General Mills Profit Rises, Sees Inflation Worsening
General Mills, Wednesday posted a 1 percent increase in quarterly profit, as higher sales were partially offset by more expensive marketing and a pizza recall.
The world's second-biggest maker of breakfast cereal also stood by its full-year earnings forecast, with better-than-expected sales being offset by worsening cost inflation.
Like most food companies, General Mills has been hit by soaring costs for energy and ingredients such as corn and dairy products. The company has increased the price per ounce of its cereal by using smaller boxes and has taken other measures to offset those costs.
Net income for the fiscal second quarter that ended Nov. 25, was $390.5 million, or $1.14 per share, compared with $385.4 million, or $1.08 per share, a year ago, the maker of Progresso soup and Pillsbury cookie dough said. Earnings in the most recent quarter included 4 cents a share in expenses for a frozen pizza recall.
Earnings matched the average analyst estimate, according to Reuters Estimates.
Sales rose 6.8 percent to $3.70 billion. Analysts, on average, had been expecting sales of $3.62 billion, according to Reuters Estimates. Strength in the Yoplait yogurt and snack bars businesses lifted sales, as well as a weaker U.S. dollar, which boosts the dollar value of overseas sales.
U.S. retail segment sales rose 3 percent in the quarter, while international sales were up 22 percent.
Operating profit was about flat.
The company backed its full-year profit view of $3.39 to $3.43 per share, but raised its sales forecast to an increase in the mid-single digits from its previous forecast of a low-single-digit increase.
General Mills shares closed at $59.07 Tuesday on the New York Stock Exchange. The stock trades at about 17 times analysts' average 2008 earnings estimate, roughly in line with the valuation of its top rival, Kellogg .