Prior to the opening bell on December 17, one of the leading producers of packaged consumer foods, General Mills Inc. (GIS) reported earnings results for its most recent quarter. General Mills is a company that markets its products primarily through its own sales organizations, supported by advertising and other promotional activities. Announcing for the 2Q, General Mills saw an increase in net profits on the back of stronger sales as cash-conscious shoppers continue to look for deals.
For the recent period, GIS recorded net income of $565.5M, or $1.66 per share, compared to the previous year’s net earnings of $378.2M, or $1.09 per share, angeneral_mills increase in profits of nearly 50%. Current results included a net gain from a mark-to-market valuation of current commodity positions, resulting in a $0.12 per share positive effect on earnings.
Excluding the mark-to-market impact, General Mills would have posted a net profit of $1.54 per share. Quarterly sales for the company came in at $4.08B, up 1.7% from the prior year’s total revenues of $4.01B.
Analysts, on average, were looking for the makers of Cheerios cereal, Progresso soup and Yoplait yogurt to post a quarterly profit of $1.45 per share based on gross sales of $4.07B.
Chairman and CEO of General Mills, Ken Powell, remarked on the company’s results, “Demand for our leading brands remains strong. These good sales levels, combined with the accumulating benefits of our holistic margin management efforts, are continuing to drive terrific operating performance in our manufacturing plants. This strong, fundamental business momentum has enabled us to raise our EPS targets for the full year.”
Gross margins for the company came in above the previous year’s results, climbing from 30.4% to 42.8%. The increase reflected stronger operating practices along with lowered commodity prices year-over-year. Operating income for the quarter was up 12.6% over last year’s results at $880.1M.
Looking further inside the company’s report, General Mills witnessed an increase in overall U.S. sales, as revenues advanced from $2.79B to $2.89B, a gain of nearly 3.6%. U.S. operating income came in at $718.4M, an increase of 13% year-over-year.
Within the international markets, sales increased more than 7% from last year’s results, climbing from $676.2M to $723.9M. A positive exchange rate contributed 4% to overall sales growth. Operating income from the international segment slipped year-over-year, falling 3% to $77.1M.
Through the first six months of the year, General Mills was able to post a net profit of $986.1M, or $2.91 per share, versus the same period from a year ago in which the company generated net income of $656.7M, or $1.88 per share, an increase of more than 50%. Excluding certain one-time items, overall earnings per share for the first half of the year was $2.82, up more than 21% from $2.32 per share.
Sales through the first two quarters totaled $7.6B, up marginally from the same period a year ago in which the company posted total sales of $7.51B.
For the fiscal year 2010, General Mills adjusted their yearly earnings outlook upwardly and is now anticipating net earnings to come in between $4.52 and $4.57 per share. That is up from a previously expected range of $4.40 to $4.45 per share. The revised earnings forecast represents a growth of 14% to 15% over 2009’s earnings of $3.98 per share.
Meanwhile, analysts within the industry were looking for General Mills to post an annual profit of $4.52 per share.
While the overall markets plunged more than 1% on the day, shares of GIS ended the December 17 session by gaining $0.75, or 1.1%, to close at $60.04 per share. Over the course of a year, the stock has traded as low as $46.37 per share, while reaching a high of $69.93 per share, which was established in intraday trading.