General Mills reports 35% rise in Q1 profit

US-based food company General Mills has reported that its profit for the first quarter of fiscal 2013 soared 35.3% to $548.9m, up from $405.6m in fiscal 2012, helped by acquisitions and improving market conditions.

Net sales for the first quarter ended 26 August 2012 increased 5% to $4.05bn, compared to $3.84bn in the previous year.

The results during the 13-week period were driven by the acquisition of yogurt brand Yoplait International in July 2011, and the purchase of three businesses – Food Should Taste Good, Yoplait Ireland and Parampara Foods – during the final quarter of 2012.

General Mills chairman and chief executive officer Ken Powell said that with this start, the company is on track to achieve its fiscal 2013 targets.

"Results for the first quarter were broadly consistent with our plans, and included sequential improvement in our volume and gross margin trends from the fourth quarter of 2012," Powell added.

In the US retail segment, which is the company’s largest revenue contributor, sales declined 0.7% to $2.49bn, while operating profit fell 1.7% to $575m, due to a drop in yogurt sales.

Divisions such as Snacks, Baking Products, Meals and Small Planet Foods posted a rise in net sales, while sales for Big G, Frozen Foods and Yoplait declined.

However, the company noted that it is seeing gradual improvement in price and volume trends across its US retail food categories.

International Segment net sales increased 26.8% to $1.09bn, and operating profit rose 55.9% to $125.8m, helped by the acquisition of Yoplait International.

In the Bakeries and Foodservice Segment, net sales declined 2% to $471.6m, while operating profit increased 10.3% to $67.7m, due to lower wheat costs and higher earnings from grain merchandising.

For fiscal 2013, General Mills noted that it will put advertising support behind its new items, and stood by its adjusted earnings forecast of $2.65 per share.

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Image: The results of the first quarter of fiscal 2013 were driven by the acquisition of four food businesses. Photo: General Mills.