General Mills Reports First Rise in Sales Since 2011

Shares in the company, which makes Cheerios cereal, Progresso soups and Häagen-Dazs ice cream, rose 3 percent.

So far this year the shares are up 19 percent, with much of that coming after the deal by Berkshire Hathaway and 3G Capital for H. J. Heinz, which has generally raised valuations for many food companies, Jack Russo, an analyst at Edward Jones, said.

Mr. Russo said General Mills had been performing better in some of its challenged businesses, including cereal and yogurt.

“It looks like they’re reinvesting back into the business, which is always smart,” Mr. Russo said.

Excluding the benefit from the recent acquisitions of Yoki Alimentos in Brazil and Yoplait Canada, General Mills said sales by volume rose 1 percent. That is its first gain for that measure since the third quarter of fiscal 2011. Since then, the company had raised prices on many of its products to offset commodity cost inflation, which hurt sales.

“We think the consumer environment is improving,” the chief executive, Ken Powell, said in an interview on Wednesday. “As the price comparison moderates, the consumer is coming back.”

In the third quarter, ended on Feb. 24, net income rose to $398.4 million, or 60 cents a share, from $391.5 million, or 58 cents a share, a year earlier.

Excluding items like the costs of valuing commodity hedges and integrating recent acquisitions, earnings were 64 cents a share. Analysts on average had expected 57 cents, according to Thomson Reuters

Sales rose 7.5 percent to $4.43 billion. Excluding the acquisitions, sales grew 2 percent, with a percentage point coming from higher sales volume.

General Mills lifted its full-year outlook by only a penny a share because of higher costs in the current fourth quarter related to a comparatively higher tax rate and commodity costs. The company said fourth-quarter earnings would be lower than a year ago.

General Mills shares rose $1.19, to $47.61, on the New York Stock Exchange.

Article source: http://www.nytimes.com/2013/03/21/business/general-mills-reports-first-rise-in-sales-since-2011.html?partner=rss&emc=rss