MINNEAPOLIS — Sales increased 13% in the third quarter for General Mills, Inc. behind Yoplait volume while earnings attributable to the company dipped 0.2% as input cost inflation affected results negatively.
Third-quarter earnings attributable to General Mills were $391.5 million, equal to 61c per share on the common stock, which compared with $392.1 million, or 61c per share, in the previous year’s third quarter.
Net sales for the quarter ended Feb. 26 were $4,120 million, which compared with $3,646.2 million in the previous year’s third quarter. Price realization and mix contributed three points of net sales growth, and pound volume contributed 10 points, including 13 points of pound volume growth from the Yoplait acquisition.
Minneapolis-based General Mills in July of 2011 announced it had completed the acquisition of a 51% controlling interest in Yoplait S.A.S. and a 50% interest in a related entity that holds the worldwide Yoplait brands from PAI Partners and Sodiaal in a transaction valued at about $1.2 billion.
“Our third-quarter results reflect strong worldwide sales growth for our business, but the 10% to 11% input cost inflation we’re experiencing this year pressured our margins,” said Ken Powell, chairman and chief executive officer of General Mills, when third-quarter results were given March 21. “In the fourth quarter, we expect to generate continued good sales momentum, and we anticipate that gross margin contraction will ease somewhat. This should result in renewed earnings growth as we wrap up 2012 and move into the new fiscal year.”
General Mills reaffirmed its earnings-per-share guidance of $2.53 to $2.55 per share for fiscal year 2012.
“Fiscal 2012 has represented a challenging operating environment with the highest level of commodity inflation that we’ve seen in 30 years,” Mr. Powell said. “But sales of our leading food brands remain strong in markets around the world, putting General Mills on pace to achieve record-level net sales and adjusted diluted earnings per share.”
In the third quarter, gross margin as a per cent of net sales was below year-ago levels due to higher input costs and the change in business mix to include the Yoplait acquisition. Advertising and media expense was 8% higher.
In the U.S. Retail segment, operating profit of $512.5 million for the quarter ended Feb. 26 was 4% lower than $533 million in the previous year’s third quarter. The decline reflected higher input costs, lower volume and a 2% increase in advertising and media expense.
U.S. Retail sales rose 4% to $2,609.4 million from $2,513.7 million. Net sales for Big G cereal grew 6% as established brands such as Honey Nut Cheerios and Cinnamon Toast Crunch made gains and new products such as Peanut Butter MultiGrain Cheerios contributed. Led by Betty Crocker dessert mixes, the Baking Products division had net sales growth of 11%. Strong growth by Nature Valley and Fiber One snack bars led the Snacks division sales growth of 7%. Meals division sales increased by 6% due to gains from Green Giant vegetables, Helping dinner mixes and Progresso soups.
In the International segment, third-quarter operating profit of $96 million marked a 40% increase from $69 million in the previous year’s third quarter. Advertising and media expense grew 31% for International in the third quarter.
International sales in the third quarter jumped 51% to $1,041.3 million from $688.4 million. The Yoplait acquisition accounted for 43 points of net sales growth. General Mills saw sales more than double in Europe and sales gains of 37% in Canada, 15% in the Asia/Pacific region and 12% in Latin America.
In the Bakeries and Foodservice segment, third-quarter operating profit slipped to $66.5 million from $66.7 million. The segment experienced higher input costs in this year’s third quarter while last year’s third quarter included strong grain merchandising earnings.
Third-quarter net sales in Bakeries and Foodservice increased 6% to $469.4 million from $444.1 million. Price realization and mix contributed six points of net sales growth.
Companywide for the nine months ended Feb. 26, net earnings attributable to General Mills was $1,241.9 million, or $1.92 per share, which was down 16% from $1,478.1 million, or $2.30 per share, in the same time period of the previous year. Net sales for the nine-month period were $12,591.5 million, up 12% from $11,245.9 million in the same time period of the previous year.
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