Higher costs weigh on General Mills earnings

by Staff
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MINNEAPOLIS — Higher input cost inflation contributed to a 13% decline in full-year earnings at General Mills, Inc. For the year ended May 27, the company had earnings of $1,567.3 million, equal to $2.42 per share on the common stock, compared with $1,798.3 million, or $2.80 per share, during fiscal 2011. Sales for the year were $16,657.9 million, up 12% from $14,880.2 million during fiscal 2011.

“Fiscal 2012 was characterized by the highest input-cost inflation we’ve experienced in more than three decades, and this cost pressure constrained our earnings growth,” said Ken Powell, chairman and chief executive officer. “In addition, slow economic recovery kept many consumer budgets under pressure. In this environment we took strategic actions that increased our worldwide sales base and strengthened our portfolio. In particular, we increased advertising and media investment on our base business, we sustained a high level of new-product activity worldwide and we made several acquisitions that expand our participation in fast-growing food categories and emerging markets.”

The U.S. Retail segment had an operating profit of $2,295.3 million, down 2% from $2,347.9 million during the previous year. Sales for the segment were $10,480.2 million, up 3% from $10,163.9 million during the previous year.

The Bakeries and Foodservice segment had an operating profit of $286.7 million, down 6% from $306.3 million during the previous year. Sales for the segment were $1,983.4 million, up 8% from $1,840.8 million during the previous year.

For the fourth quarter ended May 27, earnings for the company as a whole were up 2% at $325.4 million, or 50c per share, which compared with $320.2 million, or 50c per share, during the same quarter of the previous year. Sales for the quarter were $4,066.4 million, up 12% from $3,634.3 million during the same quarter of the previous year.

“We expect fiscal 2013 to be another year of good growth for General Mills, reflecting sales and profit increases from our base business along with contributions from newly acquired operations,” Mr. Powell said. “We plan to balance our 2013 earnings growth with reinvestment designed to support our longer term progress. These initiatives include increased marketing and merchandising investments in U.S. yogurt and select other product lines; investment to support the Canadian Yoplait yogurt business being assumed from the current licensee on Sept. 1, 2012; and investments designed to accelerate our business growth in emerging markets, particularly China.”

The company anticipates adjusted diluted earnings per share for fiscal 2013 to be about $2.65.

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