Packaged foods company General Mills Inc. (GIS) on Friday forecast earnings for the third quarter below analysts' estimates and also lowered its earnings outlook for fiscal year 2012. The company's shares are down 3 percent in the pre-market.
The maker of foods such as Cheerios and Fiber One cereals said that its third-quarter results will be impacted by weak volume performance across U.S. retail food categories in December and January.
General Mills has been reporting lower earnings in recent quarters as its margins have been eroded by high input costs.
Like others in the food industry, the company is facing the pressure of high commodity costs for key ingredients like grain and other production necessities like fuel. The company has also been pushing through price increases to recover the high input costs.
The Minneapolis, Minnesota-based company currently forecasts third-quarter adjusted earnings in a range of $0.54 to $0.56 per share. This compares to adjusted earnings of $0.56 in the prior-year period.
On average, seventeen analysts polled by Thomson Reuters expected the company to earn $0.60 per share for the quarter. Analysts estimates typically exclude special items.
In mid-December, General Mills reported a 28 percent decline in profit for the second quarter, as sales growth was more than offset by rising input costs and higher advertising expenses.
For the preceding first quarter, the company had reported a 14 percent decline in earnings due to charges as well as margin erosion amid higher input costs. However, General Mills' international segment is seeing strong revenue growth, in part due to the acquisition of French yogurt maker Yoplait.
During the first quarter, the company acquired a 51 percent controlling interest in Yoplait S.A.S. and a 50 percent interest in Yoplait Marques S.A.S. from private equity firm PAI Partners and France's privately held dairy cooperative Sodiaal for $1.2 billion.
For fiscal 2012, General Mills lowered its outlook for adjusted earnings to a range of $2.53 to $2.55 per share from the prior range of $2.59 to $2.61 per share. Analysts' consensus expect the company to report earnings of $2.60 per share.
General Mills will report its financial results for the third quarter results on Wednesday, March 21, 2012.
GIS closed Thursday's trading at $39.78 on a volume of 3.77 million shares. In Friday's pre-market, the stock is losing $1.33 or 3.34 percent to $38.45.
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