General Mills Inc reported quarterly sales that missed Wall Street’s projections but reaffirmed its full-year profit target, saying growth should accelerate for the remainder of the year. The company’s fiscal first-quarter earnings rose 12%, reflecting changes in the value of some of its commodity hedges and higher sales of brands such as Cinnamon Toast Crunch and Multigrain Cheerios.
But profits at the company’s key U.S. retail business were hurt by higher commodity costs and advertising expenses, as the maker of Cheerios cereal, Pillsbury baked goods and Green Giant frozen vegetables works harder to make its brands stand out in a weak economy.
Food companies are increasingly feeling the pressure of higher costs for commodities like wheat, particularly since the weak consumer environment has made it harder to raise prices. In recent months, the big food brands and retailers have offered consumers big discounts in an effort to drive sales.
The company said it expects near-term performance to remain in line with prior-year levels, with sales and earnings growth accelerating as the year progresses. Its forecast for the year was reiterated. The stock was recently up 1.5% to $36.21.
