General Mills Q2 profit soars 50% on strong sales
December 17, 2009
by Eric Schroeder
MINNEAPOLIS — Strong sales helped drive a 50% gain in earnings at General Mills, Inc. in the second quarter ended Nov. 29. The improved results led the Minneapolis-based company to raise its full-year earnings guidance to $4.52 to $4.57 per share, up from $4.40 to $4.45 per share forecast in September.
Net earnings in the second quarter ended Nov. 29 were $565.5 million, equal to $1.72 per share on the common stock, up from $378.2 million, or $1.14 per share, in the second quarter of fiscal 2009. Net sales rose 1.7% to $4,078.2 million from $4,010.8 million.
“Consumers around the world continue to focus on nutritious, convenient food choices that help them make breakfast, lunch and dinner for their families at good value,” said Kendall Powell, chairman and chief executive officer. “Demand for our leading brands remains strong. These good sales levels, combined with the accumulating benefits of our holistic margin management efforts, are continuing to drive terrific operating performance in our manufacturing plants. This strong, fundamental business momentum has enabled us to raise our e.p.s. targets for the full year.”
For the quarter, operating profit in the U.S. Retail segment was $718.4 million, up 13% from $638.3 million during the same quarter of the previous year. The quarter included a 29% increase in advertising and media expense.
Sales for the segment were $2,890.6 million, up 4% from $2,785.1 million during the same quarter of the previous year. General Mills said pound volume contributed 2 percentage points of the sales growth.
Net sales for Big G cereals grew 10% in the second quarter, led by Chex cereal varieties, the Cheerios franchise and Fiber One cereals. Snacks division sales rose 6%, driven by strong contributions from Fiber One and Nature Valley grain snack bars and several fruit snack varieties. Net sales in the Baking Products division increased 5% behind Betty Crocker dessert mixes, while the Pillsbury division rose 1% thanks to good performance by Pillsbury refrigerated dough products, Totino’s pizza and Pizza Roll snacks, and Pillsbury Savorings appetizers.
Another segment experiencing strong results was the Yoplait division, which grew 5% behind continued gains by Yoplait Light and strong introductory sales of Yoplait Delights yogurt parfaits.
The Meals division essentially matched last year’s sales levels, with Green Giant frozen vegetables, Progresso ready-to-serve soups and Old El Paso Mexican foods posting good gains. Net sales for the Small Planet Foods natural and organic business, meanwhile, fell 2%, reflecting soft organic food industry trends.
The International segment had an operating profit of $77.1 million for the quarter, down 3% from $79.5 million during the same quarter of the previous year. Sales for the segment were $723.9 million, up 7% from $676.2 million during the same quarter of the previous year.
The Bakeries and Foodservice segment has an operating profit of $84.6 million, up 32% from $63.9 million during the same quarter of the previous year. Sales for the segment were $463.7 million, down 16% from $549.5 million during the same quarter of the previous year.
General Mills recorded restructuring, impairment and other exit items of $25 million in the second quarter, which compared with $2 million in similar expenses during the second quarter of fiscal 2009.
For the six months ended Nov. 29, net earnings totaled $986.1 million, or $3.01 per share, up 50% from $656.7 million, or $1.96 per share, in the same period of fiscal 2009. Net sales in the first half of fiscal 2010 totaled $7,597 million, up 1.2% from $7,508.2 million.
Looking ahead to the remainder of 2010, Mr. Powell said, “Our businesses are growing, and General Mills people in our plants, sales teams and offices worldwide are delivering great performance. As we move into the second half of fiscal 2010, we plan to make additional reinvestments in marketing and merchandising programs to fuel continued growth for our brands this year and into fiscal 2011.”