US food company General Mills has reported a 19% rise in quarterly earnings as higher commodity and other input costs were more than offset by increased sales and lower restructuring expenses.
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The company reported net earnings of US$367m, or 97 cents per share, for the second quarter to 28 November, compared to $308m, or 81 cents per share, in the year-ago period. Net sales increased 4% to $3.17bn.
“In the second quarter, the pricing and productivity initiatives we’ve implemented to offset higher input costs began contributing to our bottom line. Our 4% net sales growth outpaced the 1% increase in our worldwide unit volume. And productivity initiatives contributed to 6% growth in operating profit for the quarter,” said chairman and chief executive Steve Sanger.
Looking ahead to the second half of fiscal 2005, Sanger said, “Our plans call for continuing contributions from both productivity and pricing. In particular, we expect our list price increases and higher merchandised price points to be increasingly reflected at retail. We’ll also have one less selling week in this year’s fourth quarter compared to last year. To counter those challenges, we’re bringing strong levels of news and innovation to our product lines, such as making all Big G cereals a good source of whole grain.”
The company reaffirmed its target for full-year diluted earnings per share of $2.75 to $2.80. This guidance does not include an anticipated one-time gain from the purchase by PepsiCo of General Mills’ 40.5% interest in the SVE joint venture. That transaction is expected to be completed in early calendar 2005.
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