UPDATE 3-General Mills shares tumble as first-qtr sales, margins disappoint

(Adds CEO, analyst comment)

Sept 18 (Reuters) - Cheerios cereal maker General Mills Inc missed analysts' estimates for quarterly sales and margins on Tuesday, hurt by higher input costs and lower demand for its snacks and yogurts in the United States.

The Minneapolis-based company's shares were down 8.7 percent in morning trading, leading a 2.7 percent decline in the S&P 500 Packaged Food & Meats index.

The packaged goods industry has been battling surging freight and commodities costs all year as railroads and truck fleets hike rates.

This hurt General Mills' first-quarter adjusted gross margin, which fell 160 basis points to 33.6 percent in the quarter. Margins were also weighed down by a charge related to the acquisition of Blue Buffalo Pet Products Inc. Analysts at J.P. Morgan called the results "less than ideal," saying the company's gross margin was far lower than expected.

General Mills, whose stock has lost more than a fifth in value this year, said some of the gross margin pressure would continue into the second quarter.

However, higher costs are helping General Mills and its competitors raise prices "a little bit," Chief Executive Officer Jeff Harmening said on a call to discuss earnings.

Rival cereal-maker Kellogg Co said last month that transportation costs were up strong double digits and that this would be the case for the foreseeable future.

General Mills, which also owns the Nature Valley cereal bar and Yoplait yogurt brands, said sales in its U.S. snacks unit fell 4 percent, while yogurt sales declined 2 percent.

"There was a bit of a step back in sales momentum so you're seeing some of the bears jump on that and wondering if things aren't progressing as well as we thought they were," Edward Jones analyst Brittany Weissman said. But the stock move is an overreaction as profit was a beat, she said.

Net income attributable to the company fell to $392.3 million, or 65 cents per share, in the quarter ended Aug. 26. Excluding items, the company earned 71 cents per share, beating the analyst estimate of 64 cents.

The company's net sales rose nearly 9 percent to $4.09 billion, boosted by its acquisition of pet food company Blue Buffalo, but missed analysts' estimates of $4.12 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Aishwarya Venugopal in Bengaluru and Richa Naidu in Chicago; Editing by Shounak Dasgupta and Nick Zieminski)