US food group General Mills has posted higher second-quarter earnings but lowered its full-year earnings guidance, partly due to higher commodities prices.

The company reported net earnings of $308m, or 81 cents a share, for the second quarter to 23 November, compared to $276m, or 73 cents a share, a year earlier. Net sales rose 4% to $3.06bn.

For the first six months of fiscal 2004, General Mills' net sales grew 5% to $5.58bn. Earnings after tax grew 18% to $535m.

"Our earnings are growing at a double-digit pace through the first half, fuelled by 2% growth in worldwide unit volume, operating margin improvement, and increasing profits from joint ventures," said chairman and CEO Steve Sanger.

"While we achieved growth in unit volume, sales and earnings through the first half of the year, our volume trends weakened in the second quarter. Because of that, we see some risk to fully achieving our volume targets for the year, although we do believe the product innovation and marketing programs we have planned will result in stronger volume growth in the second half. In addition, we see supply-chain costs coming in above our original plans, due in large part to higher prices on key commodities such as wheat, oil, eggs and vanilla," Sanger added.

The company said it had therefore lowered its earnings guidance for fiscal 2004 to between $2.75 and $2.85 per share, compared to a previous estimate of $2.85 to $2.90 per share.