General Mills: reports strong results for fiscal Q1/2010

Minneapolis / MN. (gm) General Mills Inc. reported strong results for the first quarter of fiscal 2010. Net sales for the 13 weeks ended August 30, 2009, grew one percent to 3,52 billion USD, led by six percent growth in U.S. Retail net sales. The comparison was difficult, as the company´s net sales grew 14 percent in last year´s first quarter. Foreign currency translation reduced 2010 first-quarter sales growth by two percentage points. Pound volume matched year-ago levels, reflecting the loss of two points of growth from divested product lines. Q1/2010 overview:

• Net sales increased to 3,52 billion USD, led by six percent growth in U.S. retail sales.
• Segment operating profit increased 21 percent to 768 million USD.
• Earnings per share grew at a strong double-digit rate to 1,25 USD.
• Excluding certain items affecting comparability, earnings per share grew 33 percent to 1,28 USD; exceeding the consensus of analyst estimates.

Gross margin for the quarter increased at a double-digit rate, reflecting strong operating performance in the company´s manufacturing facilities as well as recovery from depressed year-ago margin levels. The company increased its consumer marketing investment during the period, including a 16 percent increase in advertising and media expense. Segment operating profit grew 21 percent to 768 million USD. First-quarter net earnings totaled 421 million USD after a net reduction related to mark-to-market valuation of certain commodity positions. Diluted earnings per share (EPS) totaled 1,25 USD; up 58 percent from 0,79 USD per share in last year´s first quarter. Excluding mark-to-market impact in both years, earnings per share would total 1,28 USD for the first quarter of 2010, up 33 percent from 0,96 USD per share in the period last year.

Chairman and CEO Ken Powell: «We are very pleased with this start to the year. We are seeing continuing strong consumer demand for our products. These good sales levels, combined with the effects of our companywide focus on holistic margin management (HMM), are driving terrific operating performance in our manufacturing plants. In addition, our commodity and fuel costs for the quarter were below year-ago levels, helping us to recover margin that was lost in the same quarter last year. These factors drove first-quarter earnings growth that was well ahead of our expectations. As a result we have raised our EPS targets for the full year» (press release).