US food group General Mills today (16 December) posted a 2% fall in underlying half-year profits as its chief executive spoke of “particularly challenging” six months.

The maker of Green Giant canned vegetables and Progresso soup booked adjusted net earnings of US$934.2m for the six months to 28 November, down just under 2% on the year.

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On a reported basis, General Mills’ net earnings were up 10% at $1.09bn but that figure was boosted by a better corporate tax rate and lower costs on mark-to-market valuations on commodities.

General Mills’ segment operating profit was down 2.2% at $1.6bn as profits from its US grocery retail division and its bakeries and foodservice unit fell.

The company’s reported operating profit was up 0.7% at $1.58bn thanks to lower restructuring and impairment charges.

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The group’s net sales were up 1.1% at $7.6bn as sales rose across all three divisions, including the company’s international business, where sales climbed 2.4%.

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General Mills chairman and CEO Ken Powell said: “We expected the first half of this fiscal year to be particularly challenging, and it was. We were lapping very strong growth by our company in the same period a year ago, including 16% segment operating profit growth and a 22% increase in our adjusted diluted earnings per share.

“In addition, the operating environment in the first half of 2011 included high levels of price promotion by food manufacturers and retailers. So we were pleased to see all three of our operating segments post net sales and volume increases through the first half.”

Click here for the full first-half and second-quarter statement from General Mills and click here for further insight from the company’s conference call with Wall Street analysts.