General Mills CEO: Reaping Profit Amid Higher Costs
Stephen Sanger, CEO of General Mills, talked about the company's latest earnings, which rose 9% in the third quarter, with CNBC's Erin Brunett, saying increased sales helped offset rising prices for ingredients.
Burnett asked the CEO about the so-called corn craze sparked by bio-fuels -- and whether that will further pressure input (raw material and ingredient) pricing. He predicted ripples throughout the food market: rising corn prices will indeed drive up other grains, and in turn higher feed prices will make meat more costly.
Sanger noted that General Mills' input prices -- "especially for agricultural commodities" -- have indeed already risen, but says his company has been "able to offset that."
Sanger explained that dealing with unexpected inflation is "not terribly unusual for us": Input prices have risen each year for the last three or four years, he noted, driven by many factors like energy. So General Mills' business plan has included strategies to moderate prices via "productivity efforts" in manufacturing and purchasing.
He touted margins that rose "solidly," and underscored that the food firm's growth is driven "not by pricing, but by sales."