Shares in General Mills fell 2.2% today at 9:49 ET (20 December) after the group posted a drop in half-year profits.
General Mills posted a 21.5% fall in net income to US$850.4m for the six months ended 27 November. Operating profit was down 14.4% to $1.36bn.
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The fall in earnings came as General Mills battled higher commodity costs. Its net sales increased 11.5% to $8.47bn. Price realisation and mix contributed five percentage points of growth, the company said. In addition, volumes contributed six percentage points to the net sales growth, including ten points of growth from yoghurt business Yoplait, in which General Mills acquired a 50% stake in May.
General Mills posted net income of $444.8m for its second quarter ended 27 November, a fall of 27.5%. Operating profit was down 12.9% to $716.9m. However, net sales increased 13.7% to $4.62bn for the three months.
Reflecting on the results General Mills chairman and CEO Ken Powell said the company was set to meet its full-year financial targets. “General Mills second-quarter results show good net sales growth worldwide. Our Yoplait acquisition fueled a more than 50% increase in total international sales. Significantly higher input costs pressured our margins, as expected,” he said. “But in total, performance for the quarter and year-to-date has us on track to meet the key financial targets we have set for fiscal 2012.”
The company reaffirmed its full-year fiscal 2012 EPS guidance of $2.59 to $2.61, excluding mark-to-market effects and integration costs for the Yoplait acquisition.
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