General Mills Inc. (GIS), the maker of Cheerios cereal and Pillsbury baked goods, projected full-year profit that trailed analysts’ estimates amid increased marketing and investments in its U.S. yogurt business.
Profit for fiscal 2013, including a decrease from its acquisition of Yoki Alimentos SA, will total $2.65 a share, the Minneapolis-based company said today in a statement. Analysts projected $2.76 a share, the average of 18 estimates compiled by Bloomberg.
Chairman and Chief Executive Officer Ken Powell has boosted marketing and raised prices on some products to counter rising costs for raw ingredients such as wheat and sugar. Increased pension expenses and a higher tax rate may also reduce annual earnings growth, the company said.
The company expects 2013 net sales to grow at a “mid- single-digit rate.”
Fourth-quarter net income rose 1.6 percent to $325.4 million, or 49 cents a share, from $320.2 million, or 48 cents a share, a year earlier, General Mills said today. Sales rose 12 percent to $4.07 billion, falling short of the $4.11 billion average of analysts’ estimates compiled by Bloomberg.
Excluding some items, profit totaled 60 cents a share. Analysts projected earnings of 59 cents a share, the average of 17 estimates compiled by Bloomberg.
Sales in the U.S. retail business rose 2.9 percent to $2.4 billion, driven by the Snacks and Small Planet Foods divisions.
The company has been growing through acquisitions, having announced or completed four of them in fiscal 2012. The Yoplait acquisition played a big role in boosting quarterly sales at the company’s international segment, which grew 46 percent to $1.13 billion. Yoplait sales accounted for all of the company’s international growth and more than offset price declines.
General Mills announced in May that it agreed to buy Brazilian foodmaker Yoki for about 1.75 billion reais ($840 million) to boost snack sales in Brazil. The transaction will close during the first half of fiscal 2013. The deal, which will give General Mills nine brands and more than 600 items, also includes the assumption of about 200 million reais of outstanding debt.
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