The company said it incurred pre-tax restructuring charges of $31.4 million during fiscal 2010 (including $24.1 million related to the discontinuation of children’s refrigerated yogurt beverage and microwave soup product lines), which compared with $41.6 million in charges and a net pre-tax gain of $84.9 million from divestitures in fiscal 2009.
Net sales for the full year were $14,796.5 million, up 0.7% from $14,691.3 million.
Despite the strong full-year results, net earnings in the fourth quarter ended May 30 plummeted 41% to $211.9 million, or 32c per share, down from $358.8 million, or 54c per share, during the same quarter of the previous year. The most recent quarterly results included a $35 million tax charge related to recent federal health care legislation as well as a $25 million after-tax expense associated with a recent debt purchase.
Net sales for the fourth quarter were $3,570.4 million, down 2% from $3,645.7 million during the same quarter of the previous year.
“This was an exceptional year for our company,” said Ken Powell, chairman and chief executive officer. “We achieved broad-based sales growth and expanded gross margin, which allowed us to invest at above-planned levels in media support and selling capabilities. And our 16% e.p.s. increase significantly exceeded the high single-digit rate we target in our long-term growth model.”
For the full year, operating profit in the U.S. Retail segment was $2,392 million, up 8% from $2,208.5 million during fiscal 2009. Results included a 22% increase in media spending during the year. Sales for the segment were $10,323.5 million, up 3% from $10,052.1 million during the same period a year ago. General Mills said volume gains contributed one percentage point of the net sales growth during the year, while price and mix contributed two points.
“Net sales for Big G cereals rose 5% with good performance from core brands, and strong introductory sales from Chocolate Cheerios and Wheaties Fuel,” General Mills said. “Snacks sales grew 6% led by Fiber One bars, Nature Valley bars and various fruit snacks. Yoplait net sales grew 2%, including good contributions from new Yoplait Delights yogurt parfaits and Yoplait Greek yogurt.
“Net sales for the Pillsbury division grew 1% led by Totino’s pizza and hot snacks, and Pillsbury Toaster Strudel pastries. Meals division net sales grew 1%, as gains by Green Giant frozen vegetables, Old El Paso Mexican foods, and various convenient dinner items offset sales declines in ready-to-serve soup. Baking Products division net sales matched year-ago levels overall, but Betty Crocker brownies, cookie mixes and new gluten-free dessert mixes recorded good growth. For the company’s Small Planet Foods organic and natural product lines, net sales grew 3%.”
The International segment had an operating profit of $219.2 million, down 17% from $261.4 million during fiscal 2009. Sales for the segment were $2,702.5 million, up 4% from $2,591.4 million. On a constant-currency basis, General Mills said full-year sales rose 9% in the Asia/Pacific region, 2% in Europe and 2% in Canada.
Operating profit within the Bakeries and Foodservice segment soared 46% to $250.1 million from $171 million in fiscal 2009, driven by successful efforts to emphasize higher-margin product lines and customer channels, lower supply chain costs, and productivity savings. Sales, meanwhile, fell 14% to $1,770.5 million from $2,047.8 million. General Mills said volume subtracted 8 percentage points of net sales, while price and mixed reduced sales by 6 points.
General Mills continued to reap the benefits of its international partnerships, as after-tax earnings from joint ventures rose 11% in 2010 to $102 million. Net sales from joint ventures climbed 4% to $1.2 billion, led by strong sales from Cereal Partners Worldwide, which helped offset weaker sales for Haagen Dazs Japan.
Looking ahead, Mr. Powell said he expects another solid year for General Mills, with net sales expected to grow at a low single-digit rate and segment operating profits forecast to grow mid single-digits. Earnings per share are expected to increase to approximately $2.46 to $2.48, before any effects of mark-to-market valuation, which would represent growth of 7% to 8% over fiscal 2010 results, he said.
Despite General Mills optimistic profit forecast, the company’s stock fell nearly 5% in after hours trading June 29 as the forecast was below analysts’ e.p.s. expectations of $2.50 per share.