Food maker Kellogg Co reported on Thursday that higher costs and lower sales dampened its fourth-quarter profit, but it said it has positioned itself for growth and raised its earnings expectations for the year.

Kellogg, based in Battle Creek, Michigan, now expects to earn $3.51 to $3.57 per share for the year on a currency-neutral basis. That's above its prior guidance of $3.40 to $3.52 per share but still below Wall Street's expectations for the company at $3.62 for the year.

The cereal and food giant, which makes Frosted Flakes, Pop-Tarts and many other grocery mainstays, missed analyst expectations for its quarterly earnings, which helped send its shares down in trading Thursday.

Kellogg said it earned $US176 million ($A199.23 million), or 46 cents per share, for the quarter, down from $US179 million ($A202.63 million), or 47 cents per share, a year earlier. Revenue fell 1 per cent to $US2.9 billion ($A3.28 billion).

Analysts polled by Thomson Reuters expected the company to earn 49 cents per share on revenue of $US2.94 billion ($A3.33 billion).

Kellogg said strong sales of its cereal and snacks, particularly in North America, helped offset other business that slowed in the down economy.

Kellogg CEO David Mackay said 2009 was a challenge for the company and tight consumer spending will continue to pose a challenge, particularly in North America and Europe, this year. But he said economic picture spurred the company to make changes that will help it grow, including cutting costs, increasing advertising and developing new products.

For the full year, earnings climbed 5 per cent to $US1.21 billion ($A1.37 billion), or $3.16 per share, compared with $US1.15 billion ($A1.3 billion), or $2.99 per share, in the prior year.

Sales slipped 2 per cent to $US12.58 billion ($A14.24 billion).

"We continued our momentum in 2009, delivering another year of growth despite facing one of the most challenging economic environments in decades," Mackay said.


© 2010 AP