The packaged-food giant reported revenue of US$3.52 billion in the first quarter, shy of the US$3.54 billion analysts had estimated.

It also announced that finance chief Fareed Khan will leave on July 1 and be replaced by Amit Banati, currently president of its Asia Pacific, Africa and Middle East division.

Key insights

Cereal sales have been on the decline for years, as the breakfast-food category has been getting increasingly competitive with on-the-go bars and restaurants making a bigger play for consumers.

In North America, cereal net sales slipped 4% when excluding the impact of currency, the company said, citing issues related to the timing of shipments.

As cereal loses its lustre with changing American consumers, the company has been doubling down on salty snack development, including launching single-serve packs of products like Pringles and Cheez-It crackers.

Still, snack sales in its home market were flat in the quarter, suggesting more work is needed ahead. The Frosted Flakes maker also faced unexpected challenges in the quarter, including higher input and transportation costs, plus a recall of its RXBAR protein bars.

Market reaction

Kellogg shares fell as much as 4.9% to US$56.47 in New York, the biggest intraday drop since Feb 7. The stock had gained 4% this year through Wednesday’s close, trailing the advance in the S&P 500 Index.