General Mills Inc. reported results for the third quarter and first nine months of fiscal 2011.
- Net sales grew 2 percent to $3.65 billion;
- Segment operating profit totaled $668 million, up 10 percent;
- Diluted earnings per share grew at a double-digit rate to reach 59 cents, including a benefit from mark-to-market valuation of certain commodity positions;
- Adjusted diluted earnings per share, excluding mark-to-market effects in both years, totaled 56 cents, up 14 percent from 49 cents in last year's third quarter.
Net sales for the 13 weeks ended Feb. 27, 2011, grew 2 percent to $3.65 billion. Pound volume contributed 2 points of net sales growth. Price realization and mix and foreign currency translation had no material effect on sales growth in the quarter. Gross margin expanded in the quarter. Advertising and media expense was 10 percent below year-ago levels that grew 33 percent. Total segment operating profit grew 10 percent, led by the company's international business segment. Third-quarter net earnings grew 18 percent to $392 million, including a net increase in the mark-to-market valuation of certain commodity positions. Diluted earnings per share (EPS) totaled 59 cents, up 23 percent from 48 cents in the third quarter a year ago. Excluding mark-to-market effects in both years, adjusted diluted earnings per share would total 56 cents for this year's third quarter, up 14 percent from 49 cents last year.
Chairman and Chief Executive Officer Ken Powell said in a prepared statement, "Results for the third quarter showed an acceleration in sales and profit growth following first-half performance that tracked generally in-line with strong prior-year levels. Our plans call for the fourth quarter to show the highest earnings growth of the year, with increasing contributions from pricing actions we have taken to partially offset significant commodity cost increases. We remain on track to achieve our financial targets for the full 2011 fiscal year."
Through the first nine months of fiscal 2011, General Mills net sales grew 1 percent to $11.24 billion. Pound volume contributed 2 points of net sales growth, and price realization and mix subtracted one point of growth. Foreign currency translation had no material effect on year-to-date sales growth. Segment operating profit totaled $2.27 billion, up 1 percent from prior-year levels that increased 14 percent. Net earnings totaled $1.48 billion, up 12 percent including a net increase in mark-to-market valuation of certain commodity positions and a net tax benefit recorded in the second quarter of this year. Diluted earnings per share grew 14 percent to $2.22. Excluding the net tax benefit in 2011 and mark-to-market effects in both years, adjusted diluted earnings per share would total $1.96 through the first nine months of fiscal 2011, up 4 percent from $1.89 in the year-ago period.
Third-quarter net sales for General Mills' U.S. retail segment declined 1 percent to $2.51 billion. Pound volume essentially matched year-ago levels, while price realization and mix subtracted one point of net sales growth. Segment operating profit was slightly below last year's level, which rose 10 percent.
Third-quarter net sales for the snacks division grew 14 percent, led by Nature Valley and Fiber One snack bar products. Yoplait division net sales grew 1 percent. Net sales for Big G cereals were 6 percent below year-ago results that included particularly strong new-product activity. Meals division net sales declined 5 percent reflecting unfavorable price realization and mix, as lower volume for shelf-stable dinner mixes offset good growth by Progresso soup, Green Giant frozen vegetables, and Wanchai Ferry and Macaroni Grill frozen entrees. Pillsbury division net sales were 2 percent below year-ago levels reflecting lower sales for Totino's frozen pizza. Baking Products net sales declined 7 percent. Net sales for the Small Planet Foods natural and organic business grew 14 percent, led by Cascadian Farm cereals and Larabar fruit and nut bars.