General Mills Reports Strong Growth in Fiscal 2008 Third Quarter

20/03/08 General Mills reported results for the third quarter of fiscal 2008. Net sales for the 13 weeks ended Feb. 24, 2008, rose 12 percent to $3.41 billion, fueled by 6 percent pound volume growth.  Gross margin expanded to 39.8 percent of sales, as mark-to-market valuation of commodity positions, productivity and pricing offset significantly higher input costs.  Segment operating profits grew 14 percent to $594 million including a 13 percent increase in consumer marketing investment.  Net earnings grew 61 percent to $430 million including non-cash gains from mark-to-market valuation of commodity positions and a favorable ruling related to a tax contingency. (These non-cash items are discussed in the section titled Corporate Items below).  Diluted earnings per share (EPS) totaled $1.23 including $0.36 from the commodity and tax items.  Excluding these items, earnings per share would have totaled $0.87 in the quarter, up 18 percent from $0.74 per share a year ago.

Chief Executive Officer Ken Powell said, “This was a terrific quarter for General Mills, fueled by continued strong demand for our products in markets all around the world.”  Each of the company’s business segments reported net sales and operating profit growth for the quarter.  These gains came on top of good growth in last year’s third quarter, when General Mills’ net sales grew 6 percent and earnings per share rose 9 percent.

Through the first nine months of fiscal 2008, General Mills’ net sales increased 8 percent to $10.18 billion, and pound volume grew 3 percent.  Segment operating profits grew 7 percent to $1.89 billion.  Net earnings through nine months grew 21 percent to $1.11 billion.  Diluted EPS for the year-to-date totaled $3.19, including $0.39 from the non-cash commodity and tax items.  Excluding these items, nine-month earnings per share would have totaled $2.80, up 10 percent from $2.55 last year.

“Our product innovation and consumer marketing investments are driving strong growth on the top line,” Powell said, “and cost-savings efforts, together with pricing actions, are offsetting significantly higher input costs and protecting our margins.  This performance has us on pace to deliver strong sales and earnings growth for fiscal 2008 in total.”