General Mills Raises Outlook As Q4 Profit Doubles On Cereal Sales In U.S.

July 1, 2009 10:05 a.m. EST

New York, NY (AHN) - Investors will keep an eye on General Mills (NYSE: GIS) as the firm said its fiscal fourth-quarter net income nearly doubled on 5 percent higher total sales, topping analysts' estimates.

The Minneapolis-based cereal giant raised its earnings outlook on positive sentiment. The company now expects to make a profit $4.20 per share to $4.25 per share for the new fiscal year.

The firm raised the forecast from its previous projection of $4.15 per share on average basis. The market analysts now expect the company to post a profit of $4.18 per share.

"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," Chairman and Chief Executive Officer Ken Powell said in a statement today.

"Our plans assume that world economic conditions remain challenging, and that foreign currency translation and transaction effects will reduce our reported sales and earnings growth rates. However, we expect the rate of input cost inflation to moderate, and we believe savings from our holistic margin management initiatives will exceed cost increases."

For the quarter ended May 31, net earnings bumped up to $358.8 million, or $1.07 per share, from $185.2 million, or 53 cents, in the year-earlier quarter.

Excluding items, such as hedging gains and losses, income was at 86 cents, compared to 73 cents. Sales of the maker of Cheerios and Hamburger Helper gained to $3.65 billion, from the previous quarter's $3.47 billion. The company's sales were reduced by three percentage points, due to foreign-currency fluctuations.

The market analysts on Wall Street had anticipated the company to post profit of 81 cents, excluding special items, in the quarter on the sales of $3.7 billion.

"In today's very challenging economic environment, our leading food brands offer the quality, convenience and value that consumers are looking for and, as a result, our businesses are showing strong growth," Powell said.

"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," he added.

Fourth-quarter General Mills' U.S. Retail net sales rose 12 percent, with volume contributing 3 points of the growth. Operating profits rose 30 percent even with a 25 percent increase in consumer marketing spending in the period.

International segment net sales dropped by 5 percent, but foreign currency exchange reduced net sales growth by 17 percentage points. On a constant-currency basis, net sales increased 12 percent with volume up 5 percent in the quarter.

The company announced a 9 percent increase in the quarterly dividend rate to 47 cents per share from 43 cents. During fiscal 2009, General Mills repurchased 20 million shares of common stock at an average price of $64.