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​Kellogg's sales decline as cereals remain sluggish

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BATTLE CREEK, Mich. - Kellogg's (K) profit declined in the first quarter as the maker of Frosted Flakes and Pop Tarts continued to fight sluggish cereal sales.

The Battle Creek, Michigan company said sales slipped 1.2 percent for its flagship U.S. Morning Foods segment, which includes cereals such as Froot Loops, Mini Wheats and Raisin Bran. The dip reflects the ongoing struggles for Kellogg and rival General Mills Inc. as Americans increasingly reach for alternatives at breakfast.

Still, Kellogg CEO John Bryant expressed confidence that the company would end the year with positive cereal sales. That would mark the first time Kellogg's U.S. cereal sales were positive since 2012, he said.

Bryant chalked up his optimism to the company's new products, which he said are more in-line with changing eating habits. For instance, he noted the launch of Special K Nourish, which he said is more like muesli and reflects people's desire for wholesome ingredients.

The company is also trying to turnaround its struggling Kashi line, in part by introducing products marketed as having no genetically modified ingredients. Both Special K and Kashi have been hurt by changing tastes, with people moving away from watching calories in favor of eating foods they feel are wholesome and energizing.

In the meantime, Kellogg has been slashing costs to offset weak sales.

Kellogg is also trying to diversify its business. The company gets about 70 percent of its sales from North America, but is hoping products such as Pringle give it greater reach into markets overseas.

For the quarter ended April 2, Kellogg earned $175 million, or 49 cents per share. Earnings, adjusted for non-recurring costs, were 97 cents per share. Analysts expected 94 cents per share, according to Zacks Investment Research.

Total revenue was $3.4 billion, hurt by unfavorable currency translations. Wall Street had forecast revenue of $3.49 Wall Street.

Kellogg Co. shares have climbed roughly 7 percent since the beginning of the year, while the Standard & Poor's 500 index has stayed nearly flat. In morning trading shares fell 2.3 percent to $75.24.

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