General Mills profit beats estimates, shares rise
CHICAGO – General Mills Inc (GIS.N) posted a higher-than-expected quarterly profit and raised its full-year earnings forecast, helped by strong sales of products like its breakfast cereals in the United States, sending its shares up 4.3 percent.
General Mills has counted on a steady stream of new products and cost-cutting measures, as well as higher prices, to lift profits. The maker of Cheerios cereal and Progresso soup has also benefited as consumers eat more meals at home to save money amid the recession, and as prices for commodities like wheat decline.
Morningstar analyst Erin Swanson said the company has managed to boost sales and reap costs savings consistently from quarter to quarter.
“They have the portfolio that seems prone to take advantage of the consumer trends that we are seeing right now, both health and wellness and the trend of consumers eating at home,” Swanson said of a brand list that also includes Yoplait yogurt and Cascadian Farms organic foods.
The company has been gaining market share in cereal, soup and other categories, with new products like high-fiber soups and a Yoplait frozen smoothie kit helping it stave off private-label competitors. General Mills also has not raised prices in more than a year in 12 of its top 15 categories, CEO Kendall Powell said during an interview.
General Mills on Wednesday said profit rose to $420.6 million, or $1.25 a share, in the first quarter, ended August 30, from $278.5 million, or 79 cents a share, a year earlier.
Excluding changes in the market value of commodity hedges the company holds, earnings were $1.28 a share. Wall Street analysts had forecast $1.03, according to Reuters Estimates.