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General Mills Quarterly Profit Rises 9% on Higher Sales

AP
Thursday, 22 Mar 2007 | 11:03 AM ET

General Mills said Thursday its third-quarter profit rose 9% as increased sales helped offset rising prices for ingredients, and the company raised its guidance for the year.

General Mills, which makes Wheaties and Cheerios cereals and Yoplait yogurt, said it earned $268 million, or 74 cents a share, during the quarter that ended Feb. 25, up from $246 million, or 68 cents a share, during the same period last year.

Revenue of $3.05 billion was up 6% from $2.88 billion during the same period last year.

Analysts surveyed by Thomson Financial were expecting earnings of 70 cents a share on revenue of $2.98 billion.

Chairman and Chief Executive Steve Sanger called it "another quarter of broad-based sales growth and margin expansion for the company" in a prepared statement. He said General Mills benefited from gains in the amount of food it sold as well as a shift toward sales of more profitable items. A more efficient supply chain helped, too, he said.

The company warned that "input costs," which can include ingredients and fuel, are both expected to be above the levels seen so far this year, or last year. It also said it would spend more on marketing, and said it has "initiated evaluations of certain assets that may result in impairment or restructuring charges." It didn't elaborate.

Still, it raised full-year guidance to $3.14 to $3.16 a share, up from a high end of $3.13 previously. Analysts were already expecting $3.15.

"Our businesses are performing very well in the aggregate and financial performance through the first nine months of this year is ahead of our plans," Sanger said.

Operating profits in General Mills' largest segment, its U.S. retail products, rose almost 6% to $447 million. Sales rose 4.5 percent to $2.1 billion.

Growth was faster in its smaller divisions, with international operating profits rising 17% to $42 million with help from increased sales and benefit from currency conversion rates. Bakeries and foodservice profits rose 83% to $33 million on price increases and increased sales of higher-margin items.

For the first nine months of the year, General Mills earned $920 million, or $2.55 per share, up from $868 million, or $2.29 per share during the same period last year. Revenue of $9.38 billion was up 6% from $8.85 billion a year ago.

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