US food giant General Mills today (1 July) reported a 1% rise in annual net earnings – but also posted a 10% jump in operating profit thanks in part to record domestic sales.

The Cheerios cereal maker booked net earnings of US$1.3bn as proceeds from disposals helped offset a fall in the mark-to-market valuation of certain commodity positions.

Excluding one-off items earnings per share grew 13% to $3.98.

Operating profit for the year to 31 May reached US$2.6bn with net sales from General Mills’ US retail operations up 11% to over US$10bn.

Operating profits from its US retail division rose 12% to US$2,2bn amid a 19% increase in marketing spending.

The impact of foreign exchange weighed on General Mills’ results outside the US. Net sales grew 1% to US$2.6bn – but currency fluctuation reduced that growth by nine percentage points.

“On a constant-currency basis, sales grew 10 percent overall and the company recorded sales growth in every region where it operates,” General Mills said.

Operating profit from General Mills international division fell by 3% as foreign exchange hit earnings from overseas by 14%.

Chairman and CEO Ken Powell said the company’s performance over the fiscal year left it well placed for the next 12 months.

“In 2009, we held our margins in the face of sharply higher input costs, and we significantly increased the level of consumer marketing support for our brands. These actions have positioned General Mills to achieve another year of good growth in fiscal 2010,” Powell said.

“Our product categories are on-trend with consumer needs, and we’ve got a good line-up of product news and innovation planned for the new year, so we expect our business to generate good growth again in fiscal 2010.”

The firm forecast a 6-7% rise in earnings per share, excluding one-off items, for fiscal 2010.