General Mills Inc. reported a better-than-expected quarterly profit Wednesday, as price increases helped it contend with the much higher ingredient and fuel costs that ate into its margins.
The maker of Cheerios cereal and Progresso soups said its first-quarter net sales rose 8.9 per cent to $3.85-billion (U.S.), helped by its recently acquired Yoplait yogurt business and consumers' willingness to accept higher prices.
In a statement, chief executive Ken Powell said the sales gains reflected "resilient consumer demand."
Some of the U.S. segments that enjoyed the largest sales gains were its snacks, including Nature Valley bars, which rose 17 per cent. In contrast, sales in its meals unit, which includes canned soups and dinner mixes, fell 4 per cent. Its U.S. business accounts for nearly two-thirds of sales.
The international Yoplait unit accounted for about one-third of General Mills' sales growth, helping it beat the $3.81-billion in net sales Wall Street was expecting, according to Thomson Reuters I/B/E/S.
Sales overseas rose 30 per cent, thanks largely to Yoplait, while sales in its bakeries and foodservice unit rose 13 per cent.
General Mills reported a net income of $405.6-million, or 61 cents per share, in the fiscal first quarter, which ended on Aug. 28, compared with $472.1-million, or 70 cents per share, a year earlier.
Adjusted earnings for the quarter came to 64 cents per share, beating the 62 cents per share expected by analysts.
The company affirmed its full-year outlook, saying it expects fiscal 2012 earnings of $2.59 to $2.61 per share, excluding the costs of integrating Yoplait.
General Mills, whose other brands include Pillsbury, Green Giant and Old El Paso, said in June that it expected full-year sales volume to be lower than a year earlier, with mid-single-digit revenue growth helped by price increases.
General Mills also said at the time it expected costs to rise 10 per cent to 11 per cent in the 2012 fiscal year, which began May 30, more than double the inflation rate it had forecast for the previous year.