US cereal maker General Mills has reported lower quarterly earnings, reflecting higher commodity costs and restructuring expenses.
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The company posted net earnings of US$183m, or 47 cents per share, for the first quarter to 29 August, compared to $227m, or 59 cents per share, in the year-ago period. General Mills said the decrease in earnings was due to significant increases in commodity and other input costs, and costs related to restructuring actions taken during the quarter. Sales rose 3% to $2.59bn, with 3% growth in worldwide unit volume.
“Our plans called for earnings below year-ago levels in the first quarter, as our higher commodity costs are not yet being offset by our pricing actions and productivity initiatives,” said chairman and CEO Steve Sanger.
“This was particularly true for our US Retail segment, where response to our first-quarter merchandising programmes was stronger than planned. In addition, more than half of this year’s planned restructuring expense fell in the first quarter. In the second quarter, we expect pricing and productivity savings to begin contributing to our bottom line, resulting in renewed earnings growth,” he added.
Sanger said the company continues to target low-single-digit net sales growth for fiscal 2005, which includes one less week than fiscal 2004. The company also reaffirmed its estimate for full-year diluted earnings per share of $2.75 to $2.80.
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