General Mills 3Q Profit Up 15 Percent

Maker of Cheerios cereal and Yoplait yogurt posted 15 percent higher profit for fiscal third quarter on lower commodity costs and rising sales.

MINNEAPOLIS (AP) -- The maker of Cheerios cereal and Yoplait yogurt posted a 15 percent higher profit for its fiscal third quarter on lower commodity costs and rising sales boosted by a sharp increase in marketing spending.

General Mills Inc. also lifted its 2010 adjusted earnings outlook on Wednesday, but the forecast was shy of Wall Street's expectations.

Net income was $332.5 million, or 96 cents per share, for the period ended Feb. 28. That's up from $288.9 million, or 85 cents per share, in the same quarter a year ago.

Excluding one-time items, profit was 97 cents per share, topping the 93-cent estimate of analysts surveyed by Thomson Reuters. Those estimates generally take out one-time items.

"Results for the third quarter reflect continued good sales growth, margin strength and significant marketing reinvestment in our brands," Chairman and CEO Ken Powell said in a statement.

General Mills, based in Minneapolis, has been one of the stronger food makers in the weak economy because of sales gains from consumers looking for cheap meals and its own cost-control efforts.

The company recently said it is looking to new venues for growth, boosting its advertising spending to introduce new products and reach new markets. General Mills' third-quarter advertising and media spending increased 33 percent.

Quarterly revenue increased 3 percent to $3.63 billion. Wall Street expected $3.62 billion.

Revenue from Big G cereals climbed 6 percent, helped by the rollouts of new Chocolate Cheerios and Wheaties Fuel as well as strong results from existing brands such as Multigrain Cheerios and Lucky Charms.

At the snacks unit, revenue rose 15 percent with healthier fare like fruit snacks, Fiber One bars and Nature Valley granola bar varieties performing well. The Yoplait division's revenue edged up 2 percent on the addition of Yoplait Delights and solid results from its Yoplait Greek style yogurt.

Revenue for the Pillsbury unit also rose 2 percent with strength in Pillsbury Toaster Strudel, Totino's pizza and Pillsbury refrigerated dough products.

Among the weaker performers were the meals unit and the baking products division. Meals revenue fell 2 percent, with declining Progresso soup sales offsetting strong results from Old El Paso Mexican products, Green Giant frozen vegetables and Helper and Restaurant Favorites dinner mixes.

Baking products' revenue dropped 8 percent on lower flour prices and increased competition in dessert mixes.

Overseas revenue grew 11 percent, partly helped by a softer dollar.

Last month General Mills said it will focus on consumer segments such as baby boomers, young families and the rising middle class in emerging global markets to drive its business over the next five years.

For fiscal 2010, the company now expects adjusted earnings of $4.57 to $4.59 per share. Its prior guidance was between $4.52 and $4.57 per share.

But analysts expect a slightly higher profit of $4.60 per share for the year.

General Mills provided some long-term growth targets in February, saying it foresees earnings hitting $6.75 per share by 2015, with sales rising to $18 billion. The food maker reported sales of $14.69 billion for 2009.

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