General Mills Inc. (GIS) on Wednesday reported a 35 percent increase in first-quarter profit benefited mainly by one-time gains and strong international performance with contributions from latest acquisitions. Earnings per share topped analysts' estimates, while sales missed their view. Going ahead, the packaged food company backed its fiscal 2013 forecast, which is below analysts' estimates, even though it is cautious about core U.S. Market.
Noting that the company is on pace to achieve its fiscal 2013 targets, Chairman and Chief Executive Officer Ken Powell said, "Results for the first quarter were broadly consistent with our plans, and included sequential improvement in our volume and gross margin trends from the fourth quarter of 2012."
The company noted that it sees slow improvement in price and volume trends across retail food categories in the core U.S. market.
For the first quarter, net earnings attributable to the company climbed to $548.9 million or $0.82 per share from $405.6 million or $0.61 per share last year.
The latest quarter results included a $0.07 per share net benefit from mark-to-market valuation, and a $0.10 per share discrete tax benefit, slightly offset by restructuring and acquisition-related charges.
Adjusted earnings per share, which excluded items, totaled $0.66, while prior year's adjusted earnings were $0.64 per share. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude one-time items.
Net sales increased 5.3 percent to $4.05 billion from $3.85 billion in the previous year, while analysts' estimated revenues were $4.08 billion.
Volume contributed 9 points of sales growth primarily from acquired businesses of Yoplait International, Food Should Taste Good, Yoplait Ireland and Parampara Foods businesses. Meanwhile, price realization and mix reduced net sales growth by 2 points, and foreign exchange subtracted 2 points of sales growth.
During the first quarter, General Mills launched more than 100 new products
In the quarter, net sales from U.S. Retail segment dropped 1 percent to $2.49 billion with lower volume.
International segment's net sales, however, climbed 27 percent to $1.09 billion as volume contributed 47 points of net sales growth, including 45 points of growth from acquisitions.
Bakeries and Foodservice segment's net sales fell 2 percent, despite higher volume.
Gross margin in the quarter increased 260 basis points to 40.2 percent, and operating margin grew 270 basis points to 19.3 percent.
Powell added that the initial second quarter results will include incremental contributions from Yoplait Canada and Yoki Alimentos in Brazil.
For fiscal 2013, the company continues to expect adjusted earnings per share of about $2.65, while 20 analysts project full-year earnings of $2.66 per share.
In pre-market activity, General Mills shares are currently trading at $40.01, up $0.70 or 1.78 percent.
by RTT Staff Writer
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