogg's interest expense totaled $295 million which included the cost associated with the bond tender offer completed in December 2009. The reported 2009 tax rate was 28.2 percent, primarily reflecting some discrete favorable tax items.