General Mills reports 16.3% decline in Q1 net income

General Mills, a US-based food company, has reported that its net earnings for the first quarter of 2014 declined 16.3% to $459.3m, compared with $548.9m for the same period in 2013.

Net earnings dropped as special items boosted the packaged food company’s year-ago results; however, new businesses contributed to growth in net sales.

For the quarter ended 25 August, net revenues rose 7.9% to $4.37bn, compared with $4.05bn a year ago, with 5 percentage points of the gain due to newly acquired businesses overseas.

Net sales were also driven by increasing demand for the company’s yoghurt products and the addition of new international businesses.

Segment-wise, the US Retail operations reported a 4% rise in net sales to $2.58bn, driven by the Snacks, Big G, Baking Products and Small Planet Foods divisions, while operating profit increased 6.4% to $611.9m.

The International segment reported a 21.7% rise in net sales to $1.32bn, while operating profit declined slightly to $125.6m.

The Convenience Stores and Foodservice segment reported a 0.8% decrease in sales to $467.8m, while operating profit rose 9.5% to $74.1m.

Combined after-tax earnings from the Cereal Partners Worldwide (CPW) and Haagen-Dazs Japan (HDJ) joint ventures increased 4% to $24m.

General Mills chairman and CEO Ken Powell said the company’s performance represents a solid start to the new fiscal year.

"In particular, our net sales growth in the quarter reflects a healthy mix of gains from established brands, strong introductory shipments for new products, and contributions from new businesses added to our portfolio," Powell added.

"We continue to be excited about our 2014 business plans, which call for sales and earnings growth consistent with our long-term model, along with strong cash returns to shareholders through dividend growth and share repurchase activity."

For the full-year 2014, the company reaffirmed its guidance of low single-digit growth in net sales, mid single-digit growth in segment operating profit, and adjusted diluted EPS of $2.87 to $2.90.

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Image: General Mills’ net sales for the first quarter were driven by increasing demand for yoghurt products and the addition of new international businesses. Photo courtesy of General Mills, Inc.