US: Gen Mills ups profit target after H1 figures

US food giant General Mills today (17 December) raised its full-year earnings forecast after posting a rise in half-year profits.

The maker of brands including Haagen-Dazs and Old El Paso said it now expects full-year earnings to reach US$3.83-3.87 a share, excluding any impact from mark-to-market valuation and the gain from the sale of its Pop Secret popcorn business in September.

General Mills, which had previously forecast earnings of $3.81-3.85 a share, said the increase would come despite rising costs, which it estimates will grow by 9% during its current fiscal year.

The company also warned that currency fluctuations would reduce reported sales and earnings for the year.

Nevertheless, General Mills chairman and CEO Ken Powell said the company was well-paced to ride out the economic downturn.

"The economic environment is challenging, but our brands are a good fit with consumers' need for great-tasting, healthy, convenient foods at good value," Powell said. "We'll continue to support the sales momentum in our businesses with product news, new product introductions and ongoing increases in consumer marketing investment."

During the six months to 23 November, General Mills increased its sales by 11% to $7.51bn with sales of baking products in the US jumping 16% during the last three months.

Net earnings were down 3.3% to $657m after a reduction related to mark-to-market valuation of certain commodity positions and a gain from the Pop Secret sale.

However, segment operating profit was up 9% to $1.41bn.

First-half US sales climbed 11% to $5.08bn, with operating profit up 10% to $1.16bn.

Internationally , sales grew 8% to $1.37bn, thanks to price increases. Nevertheless, the impact if currency fluctuations began to tell during the second quarter, with international sales inching up 2%. Foreign exchange reduced net sales growth by eight points, General Mills said.

Shares in General Mills stood at $61.22 at 10:56 ET today, against yesterday's closing price of $61.25.