US: General Mills profits miss Wall St forecasts

By Dean Best | 18 December 2013

General Mills saw US sales fall 1% in its second quarter

General Mills saw US sales fall 1% in its second quarter

US food group General Mills saw its shares fall today (18 December) after the Yoplait owner booked second-quarter earnings that were below Wall Street forecasts.

Lower US sales and an increase in ingredient costs weighed on General Mills' profits during the quarter.

The company booked adjusted diluted earnings per share of US$0.83 for the 13 weeks to 24 November, compared to Thomson Reuters data that showed analysts were expecting earnings of $0.88 a share. A year ago, General Mills booked earnings per share of $0.86 a share.

Operating profit was up 5% at $870.1m. However, segment operating profit, which strips out corporate expenses, dropped 4%, when compared to what General Mills called "strong year-ago results".

Net sales were flat at $4.88bn. In the previous year's second quarter, net sales were up 6%.

"The second quarter was a difficult comparison to strong prior-year sales and earnings results for our businesses," chairman and CEO Ken Powell said. "In addition, the period included the highest quarterly input cost inflation we expect to see this fiscal year, and food and beverage industry sales in the US and other developed markets slowed a bit during the quarter. Even so, our bottom-line results through the first half of the year are broadly consistent with our plans."

Net income was up 1.5% at $549.9m.

General Mills reaffirmed its forecast for annual adjusted diluted earnings per share of between $2.87 and $2.90. However, the company said foreign currency effects are expected to be a greater headwind than originally estimated. The possible devaluation of the Venezuelan bolivar would likely reduce earnings "to the low end of the company's guidance range".

Shares in General Mills were down 2.38% at $48.40 at 09:59 ET.

Sectors: Bakery, Canned food, Cereal, Dairy, Financials, Ice cream, Natural & organic

Companies: General Mills, Yoplait

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