Strong in all divisions, General Mills income climbs 8%

by Josh Sosland
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MINNEAPOLIS — Net income of General Mills, Inc. in the first quarter ended Aug. 26 was $288.9 million, equal to 85c per share on the common stock, up 8% from $266.9 million, or 76c per share, during the first quarter of fiscal 2007. Net sales were $3,072 million, up 7%.

Operating profit of the Bakeries & Foodservice business was $34 million, up 17% from $29 million in the same period a year earlier. Sales were $440.9 million, down 1%.

U.S. Retail operating profit was $473.3 million, up 6% from $447.3 million. Sales were $2,031.7, up 6%.

First-quarter profits of the company’s International business were $71 million, up 27% from $55 million. Net sales were $599.4 million, up 19%. Contributors to the sales gain included 9 points from volume growth and 7 points from foreign exchange gain.

Driving growth in the Retail segment was the company’s snack business, which scored a 16% increase in net sales, boosted by Nature Valley grain snacks, Fiber One bars and fruit snacks. Baking products scored a 7% sales increase, boosted by higher prices and a favorable product mix shift. Pillsbury USA sales were up 6%, driven by refrigerated dough and Totino’s frozen pizza and snacks.

Big G cereal sales were up 5%. During the quarter, the company made introductory shipments of new Cheerios Crunch Oat Cluster, Chocolate Chex and two Curves cereals.

Meals division net sales rose 6%, led by dinner mixes and Progresso ready-to-serve soups. Yoplait division sales were up 3% and featured contributions from new Yo-Plus probiotic yogurt and Fizzix carbonated yogurts.

Whiles sales of the company’s Small Planet Foods organic business slipped 4% from the same quarter last year, the company noted that the comparison was a difficult one. The business grew 34% in the first quarter last year.

After-tax earnings from General Mills joint ventures in the first quarter of fiscal 2008 were $22 million, up 16% from $19 million in the same period last year. Net sales of Cereal Partners Worldwide grew 26% in the quarter, boosted by the Uncle Tobys cereal business in Australia, acquired in July 2006.

Haagen Dazs sales were flat and the 8th Continent joint venture in the United States sustained a 16% sales decline.

Commenting on the quarterly performance, Steve Sanger, General Mills chairman and chief executive officer, said the strong results were achieved despite "challenging input-cost inflation" and increased marketing spending to build the company’s brands. He reaffirmed guidance of low single-digit sales growth, mid single-digit growth in segment operating profits and diluted earnings per share of $3.39 to $3.42 for fiscal 2008.

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