General Mills profit rises 18%, helped by rate cuts

Cereal maker also credits sales of yogurt, snacks

September 18, 2001|By BLOOMBERG NEWS

MINNEAPOLIS - General Mills Inc., the maker of Cheerios and Wheaties cereals, said yesterday that its fiscal first-quarter profit rose 18 percent as the company sold more yogurt and snacks and reduced interest and other expenses.

Net income for the quarter that ended Aug. 26 rose to $188 million, or 64 cents a share, from $158.9 million, or 55 cents, a year earlier. Revenue rose 5.7 percent, to $1.77 billion from $1.67 billion, the company said.

Interest expense dropped 11 percent in the quarter as interest rates fell, Chief Financial Officer James Lawrence said. Earnings from joint ventures more than doubled, and sales were boosted by recently introduced products, such as Yoplait Expresse.

General Mills has been adding products as U.S. sales of cereals slow and consumers opt for convenience foods such as breakfast bars and bagels.

General Mills said it expects the Federal Trade Commission to finish reviewing its proposed $10.5 billion purchase of Diageo PLC's Pillsbury unit next month.

The transaction has been delayed by talks between the FTC and General Mills over corporate control of the Pillsbury Doughboy, people familiar with the review have said.

Sales at General Mills' snacks venture with PepsiCo Inc. rose 8 percent, led by growth in western Europe. Sales at Cereal Partners Worldwide, a venture with Nestle SA, rose 10 percent. Yogurt and snack sales rose 8 percent, while sales of meals and side dishes such as Bowl Appetit! increased 5 percent.

General Mills' share of the U.S. cereal market rose to 32 percent from 31.5 percent in the year-ago quarter as it won sales from Kellogg Co. and Kraft Foods Inc.'s Post brand. Cold-cereal volume sales to consumers rose 5 percent in the quarter.

Profit in the latest quarter included a gain from insurance proceeds for the settlement of a 1994 incident involving the mishandling of raw oats. It also included charges from a decision to leave the Squeezit beverage business, Pillsbury acquisition costs and costs related to flood damage. Those items totaled $9.3 million, or 3 cents a share.

Excluding those gains and charges, and a loss of $3.1 million from a change in accounting, General Mills said, it earned $181.8 million, or 62 cents a share. The company also excluded 2 cents a share in goodwill amortization costs.

General Mills' shares closed down 35 cents yesterday at $45.04.

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