General Mills Inc. reported Wednesday that its fiscal fourth-quarter profit beat estimates as sales of top brands like Cheerios rose while consumers continued eating at home.
The food maker offered a 2010 outlook above estimates as it said it expects sales to keep rising and ingredient costs to continue moderating _ a reversal from the past few years, when costs for commodities like corn reached record highs.
Consumers have been pulling back on their spending at restaurants during the recession and heading to grocery stores. That trend is helping sales for Golden Valley, Minn.-based General Mills, though many consumers also are switching to less expensive in-house brands once they get to the store.
General Mills' line of top-brands _ including Cheerios and Yoplait Yogurt _ are growing, even as their overall categories expand, showing consumers are sticking with the brands, Chief Executive Ken Powell said in an interview.
"They grew a little bit better this year because of the eating-at-home trend," Powell said of the company's cereals, yogurt and snack bars.
Even as food makers have been seeing sales gains from cost-conscious consumers, they had to deal with their own high prices for commodities. General Mills did that by cutting costs, improving efficiency and raising prices, which also helps now as commodity costs moderate and sales keep rising, said Christopher Shanahan, a research analyst with Frost & Sullivan.
"They're in a strong position to come out of this recession much bigger," he said.
The company also is updating some brands and investing in marketing to keep consumers interested, said Edward Jones analyst Jack Russo.
General Mills said it increased its spending on marketing 19 percent in the fourth quarter, and that momentum will continue in fiscal 2010, along with new products like Progresso soups with high fiber, gluten-free Betty Crocker dessert mixes and new versions of Yoplait including smoothies.
For the three months that ended May 31, General Mills earned $358.8 million, or $1.07 per share, up from $185.2 million, or 53 cents per share, a year earlier.
Excluding restructuring charges, a loss on some product lines that were sold and other one-time items, the company earned 86 cents per share.
Analysts surveyed by Thomson Reuters, who generally exclude one-time items, forecast earnings of 81 cents per share.
Quarterly sales rose 5 percent to $3.65 billion from $3.47 billion, helped by an extra week in the period. Still, sales fell short of Wall Street's estimate of $3.69 billion.
Shares rose on the news, gaining $2.16, or 3.9 percent, to close at $58.18 Wednesday.
Revenue in the U.S. retail division, which sells to stores, rose more than 11 percent in the quarter to $2.5 billion, including the extra week. Yoplait, Big G cereals like Cheerios and Wheaties, and Pillsbury USA were among the product lines posting double-digit sales increases.
Overseas, sales dropped 5 percent to $645 million as the stronger dollar hurt results 17 percent. As the U.S. dollar gains strength, that weighs on international sales once they are converted back to U.S. dollars.
The bakeries and foodservice segment, which sells to outlets like hotels and restaurants, continued to hurt as consumers held back on eating out, with sales down 9 percent for the quarter to $519.8 million.
For the fiscal year, net income rose to $1.3 billion, or $3.80 per share, from $1.29 billion, or $3.71 per share, in fiscal 2008. Annual sales climbed 8 percent to $14.69 billion from $13.65 billion.
The company expects fiscal 2010 profit of $4.20 to $4.25 per share, above analysts' $4.18-per-share estimate. The company said its expectations assume foreign currency translation will still be an issue.
The company did not offer a quarterly outlook.
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AP Business Writer Michelle Chapman contributed to this report from New York.
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