Letter to Shareowners
Thanks to the hard work and passion of Kellogg Company employees around the world, 2007 was another year of continued sales growth, strong financial results and increased shareowner return. The growth was broad-based across categories and geographies. Here are some highlights:
- Net sales increased 8% to $11.8 billion.
- Internal net sales, which excludes the effects of currency exchange rates, increased more than 5%.
- Internal operating profit increased by 3%.
- Diluted net earnings per share (EPS) grew 10% to $2.76.
- Cash flow was over $1 billion, or 9% of net sales.
- Total shareowner return was 7%.
- The dividend was increased by 7% starting in the third quarter.
- This was our sixth consecutive year of growth in sales, operating profit and earnings per share.
- We reinvested in the business through increased brand building, innovation capability, expansion and cost-saving projects, all of which enhance our future sustainable performance visibility.
Kellogg employees achieved these solid results despite being faced with the most difficult operating environment our industry has experienced in many years. World commodity prices for many of our raw materials spiked to all-time highs. Fuel and energy inflation was dramatic, but the cost pressure did not shake the solid foundation upon which we have built our business – a business model that is simple, resilient and designed to deliver sustainable growth. Kellogg people rose to meet this year's challenges by delivering compelling innovation, exciting new advertising and cost efficiencies around the world. This dedication to superior execution is characteristic of Kellogg employees everywhere, and we sincerely thank each person in our organization for their commitment to success and their passion for our business.
A proven business model.
At Kellogg we have an unwavering focus on the long-term health of our business. While we are realistic about the challenges ahead, our performance in 2007 demonstrates the strength of our business model and its capacity to produce growth, even under difficult conditions. Despite increased inflation, we continue to reinvest into our business.
