Sep 21, 2011 • By

General Mills reports first-quarter earnings

Today General Mills announced our first-quarter fiscal 2012 earnings. I’ll discuss the highlights in this blog post, but if you’d like the full financials, you can read our press release.

Despite a difficult economic environment, General Mills delivered solid first-quarter results that exceeded the consensus of analyst estimates.

Our Chairman & CEO Ken Powell said today, “A challenging first-quarter comparison is now behind us, and we expect General Mills to show earnings growth over the next nine months, with the pace of growth strengthening as the year unfolds.”

We also reaffirmed our fiscal 2012 guidance today.

Following is a brief overview of the first-quarter financials. Our results now include the Yoplait International business acquired on July 1.

•Net sales grew 9 percent to $3.85 billion. The international Yoplait acquisition contributed 3 points of net sales growth.

•Segment operating profit declined 3 percent reflecting significantly higher input costs year-over-year.

•Diluted earnings per share (EPS) totaled 61 cents.

•First-quarter adjusted diluted EPS, which excludes the effects of mark-to-market valuation of certain commodity positions, totaled 64 cents, matching year-ago results – and exceeding the consensus of analyst estimates (62 cents).

During the investor call today, General Mills Executive Vice President and Chief Operating Officer of U.S. Retail, Ian Friendly, said General Mills is seeing category sales trends in U.S. Retail improve as food manufacturers have returned to greater levels of product innovation and marketing support. He also said General Mills recently launched 70 new products, and expects to increase its media investment this year at least as fast as sales growth.

Friendly highlighted Big G cereal, which grew 2 percent this quarter. While our new products performed well – including Fiber One 80 Calorie Honey Squares – he said marketing support grew sales on our established brands as well. Honey Nut Cheerios – America’s best-selling cereal – grew 5 percent; the gluten-free benefits of our Chex cereals helped drive 29 percent growth in the quarter; and Cinnamon Toast Crunch grew 8 percent in the quarter on Hispanic advertising.

Our snacks division grew 17 percent this quarter on both new and established products. In June we launched Fiber One brownies with just 90 calories per serving. Or you can refer to them as “Magic Brownies” as Cheech and Chong do in a new marketing campaign launched just this week.

Outlining the state of consumer trends around the world, Chairman and CEO Powell said consumer trends are “a tale of two worlds.” He said an increasing number of consumers in emerging markets are buying branded packaged goods as their income expands. But high unemployment, a soft housing market, and concerns about the economy are pressuring consumer confidence and spending in developed markets.

Despite the challenges, Powell said he remains “very optimistic about the opportunities for those of us in the food business.”

Powell said results for our Foodservice business continue to outpace the industry. Sales growth of 13 percent was helped by new products such as Pillsbury heat-and-eat mini French toast for K-12 schools, and Nature Valley Recharge energy bars for convenience stores.

Powell also said our international sales grew 30 percent, with large, global brands driving this sales growth. He said Häagen-Dazs had a great summer in France, where Secret Sensations is off to a terrific start. This is ice cream on the outside, and a liquid crème brulee or chocolate fondant center. And we remain on track to open more than 100 new Häagen-Dazs ice cream shops around the world in 2012.

Powell also said “we’ve got a terrific lineup of new items already launched, with additional innovation planned for the back half of the year.”

For more details on our first quarter results, you can find our investor webcast archived on our investor relations website.