Packaged food company General Mills, Inc. (GIS) on Wednesday reported a 22 percent increase in second-quarter profit, helped by strong volume growth at its International segment that reflects the addition of the newly acquired Yoki Alimentos business in Brazil and Yoplait Canada.
Earnings per share for the quarter beat analysts' expectations, while revenues matched their estimates. Looking ahead, the company raised its earnings outlook for fiscal 2013.
The Minnesota-based maker of Cheerios and Fiber One cereals noted that acquisitions together with the recently assumed Yoplait Canada business contributed 4 points of net sales growth for the quarter.
Volume contributed 7 points of sales growth, reflecting the addition of Yoki and Yoplait Canada. Meanwhile, price realization and mix reduced net sales growth by 1 point, while foreign exchange had no impact on the rate of net sales growth in the quarter.
In the quarter, net sales for the U.S. Retail segment grew 2 percent to $2.99 billion, aided by increased volume.
International segment's net sales grew 19 percent to $1.38 billion. Volume contributed 26 points of net sales growth for the segment, reflecting the addition of Yoki and Yoplait Canada.
However, Bakeries and Foodservice segment's net sales declined 1 percent to $515.6 million on lower volume.
General Mills' second-quarter net earnings rose to $541.6 million or $0.82 per share from $444.8 million or $0.67 per share in the year-ago period.
Excluding items, adjusted earnings per share totaled $0.86, compared to $0.76 in the year-ago period. On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.79 per share for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter grew 6 percent to $4.88 billion from $4.62 billion in the same period last year and matched analysts' consensus revenue estimate of $4.88 billion.
Gross margin increased 120 basis points from last year to 35.7 percent, while operating margin grew 150 basis points to 17 percent.
Looking ahead to fiscal 2013, General Mills increased its guidance for adjusted earnings per share to a range of $2.65 to $2.67. Earlier, the company forecast adjusted earnings for the year in a range of about $2.65 per share.
The revised outlook excludes mark-to-market effects, a net tax benefit recorded in the first quarter, and restructuring and integration costs.
General Mills anticipates supply chain inflation for the year will be at the high end of its previously forecast range of 2 to 3 percent range, with the past summer's drought expected to modestly increase second-half inflation rates.
GIS closed Tuesday's trading at $41.77. In Wednesday's pre-market, the stock is adding $0.26 or 0.62 percent to $42.03.
by RTT Staff Writer
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