MINNEAPOLIS (AP) -- General Mills Inc. said Tuesday it sold more cereal and snacks in the second quarter, but higher commodity costs and lower selling prices left adjusted earnings short of expectations.
Food makers benefited during the recession as more Americans saved money by eating at home more. But now they are facing tough year-over-year comparisons and rising costs for commodities such as grain.
The maker of Cheerios and Cinnamon Toast Crunch says net income rose 9 percent to $613.9 million, or 92 cents per share. That compares with $565.5 million, or 83 cents per share, last year.
Excluding a tax benefit and the effects of mark-to-mark accounting, net income was 76 cents per share, missing analyst expectations of 78 cents per share, according to a poll by Thomson Reuters.
Revenue edged up nearly 1 percent to $4.07 billion. Analysts expected $4.1 billion.
"The operating environment in the first half of 2011 included high levels of price promotion by food manufacturers and retailers," CEO Ken Powell said.
Shoppers squeezed by the fallout from the recession have made it tough for supermarkets to raise prices as well, because they're shopping on price and switching to store brands.
General Mills' U.S. retail revenue was flat at $2.85 billion. Big G cereal revenue fell 2 percent, while Yoplait revenue rose 4 percent.
International revenue rose 4 percent to $749 million, driven by revenue gains in Latin America and Asia/Pacific.
General Mills, based in Minneapolis, says it expects to reach its full-year guidance of $2.46 to $2.48 per share. Analysts expect $2.48 per share.
