General Mills, Inc. : General Mills 4th-Quarter Net Rises 1.6%; Projects Weak Fiscal Year Earnings Per Share
06/27/2012| 07:53am US/Eastern
By Melodie Warner
General Mills Inc.'s (GIS) fiscal fourth-quarter earnings edged up 1.6% though the packaged-food maker continued to struggle with higher costs and more restrained consumer spending.
"Fiscal 2012 was characterized by the highest input-cost inflation we've experienced in more than three decades, and this cost pressure constrained our earnings growth," Chairman and Chief Executive Ken Powell said.
General Mills expects fiscal 2013 adjusted per-share earnings of about $2.65 and sales to grow at a mid-single-digit rate, and its business plan assumes input cost inflation of 2% to 3%. Wall Street was looking for $2.75 and 5% revenue.
The company said it plans to increase its fiscal 2013 investments in U.S. yogurt, the Canadian Yoplait yogurt business being assumed in September and accelerate its business growth in emerging markets, particularly China.
The maker of Cheerios cereal, Yoplait yogurt and Betty Crocker baking products has seen declining earnings in recent quarters as it struggles to offset higher raw-material costs with price increases and shrinking product sizes. But budget-conscious consumers have pushed back and the lower sales volume has also hurt its margins. Last month, General Mills launched a restructuring plan that includes cutting roughly 2% of its global workforce, with the savings going toward new products and other strategies to try to spark growth.
For the quarter ended May 27, General Mills reported a profit of $325.4 million, or 49 cents a share, up from $320.2 million, or 48 cents, a year earlier. Excluding items such as restructuring charges, earnings rose to 60 cents from 52 cents. Sales jumped 12% to $4.07 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 59 cents on revenue of $4.11 billion.
Gross margin fell to 36.8% from 37.5%.
At its U.S. retail segment, the largest by revenue, net sales rose 2.9%, while operating profit increased 4.5%. The international segment's sales grew 46% to $1.13 billion, contributing to a 66% jump in the segment's operating profit. Bakeries and foodservice segment sales were up 1.7%, and operating profit declined 10%.
Shares closed Tuesday at $38.15 and were inactive premarket. The stock is down 5.6% so far this year.
Write to Melodie Warner at email@example.com