General Mills earnings down 33% in third quarter

by Allison Sebolt
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MINNEAPOLIS — High input costs and a difficult comparison to strong year-ago results accounted for a 33% decrease in earnings during the third quarter at General Mills.

For the quarter ended Feb. 22, General Mills had net earnings of $288.9 million, equal to 88c per share on the common stock, which compared with earnings of $430.1 million, equal to $1.28 per share, during the same quarter of the previous year.

Net sales for the quarter were $3,537.4 million, up 4% from $3,405.6 million during the same quarter of the previous year.

Despite the weak third quarter earnings, General Mills has revised upward its guidance for fiscal 2009 to a diluted earnings per share range of $3.87 to $3.89 per share, up from $3.83 to $3.87 per share.

"In the fourth quarter we expect our input cost inflation will be well below our estimated full-year inflation rate of 9 per cent," said Ken Powell, chairman and chief executive officer. "The benefits of this lower input cost inflation and an extra selling week this year will contribute to strong segment operating profit growth for the final quarter. The operating environment in very challenging; however, our good performance through the first nine months of fiscal 2009 has enabled us to modestly increase our full-year earnings guidance."

For the quarter, operating profit in the U.S. Retail segment was $489.5 million, down 1% from $486.2 million during the same quarter of the previous year. Sales for the segment were $2,495.8 million, down 9% from $2,300.8 million during the same quarter of the previous year.

The International segment had an operating profit of $48.9 million for the quarter, down 6% from $52.2 million during the same quarter of the previous year. Sales for the segment were $580 million, down 5% from $612.8 million during the same quarter of the previous year.

The Bakeries and Foodservice segment has an operating profit of $21.9 million, down 61% from $56.1 million during the same quarter of the previous year. Sales for the segment were $461.6 million, down 6% from $492 million during the same quarter of the previous year.

For the nine months ended Feb. 22, the company had net earnings of $945.6 million, equal to $2.84 per share, down 15% from $1,109.5 million, equal to $3.32 per share, during the same period of the previous year. Sales for the nine months were $11,045.6 million, up 9% from $10,181 million during the same period of the previous year.

"We expect to finish the year on a strong note," Mr. Powell said. "We intend to continue investing substantial levels of consumer marketing support behind our brands in order to help position our businesses for continuing growth in fiscal 2010."

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