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September 24, 2009

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Demand for food a recipe for profits

General Mills Inc, whose brands include Wheaties cereal and Yoplait yogurt, said yesterday that its fiscal first-quarter profit surged 51 percent on strong demand for its products.

The results prompted the food maker to lift its full-year earnings outlook. Shares rose US$2.33, or 3.8 percent, to US$63.30 in pre-market trading.

Earnings climbed to US$420.6 million, or US$1.25 per share, compared with US$278.5 million, or 79 cents per share, a year ago.

Excluding an expense related to commodity positions, profit was US$1.28 a share.

Besides rising sales, Chairman and CEO Ken Powell said, the company's performance was helped by lower ingredient and fuel costs.

General Mills poured more money into its advertising and marketing efforts during the quarter and the move appeared to pay off.

Revenue for the period ended on August 30 edged up 1 percent to US$3.52 billion from US$3.5 billion. Cereal sales climbed 9 percent while revenue at the meals unit rose 4 percent, with improved results from Old El Paso Mexican products and Green Giant frozen vegetables.

Pillsbury sales increased 12 percent on Totino's Pizza Rolls, Pillsbury refrigerated cookie dough and Pillsbury Toaster Strudel. Yoplait sales grew 4 percent, while snacks climbed 1 percent and baking products 3 percent.

The company raised its 2010 adjusted profit to US$4.40 to US$4.45 a share, from US$4.20 to US$4.25.


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