General Mills sees profit surge, raises guidance

Posted by Editorial on 24th September 2009

Grocery manufacturing giant General Mills has reported profit growth of 21 per cent in the first quarter as brands like Old El Paso and Cheerios continue to perform well.

The maker of Latina and Haagen Dazs reported a sales increase of one per cent despite the negative impact of currency translation with volume growth stagnant.

“We’re very pleased with this start to the year. We’re seeing continuing strong consumer demand for our products,” Chairman and Chief Executive Officer, Ken Powell, said. “These good sales levels, combined with the effects of our company-wide focus on holistic margin management (HMM), are driving terrific operating performance in our manufacturing plants.”

“In addition, our commodity and fuel costs for the quarter were below year-ago levels, helping us to recover margin that was lost in the same quarter last year. These factors drove first-quarter earnings growth that was well ahead of our expectations. As a result we’ve raised our EPS targets for the full year.”

Marketing expenditure soared 16 per cent as the company tapped into new ways to reach their consumers.

“We are … innovating on how we reach consumers. Increasingly, we are connecting with consumers online and on the go,” Executive Vice President, Ian Friendly, advised. “We are offering coupons to consumers through their mobile phones. Betty Crocker, one of our oldest brands, is offering ideas and inspiration on her Facebook page. Our box tops for education program is using social media to support our products and help people earn more money for their schools through new blog outreach and YouTube videos, and FiberOne has created a series of webisodes that deliver our brand message in a fun entertaining way.”

2010 Outlook
Mr Powell was more confident about the coming year in light of the strong first quarter results and signs that their business model is performing well.

“Over the past several years, we’ve focused intently on a business model that uses supply chain productivity, sales mix management, and other cost savings efforts to protect our margins from the pressure of rising input costs,” he said. “This helps us limit price increases and also allows us to direct significant resources back into our business, in the form of ongoing product innovation and increased consumer marketing support. This reinvestment fuels continuing strong sales trends for our brands… (and) drives growth for our food categories in markets around the world.”

“This model is working well, it’s sustainable, and so we’re sticking with it.”