Jun 29, 2011 • By

General Mills reports fiscal 2011 earnings

This morning General Mills announced fiscal 2011 and fourth-quarter earnings, as well as our guidance for fiscal 2012. There is a lot of information in the press release and our investor presentation, so I will try to summarize the key points in this post.

In fiscal 2011, our performance met our expectations. Both sales and profit results met the key targets we set for the year.

Performance continues to be particularly strong across our international markets, led by our five global platforms of cereal, snacks, ice cream, meals – and yogurt once our Yoplait acquisition closes in the first fiscal quarter.

Our Bakeries and Foodservice business also had a strong year. Our sales to foodservice distributors were up 3 percent, and sales of our brands in convenience stores grew 11 percent in 2011, led by yogurt, cereal and snacks.

In addition to the business performance in fiscal 2011, I think it’s worth pointing out that we also continue to generate strong returns to shareholders — we delivered 14 percent total return to shareholders this year, on top of a 43 percent return in fiscal 2010. And just yesterday we announced a 9 percent dividend increase.

Fiscal 2011 results

·Net sales for the year increased 2 percent.

·Segment operating profit grew 4 percent.

·Diluted earnings per share (EPS) increased 20 percent to $2.70.

·Excluding certain items affecting comparability, diluted earnings per share grew 8 percent to $2.48, in line with the consensus of analyst estimates.

Fourth-quarter results

·Fourth-quarter net sales grew 3 percent.

·Segment operating profit grew 14 percent.

·Diluted EPS grew 55 percent to $0.48.

·Excluding certain items affecting comparability, diluted earnings per share grew 27 percent to $0.52, in line with the consensus of analyst estimates.

For fiscal 2012, our Chairman & CEO Ken Powell said that General Mills expects another year of good sales and earnings growth. In today’s investor webcast, Ken presented a strong lineup of new products and marketing initiatives. Our new product lineup for the first half of fiscal 2012 includes:

-Fiber One 80-Calorie Cereal

-Fiber One 90-Calorie Brownies

-Totino’s Pizza Stuffers

-Yoplait Light Granola Parfaits

-Pillsbury Egg Scrambles and Grands! Biscuit Sandwiches

And more!

Fiscal 2012 guidance

The company said it expects in 2012:

-Mid single-digit net sales growth.

-Low single-digit segment operating profit growth.

-Diluted earnings per share (EPS) are expected to increase to $2.60-2.62 before any effects of mark-to-market valuation. This EPS guidance would represent growth of 5 to 6 percent from 2011 results. (This guidance does not include any impact from General Mills’ announced acquisition of a controlling interest in the international Yoplait business, which is expected to close in the first quarter.)

-Input cost inflation of 10 to 11 percent, with significantly higher costs for ingredients and energy.

Analyst fiscal 2012 estimates were somewhat higher, but that was before our discussion today about input cost inflation. Despite the level of inflation, we will continue to invest in brand building and innovation to keep our brands healthy and growing – both in the U.S. and around the world. We believe this is the right strategy for the long-term health of our business.

Continued focus on Holistic Margin Management (our unique approach to cost savings) will help us offset much of the inflation we’re experiencing, keeping our brands affordable for consumers. Keeping our products affordable will continue to be our focus.

We remain on track to achieve $1 billion in productivity from 2010 to 2012, and we expect total supply chain productivity of more than $4 billion over the next decade.

For further details, please view our investor webcast on

Editor’s note: Earnings per share excluding certain items and total company segment operating profit are non-GAAP measures. Reconciliations of these measures to their relevant GAAP measures appear in financial schedules and Note 9 to the consolidated financial statements included with our press release. This blog also includes forward-looking statements about our expectations for our performance in fiscal 2012. You should refer to our press release for a description of factors that could impact our predictions about future results.