General Mills has said that it expects fiscal 2006 earnings to exceed the company’s published guidance.

Diluted earnings per share for the year ended May 28, 2006, are expected to total US$2.90, including eight cents of dilution associated with accounting for contingently convertible debt. Prior guidance was for full-year earnings per share of $2.80 to $2.85, including eight cents of dilution associated with the accounting rule.

“The stronger results reflect modestly above-target operating performance along with an approximately three cents per share benefit from a favourable tax adjustment realized in the fourth quarter of the year,” a statement said.
General Mills will report fourth quarter and full-year 2006 financial results on 29 June. At that time, the company also expects to outline its plans for 2007.

The company added in the statement that those plans will include targets of low single-digit growth in net sales and mid single-digit growth in segment operating profits, consistent with the company’s long-term growth model.

“Earnings per share growth from reported 2006 results will be restrained by the company’s adoption of stock option expensing, effective as of the first quarter of fiscal 2007; an estimated $40m increase in interest expense primarily due to higher rates; and an estimated 75 to 125 basis point increase in the company’s effective tax rate,” the company concluded.