General Mills Reports 5 Percent Growth in Net Sales

Net sales for the 13 weeks ended Aug. 26, 2012, grew 5 percent to $4.05 billion. Pound volume contributed 9 points of sales growth, primarily reflecting acquisitions.

20 Sep 2012 --- General Mills reported results for the first quarter of fiscal 2013. The period includes two months of incremental contribution from the Yoplait International acquisition completed in July 2011, and three months of results for the Food Should Taste Good, Yoplait Ireland and Parampara Foods businesses acquired during the final quarter of fiscal 2012.

Net sales for the 13 weeks ended Aug. 26, 2012, grew 5 percent to $4.05 billion. Pound volume contributed 9 points of sales growth, primarily reflecting acquisitions. Price realization and mix reduced net sales growth by 2 points, and foreign exchange subtracted 2 points of sales growth. Gross margin as reported was above year-ago levels, but excluding mark-to-market effects underlying gross margin was 40 basis points below year-ago levels. (Please see Note 8 below for reconciliation of this non-GAAP measure.) Total marketing spending in the quarter was weighted toward in-store promotional support for established brands and new product introductions; advertising and media expense was 7 percent below year-ago levels. Total segment operating profit grew 6 percent to $769 million (Please see Note 8 for reconciliation of this non-GAAP measure). First-quarter net earnings attributable to General Mills totaled $549 million and diluted earnings per share totaled 82 cents. These results include a 7-cent per share net benefit from mark-to-market valuation of certain commodity positions, and a 10-cent net benefit related to a discrete tax item. These benefits were partially offset by charges totaling 1-cent per share for restructuring actions taken in 2012 and acquisition-related integration expense. Adjusted diluted EPS, which excludes the items discussed above, totaled 66 cents in the first quarter of 2013 compared to 64 cents in last year’s first quarter.

Chairman and Chief Executive Officer Ken Powell said this start has the company on pace to achieve its fiscal 2013 targets. “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,” he said.

During the first quarter of 2013, General Mills launched more than 100 new products worldwide. Products making the strongest contributions to net sales growth in the quarter included new items such as Apple Cinnamon Chex and Fiber One Nutty Clusters & Almonds cereals, Nature Valley Protein Bars, Green Giant Seasoned Steamers vegetables, Progresso Recipe Starters cooking sauces and in Europe, Meringue and Raspberry Fondant Secret Sensations from Häagen Dazs. Established brands including Honey Nut Cheerios cereal, Totino’s frozen snacks, Yoplait Greek yogurt, various Pillsbury refrigerated baked goods and in China, Wanchai Ferry frozen dim sum varieties also contributed strong sales gains.

U.S. Retail Segment Results
First-quarter net sales for General Mills’ U.S. Retail segment totaled $2.49 billion, down 1 percent from a year earlier. Pound volume reduced net sales growth by 2 points, and price realization and mix contributed 1 point of net sales growth. The Snacks, Baking Products, Meals and Small Planet Foods divisions each recorded net sales gains, while sales for Big G, Frozen Foods and Yoplait declined. Higher promotional spending in the quarter supported introductory merchandising of new items and lower merchandised price points for certain established product lines; advertising and media expense was below strong year-ago levels. Segment operating profit declined 2 percent to $575 million.

International Segment Results
First-quarter net sales for General Mills’ consolidated international businesses grew 27 percent to reach $1.09 billion. Pound volume contributed 47 points of net sales growth, including 45 points of growth from acquisitions. Price realization and mix subtracted 11 points of net sales growth, and foreign currency subtracted 9 points of growth. On a constant-currency basis, International segment net sales grew 36 percent overall, with gains of 51 percent in Europe and 28 percent in Canada including incremental contributions from the Yoplait International acquisition. Both Latin America and the Asia / Pacific region posted 20 percent gains in constant-currency net sales. (Please see Note 8 below for reconciliation of this non-GAAP measure.) International segment operating profit grew 56 percent to $126 million, including increased advertising and media expense.

Bakeries and Foodservice Segment Results
First-quarter net sales for the Bakeries and Foodservice segment totaled $472 million, 2 percent below year-ago results. Pound volume contributed 2 points of net sales growth, while price realization and mix reduced net sales growth by 4 points. Segment operating profit grew 10 percent in the quarter to $68 million, reflecting lower wheat costs year-over-year and higher earnings from grain merchandising.

Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide (CPW) and Häagen Dazs Japan (HDJ) joint ventures totaled $23 million. This was below strong sales-driven performance a year ago, primarily due to higher input costs and unfavorable foreign currency exchange effects for CPW. Constant-currency net sales for CPW grew 1 percent in the quarter, and constant-currency net sales for HDJ were 4 percent above year ago levels.