General Mills sales advance slowly, innovation coming

Profits outpaced sales growth at General Mills during the third quarter ended February 24 and the company vowed to launch a promising slate of new products and increase store support during the current quarter.

Sales at the food giant increased 8% to a little more than $4.4 billion and adjusted earnings per share increased 16.4% to 64 cents, well ahead of the 57 cents analysts were expecting. Sales at the company’s U.S. retail segment increased 2% to $2.66 billion due to, "net price realization and mix." The company cut its advertising and media expense by 6% during the quarter and said the U.S. segment’s operating profit increased 13% to $577 million.

Products making the strongest contributions to U.S. Retail sales growth included new items such as Honey Nut Cheerios Medley Crunch cereal, Fiber One Protein bars, Yoplait Greek 100 yogurt and frozen Green Giant Seasoned Steamers vegetables. The company also singled out established brands such as Cheerios and Lucky Charms cereals, Progresso ready-to-serve soups, Nature Valley grain snack bars, Totino's frozen snacks and pizzas, Betty Crocker SuperMoist cake and pouch cookie mixes, and Pillsbury Grands! refrigerated biscuits as contributing to retail sales growth..

"Our sales and volume growth reflects contributions from new businesses and from established products. Operating profit results for the quarter were particularly good, with double-digit increases for both our U.S. Retail and Bakeries and Foodservice segments," said Ken Powell, General Mill’s chairman and CEO.

To continue the momentum in its fourth quarter, the company plans to counteract expense headwinds with more new items launched into an operating environment it called slowly and steadily improving.

"Trends in our established businesses are improving, and integration of our new businesses is going smoothly," Powell said. "We're preparing to launch a promising slate of new products as our new fiscal year begins this summer, and our plans for fiscal 2014 call for high single-digit (earnings per share) growth, consistent with our long-term model."

The company continues to forecast input cost inflation of approximately 3% and fourth quarter spending to support in-store merchandising also is expected to be above year-ago levels. That combination caused the company to forecast fourth quarter earnings below the prior year level.