General Mills Inc. reported a jump in quarterly profits Wednesday, as strong performance overseas offset rising commodity costs and lower U.S. cereal sales.
The Golden Valley-based packaged foods giant posted fiscal third-quarter earnings of $392 million, or 59 cents per share. Adjusted for one-time events, earnings per share were 56 cents, up from 49 cents a year earlier and in line with stock analysts' estimates.
Quarterly sales were $3.65 billion, up 2 percent from a year ago and a little less than the $3.69 billion expected by analysts. "It was kind of a mixed bag this quarter," said Jack Russo, a stock analyst with Edward Jones & Co.
General Mills shares fell 67 cents, or 1.8 percent, to close at $36.24.
In the United States, where General Mills generates the bulk of its revenue, quarterly retail sales were down 1 percent to $2.51 billion, and operating profits were slightly less than in the previous year. "The company faces persistent headwinds with fragile consumer confidence and rising commodity costs," said Erin Lash, a stock analyst for Morningstar Inc.
Sales of snacks like Nature Valley and Fiber One bars were strong, but the performance of General Mills' U.S. cereal unit was particularly lackluster. Cereal sales were down 6 percent from a year earlier.
However, General Mills Chief Executive Ken Powell noted in a conference call with analysts that the cereal business faced a tough comparison with last year's third quarter. That's when General Mills launched Chocolate Cheerios and Wheaties Fuel, which prompted a surge in cereal sales.
General Mills, like most packaged food companies, has been raising prices in recent months. But one analyst asked Powell why those price increases didn't appear to materialize in higher revenue for the quarter.
