General Mills, the US firm behind brands like Haagen-Dazs ice cream, Nature Valley snack bars and Cheerios cereal, revealed its overseas business had gotten off to “a good start” in the first quarter of the company’s fiscal year.
In a cautious conference call with analysts to discuss the group’s quarterly results, CEO Ken Powell said the company’s sales in Europe, Asia-Pacific and Latin America rose.
As a whole, General Mills’ said its overseas business grew “slightly”, with sales of US$660m, although foreign exchange did dampen growth.
Powell pointed to a 6% rise in constant-currency sales in Europe, led by France, while sales in the UK grew in the “mid-single-digits”, he said.
“That’s a good start to the year for Europe, where the economic conditions have been tough,” Powell said. However, he added: “It’s too early to declare economic victory.”
Sales in Asia-Pacific were up 7%, with constant-currency sales in China up “at a double-digit rate”, the General Mills chief explained. Sales in Latin America increased 4%, driven by “good growth” in developing markets, he added.
“Our international business is off to a good start this year, and we’re beginning to see improving consumer trends in some markets. We have tremendous potential in international markets, and we’re on track to deliver mid-single-digit constant-currency sales growth in 2011,” Powell said.
In the US, General Mills’ net sales rose 2% to $2.45bn with the company’s Big G cereals division and yoghurt business YOPLAIT both seeing sales rise 4% during the quarter.
Powell said trends in June and July had been “fairly soft in a number of categories” although he added that “August trends picked up a bit”.
The General Mills conceded that, looking across US food categories, sales trends were “a mixed bag”. However, he added: “I guess what I would say generally is that it looks to us like the categories are starting to all move in a good direction. As we said, we saw our soup business started to pick up a little bit towards the end of the quarter. So our outlook is that as we move into the end of summer and fall and all of our programs go into play we’ll see those categories continue to improve.”
Looking to the rest of the company’s fiscal year, Powell was cautious in his outlook. “In terms of General Mills results, we’re anticipating that our near-term financial performance will continue tracking in line with year-ago levels. And we expect sales and earnings trends will pick up at a measured pace as our fiscal year unfolds,” he said.