The maker of Cheerios cereal, Yoplait yogurt and other food products reported Wednesday that better cereal and organic and natural product sales drove its fiscal first-quarter net income up 12 percent.
General Mills Inc. has been one of the strongest performers in the sector during the recession because of brand loyalty and cost controls. While the company is selling more of its products, it is struggling to balance the demands of rising commodity costs and discounting in stores driven by tough competition.
The cereal and food maker posted net income of $472.1 million, or 70 cents per share, for the period ended Aug. 29. That's higher than its $420.6 million, or 62 cents per share, a year ago.
Adjusted profit was 64 cents per share, which was a penny better than what analysts polled by Thomson Reuters expected.
Revenue edged up 1 percent to $3.53 billion from $3.48 billion, but fell short of Wall Street's $3.57 billion.
"Consumer demand for our established brands remains strong, and new products are making good contributions to our sales results," Chairman and CEO Ken Powell said in a statement.
The company's Small Planet Foods posted a 15 percent sales increase. The unit, which makes organic and natural products, said sales of its Cascadian Farm organic cereals and granola bars improved, while Larabar fruit and nut energy bars posted a double-digit sales increase.
Revenue for Big G cereals climbed 4 percent, with strong performances from Multigrain Cheerios, Fiber One and Cinnamon Toast Crunch and healthy contributions from newcomers Chocolate Cheerios and Wheaties Fuel.
Snack unit revenue rose 5 percent, helped by shipments of new grain snack bars and fruit snack bars. Sales for the Yoplait yogurt business gained 4 percent with Yoplait Light, Yoplait Greek, Yoplait Splitz layered yogurts and Yoplait Original four-packs performing well.
At the meals division, sales increased 3 percent with solid contributions from Green Giant frozen vegetables, Old El Paso Mexican foods and new Wanchai Ferry and Macaroni Grill frozen entrees.
Among those that struggled were the Pillsbury unit and the baking products segment, which both reported revenue declines.
General Mills maintained that its adjusted earnings will be between $2.46 and $2.48 per share for fiscal 2011. This is in range of analysts' $2.48 per share.
General Mills shares edged up 7 cents to $35.74 in premarket trading.
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