General Mills 1Q Profit Jumps 51%, Boosts EPS View

General Mills Inc.'s (GIS) fiscal first-quarter earnings soared 51% amid U.S. retail sales growth, lower costs and stepped up advertising.

The results handily topped expectations and the processed-food giant again raised its fiscal-year earnings view, this time by 20 cents to $4.40 to $4.25 a share.

Consumer-products companies have benefited as commodities prices have remained off their peaks, though rising sugar prices could pose a challenge. The maker of cereal and other packaged foods in July said it didn't expect to lower prices despite the pullback.

General Mills also has introduced products to help drive its U.S. retail segment growth such as Progresso High Fiber soups. Its Betty Crocker brand entered the profitable gluten-free niche with mixes for cookies, brownies and cakes.

For the quarter ended Aug. 30, the maker of Cheerios cereal and Yoplait yogurt reported a profit of $420.6 million, or $1.25 a share, up from $278.5 million, or 79 cents, a year earlier.

Excluding items, such as hedging gains and losses, earnings were up at $1.28 from 96 cents. The company earlier this month indicated results likely would top its internal projections but didn't give details.

Revenue edged up 0.6% to $3.52 billion, with currency fluctuations hurting sales results by 2 percentage points. Volume was flat, reflecting the loss of 2 percentage points from divested product lines.

Analysts polled by Thomson Reuters most recently were looking for earnings of $1.03 on revenue of $3.49 billion.

Gross margin jumped to 41.5% from 34.1% amid lower costs for grain and other commodities.

At its U.S. retail business, sales rose 5.8%, with volume up 2%. Profit rose 21%. In its international division, sales dropped 4.1% on the weaker dollar as earnings fell 13%.

The bakery and food-service unit remains under pressure amid restaurant industry weakness, with sales down 16% on divestitures and falling flour prices. However, segment profit more than doubled amid lower commodities prices and cost cuts.

Shares closed at $60.97 on Tuesday and didn't trade premarket. The stock is flat this year.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]