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General Mills profit beats estimates, lifts outlook

The General Mills logo is seen on a box of Cheerios cereal in Evanston, Ill.

JIM YOUNG/REUTERS

General Mills Inc. posted higher-than-expected quarterly earnings on Wednesday and raised its full-year outlook only slightly as it sees higher ingredient costs, a higher tax rate and a possible currency devaluation in Venezuela.

The foods maker behind Cheerios cereal, Progresso soups and Haagen Dazs ice cream said it expects ingredient costs inflation at the high end of its 2 per cent to 3 per cent forecast due to the summer drought in the U.S. Midwest that pushed up prices for corn and other grains.

In addition, General Mills expects a higher tax rate in the second half of its fiscal year than in the first and is anticipating a possible currency devaluation in Venezuela.

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"As we move into the second half, the global operating environment remains challenging," said chief executive officer Ken Powell.

In the company's fiscal second quarter, ended Nov. 25, net earnings rose to $541.6-million, or 82 cents per share, from $444.8-million, or 67 cents per share, a year earlier.

Excluding items, earnings were 86 cents per share, topping analysts' average estimate of 79 cents per share, according to Thomson Reuters I/B/E/S.

Sales increased nearly 6 per cent to $4.88-billion, meeting analysts' expectations, helped by the recently acquired Yoki Alimentos business in Brazil.

The company now expects to earn $2.65 per share to $2.67 per share in fiscal 2013, excluding accounting adjustments, a tax benefit and restructuring and integration costs. Its earlier forecast called for earnings of about $2.65 per share.

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