General Mills 3Q Net Income Dips, Revenue Rises

MINNEAPOLIS (AP) — General Mills Inc.'s fiscal third-quarter profit edged lower due to rising costs, but its revenue improved on strength abroad.

The maker of Cheerios cereal, Natural Valley granola bars and Hamburger Helper remains one of the most popular food brands in grocery stores. But like most of its peers, it has struggled with higher costs for everything from ingredients to labor and has raised its prices to help alleviate some of the pressure.

The Minneapolis-based company reported on Wednesday that its net income slipped to $391.5 million, or 58 cents per share, for the three months ended Feb. 26, down slightly from $392.1 million, or 59 cents per share, a year earlier.

Removing Yoplait acquisition-related costs and other items, earnings were 55 cents per share.

That missed the 56 cents per share that analysts polled by FactSet predicted.

General Mills' stock fell 21 cents to $38.55 per share in afternoon trading. Its shares have fallen from a 52-week high of $41.06 in mid-January but are 11 percent higher than their low for the past year of $34.64 set in early August,

Revenue increased 13 percent to $4.12 billion from $3.65 billion, benefiting from higher prices. Wall Street expected revenue of $4.09 billion.

Sales of Big G cereals climbed 6 percent on the strength of Honey Nut Cheerios, Cinnamon Toast Crunch and Peanut Butter Multigrain Cheerios.

The baking product unit posted an 11 percent sales gain, led by Betty Crocker dessert mixes. Sales for the snacks division rose 7 percent thanks to strong results from Nature Valley and Fiber one snack bars. The meals unit and Small Planet Foods also reported sales increases, while sales for Pillsbury USA products were flat.

The Yoplait unit's sales dropped 3 percent, with gains by Go-Gurt, Yoplait Greek and Mountain High yogurt offset by volume declines by some other products.

General Mills saw strength overseas, with international sales surging 51 percent. European sales more than double, while Canadian sales rose 37 percent. The Asia/Pacific region posted a 15 percent sale gain, while Latin America reported a 12 percent rise in sales.

At the bakeries and foodservice unit, sales increased 6 percent.

The company said that its gross margin — a key indicator of profitability — was hurt by a 10 percent to 11 percent rise in increased costs for things such as ingredients and labor.

The company maintained its guidance for fiscal 2012 adjusted earnings between $2.53 and $2.55 per share.

Analysts expect earnings of $2.55 per share.