General Mills Inc. Reports 14 Percent Net Sales Gain In Second Quarter

General Mills Inc. reported results for the second quarter and first half of fiscal 2012.

Net sales for the 13 weeks ended Nov. 27, 2011, grew 14 percent to $4.62 billion. Price realization and mix contributed 3 points of sales growth, and foreign exchange contributed 1 point of growth. Pound volume contributed 10 points of growth, including 14 points of growth from the Yoplait acquisition. Gross margin as a percent of net sales was below year-ago levels due to higher input costs and the change in business mix to include the Yoplait acquisition. Advertising and media expense increased 8 percent in the period. Segment operating profit grew 2 percent to $873 million. Second-quarter net earnings attributable to General Mills totaled $445 million and diluted earnings per share totaled 67 cents. Adjusted diluted earnings per share, which excludes the effects of mark-to-market valuation of certain commodity positions in both fiscal 2012 and 2011, Yoplait integration costs in 2012, and a net benefit from certain tax matters in 2011, totaled 76 cents for the second quarter in each year.

Chairman and Chief Executive Officer Ken Powell said in a prepared statement, "General Mills second-quarter results show good net sales growth worldwide. Our Yoplait acquisition fueled a more than 50 percent increase in total international sales. Strong levels of net price realization and product innovation drove sales increases for our established International operations, and for our bakeries and foodservice and U.S. retail business segments. Significantly higher input costs pressured our margins, as expected. But in total, performance for the quarter and year-to-date has us on track to meet the key financial targets we have set for fiscal 2012."

Through the first six months of fiscal 2012, General Mills net sales grew 12 percent to $8.47 billion, including 6 points of growth from the international Yoplait acquisition. Price realization and mix contributed 5 points of net sales growth, and foreign exchange contributed 1 point of growth. Pound volume contributed 6 points of net sales growth, including 10 points of growth from the Yoplait acquisition. Segment operating profit of $1.60 billion essentially matched year-ago levels. Net earnings attributable to General Mills totaled $850 million and diluted EPS totaled $1.28. Adjusted diluted earnings per share, which excludes mark-to-market effects, Yoplait integration costs, and the net tax benefit a year ago, totaled $1.41 for the first half of 2012 compared to $1.40 in the first half of 2011.

Retail segment grew 3 percent to $2.94 billion. Pound volume reduced net sales growth by 7 points, primarily reflecting lower shipments of items such as flour and dessert mixes, canned and frozen vegetables, and yogurt. Price realization and mix contributed 10 points of net sales growth in the quarter. Segment operating profit of $661 million was 4 percent below prior-year levels, reflecting higher input costs and a 6 percent increase in advertising and media expense.

Net sales for Big G cereals grew 1 percent, including gains from established brands such as Honey Nut Chex and Cinnamon Toast Crunch, and good contributions from new products including Cinnamon Burst Cheerios and Fiber One 80 Calorie cereal. Net sales for the Snacks division grew 20 percent led by Fiber One and Nature Valley snack bar varieties. Sales for the Pillsbury division grew 9 percent with good contributions from Totino's frozen snacks and pizza, Pillsbury refrigerated baked goods, and new Pillsbury frozen breakfast items. Sales for the baking products division grew 2 percent, reflecting strong net price realization. Meals division net sales were 2 percent below year-ago levels reflecting lower volume for several product lines, including canned vegetables, frozen entrees, and potato mixes. Yoplait division net sales were 6 percent below year-ago levels as growth from Go-Gurt, Yoplait Greek and Mountain High yogurt was offset by declines on several established product lines. Net sales for Small Planet Foods increased 17 percent led by Cascadian Farm cereals and Larabar fruit and nut energy bars.