News Releases

Sep 22, 2010

General Mills reports fiscal 2011 first-quarter results


Company reaffirms full-year sales and earnings growth targets

MINNEAPOLIS, Minn. - General Mills (NYSE: GIS) said today that results for the first quarter of fiscal 2011 met the company’s expectations, despite difficult comparisons to strong growth recorded in the previous year’s first quarter.  This performance has the company on track to achieve its sales and earnings growth targets for the full 2011 fiscal year.

Fiscal 2011 First Quarter Financial Summary

  • Net sales grew 1 percent to $3.53 billion.
  • Segment operating profit totaled $749 million, down 2 percent from very strong results a year earlier.
  • Diluted earnings per share (EPS) grew 13 percent to 70 cents per share.
  • Adjusted diluted EPS, which excludes certain items affecting comparability, totaled 64 cents per share, matching results in last year’s first quarter.

Net sales for the 13 weeks ended Aug. 29, 2010, grew 1 percent to $3.53 billion.  Pound volume contributed 2 points of net sales growth, while foreign currency translation reduced net sales growth by 1 point.  Cost of goods sold for the quarter included a $72 million increase in mark-to-market valuation of certain commodity positions (discussed below in the section titled Corporate Items).  Excluding mark-to-market valuation effects, gross margin was 70 basis points below strong prior-year levels.  Advertising and media expense grew 8 percent in the quarter.  Segment operating profit totaled $749 million, down 2 percent from last year’s results, which were up 22 percent.  First-quarter net earnings totaled $472 million including mark-to-market effects, and diluted earnings per share totaled $0.70, up 13 percent from $0.62 per share a year ago.  Excluding mark-to-market effects in both years, earnings per share would total $0.64 for the first quarter of 2011, matching year-ago results that grew 33 percent.

Chairman and Chief Executive Officer Ken Powell said, “We’re pleased to see continued growth in volume and net sales across our worldwide businesses.   Consumer demand for our established brands remains strong, and new products are making good contributions to our sales results.  This top line resilience, coupled with our continuing focus on holistic margin management (HMM), has us off to a solid start in 2011.”

U.S. Retail Segment Results
First-quarter net sales for General Mills’ U.S. Retail segment increased 2 percent to $2.45 billion, reflecting good growth on top of year-ago sales that rose 6 percent.  Pound volume contributed 1 point of the net sales increase, and price and mix contributed another point of growth.  Segment operating profit of $615 million was 3 percent below last year’s strong result, reflecting increased input costs and a 6 percent increase in advertising expense.

Net sales for Big G cereals grew 4 percent, building on year-ago sales that were up 9 percent.  This reflected growth from established brands such as Multigrain Cheerios, Fiber One and Cinnamon Toast Crunch, along with contributions from new Chocolate Cheerios and Wheaties Fuel.  Net sales for the Snacks division grew 5 percent including introductory shipments of new grain snack bars and fruit snack varieties.  Yoplait net sales grew 4 percent including good contributions from Yoplait Light along with new Yoplait Greek yogurt varieties, and introductory shipments of Yoplait Splitz layered yogurts and Yoplait Original four-packs.   Meals division net sales grew 3 percent in the quarter, led by gains on Green Giant frozen vegetables, Old El Paso Mexican foods, and new Wanchai Ferry and Macaroni Grill frozen entrees.  Pillsbury division net sales declined 3 percent, reflecting a difficult comparison to double-digit sales growth a year earlier. Totino’s pizza and hot snacks recorded good sales performance, as did several new items including the Sweet Moments line of refrigerated ready-to-eat desserts. Baking Products net sales were 6 percent below prior-year levels, but Betty Crocker cake and frostings posted gains, and new items including gluten-free Bisquick and Supreme cake mix varieties recorded good initial sales results.  Net sales for the company’s Small Planet Foods organic and natural products increased 15 percent, reflecting growth from Cascadian Farm cereals and granola bars, along with double-digit sales increases for Larabar fruit and nut energy bars.

International Segment Results
First-quarter net sales for General Mills’ consolidated international businesses grew slightly to $660 million.  Pound volume contributed 4 points of net sales growth, while foreign exchange reduced net sales growth by 4 points.  On a constant-currency basis, International segment net sales grew 4 percent overall, led by gains of 6 percent in Europe and 7 percent in the company’s Asia / Pacific region (see note 7 to the consolidated financial statements below for discussion of this non-GAAP measure).  Advertising and media expense increased 17 percent in the quarter.  Including this increased brand-building investment, International segment operating profit totaled $62 million, 1 percent below prior-year results.

Bakeries and Foodservice Segment Results
First quarter net sales for the Bakeries and Foodservice segment grew slightly to $427 million. Despite a weak U.S. foodservice industry environment, pound volume grew 3 percent in the quarter including the impact of a divested product line, which reduced net sales growth by 2 points.  Price and mix reduced net sales growth by 3 points in the quarter.  Segment operating profit grew 11 percent to $72 million.

Joint Venture Summary
After-tax earnings from joint ventures grew 9 percent to $26 million in the first quarter of 2011. Net sales for Cereal Partners Worldwide (CPW) increased 1 percent in the quarter, with volume contributing 2 points of net sales growth, price and mix adding 1 point of growth, and negative foreign exchange effects reducing net sales growth by 2 points.  Net sales for Haagen Dazs Japan declined 1 percent, as lower volumes and prices were largely offset by favorable foreign exchange.

Corporate Items
Corporate unallocated items totaled $12 million of income in the first quarter compared to $70 million of expense in the period a year ago.  This primarily reflects differences in the mark-to-market valuation of certain commodity positions, which increased $72 million in the first quarter of 2011 compared to a net reduction of $15 million in the first quarter last year.  Excluding mark-to-market effects, unallocated corporate items totaled $60 million of expense in the first quarter of fiscal 2011 compared to $55 million of expense in the period a year ago.  Net interest expense of $90 million was 2 percent below year-ago levels, reflecting a lower average debt level. 

Cash Flow Items
Cash provided by operating activities totaled $178 million in the quarter, below year-ago levels due to increased use of working capital in the period.  Capital investments totaled $133 million in the first quarter of 2011.  Dividends paid increased to $184 million, reflecting the increase in the company’s dividend rate year over year.  During the first quarter, General Mills repurchased 21 million shares of common stock for a total of $788 million.  Average diluted shares outstanding for the first quarter were essentially unchanged from the year-ago level.

Fiscal 2011 Outlook
As the second fiscal quarter begins, General Mills said it anticipates near-term financial results will continue tracking in line with year-ago levels, with accelerating sales and earnings growth expected as the year progresses.  Ken Powell said, “The global operating environment is still quite challenging, but our food businesses are resilient and continue to demonstrate high-quality growth.”  The company reaffirmed its full-year fiscal 2011 EPS guidance of $2.46 to $2.48 per share, excluding any mark-to-market effects.  This would represent growth of 7 to 8 percent from adjusted earnings per share of $2.30 in fiscal 2010.

General Mills will hold a briefing for investors today, Sept. 22, 2010, beginning at 8:30 a.m. Eastern time.  You may access the webcast from General Mills home page:

Earnings per share excluding certain items, total company segment operating profit, earnings excluding certain items expressed as a percent of sales and international sales excluding foreign currency translation effects are each non-GAAP measures.  Reconciliations of these measures to their relevant GAAP measures appear in the financial schedules and Note 7 to the attached consolidated financial statements.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations and assumptions. These forward-looking statements, including the statements under the caption “Outlook” and statements made by Mr. Powell, are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements.  In particular, our predictions about future net sales and earnings could be affected by a variety of factors, including: competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions, advertising activities, pricing actions, and promotional activities of our competitors; economic conditions, including changes in inflation rates, interest rates, tax rates, or the availability of capital; product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions or dispositions of businesses or assets; changes in capital structure; changes in laws and regulations, including labeling and advertising regulations; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, and energy; disruptions or inefficiencies in the supply chain; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure of our information technology systems; resolution of uncertain income tax matters; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war.  The company undertakes no obligation to publicly revise any forward-looking statement to reflect any future events or circumstances.

For more information, contact:

(Analysts) Kris Wenker
General Mills
(763) 764-2607

(Media) Kirstie Foster
General Mills
(763) 764-6364