General Mills has upped its 2009 full year earnings per share guidance on the back of a good operating performance and lower fourth-quarter tax rates.

The company said in a statement that in anticipation of meetings with European investors this week,  it was estimating that preliminary year-end estimates exceed the company's prior 2009 EPS guidance by several cents.

The company's most recent guidance for earnings per share was $3.87 to $3.89 excluding certain items. The company's 2009 fiscal year ended 31 May and General Mills expects to report complete fourth-quarter and full year results on 1 July.

The company also commented on reported net sales expectations for its three major business segments in fiscal 2010, which will include 52 weeks, whilst fiscal 2009 was a 53-week year.

General Mills said that its US retail business segment (67% of fiscal 2008 net sales) had demonstrated strong growth in fiscal 2009. Through the first nine months, reported net sales grew 10% with pound volume increasing 4%t.

"The company believes the significant investments it has been making in product innovation and consumer marketing will help carry momentum into the new fiscal year," it said.

However, it added that the rate of US retail net sales growth is expected to moderate in 2010 from the levels seen in 2009 when significant input cost inflation necessitated stronger pricing actions by food manufacturers.

"General Mills currently anticipates that 2010 input cost inflation will be quite low, and that its net sales growth will be volume driven with little contribution from pricing," the company said.

For General Mills' international segment (19% of fiscal 2008 net sales), foreign currency exchange is expected to have a negative impact on reported results in fiscal 2009 and 2010.

"Through the first nine months of 2009, international segment net sales grew at a 10% rate on a constant-currency basis, but translation effects reduced reported net sales growth by 6 percentage points to 4%. General Mills affirmed that in 2010, the company expects its international segment to record strong sales growth on a constant-currency basis," the statement said.

General Mills' bakeries and foodservice segment (15% of fiscal 2008 net sales) had been hit by a weak economic environment, the company said, though it was on track to meet its 2009 profit target for this business segment.

During 2009, General Mills divested its foodservice businesses generating annual net sales of approximately US$150m.

"Reflecting these divestitures, the weak operating environment, and an expectation of lower bakery flour pricing due to lower commodity costs, the company currently expects 2010 reported net sales for its bakeries and foodservice segment will be below 2009 levels. Underlying business trends are expected to show continued good sales growth for branded product lines," the statement said.

General Mills said it would provide specific guidance for its 2010 financial targets on 1 July, but the company expressed comfort with the current consensus earnings per share estimate of $4.15 per share for fiscal 2010.