General Mills 4Q profit climbs on higher sales

General Mills Inc.'s fiscal fourth-quarter net income rose 51 percent on stronger sales abroad, but rising ingredient and fuel costs remain a concern as the maker of Cheerios, Lucky Charms and other foods gave a 2012 earnings outlook below analysts' expectations.

Its stock fell 91 cents, or 2.5 percent, to $36.30 in premarket trading on Wednesday.

Like many businesses, General Mills started raising its prices over the past few months to help cope with climbing ingredient costs as escalating fuel costs gave an additional squeeze.

General Mills said it anticipates 2012 earnings of about $2.60 to $2.62 per share, with revenue growth in the mid single-digits. Analysts polled by FactSet predict earnings of $2.68 per share.

The company said its guidance assumes "significantly higher costs for ingredients and energy." It expects costs to rise 10 percent to 11 percent during the year.

The outlook also accounts for its assumption that developed markets will remain challenging over the next year.

In the fourth quarter, General Mills earned $320.2 million, or 48 cents per share. That's up from $211.9 million, or 31 cents per share, a year ago.

Adjusted earnings increased to 52 cents per share from 41 cents per share, meeting analysts' forecasts.

Revenue for the period ended May 29 climbed 3 percent to $3.63 billion from $3.53 billion, but missed Wall Street's estimate of $3.66 billion.

General Mills benefited mostly from strength overseas, with international revenue up 16 percent. Its bakeries and foodservice segment also posted an 11 percent revenue gain.

Results for the U.S. retail division were weaker, with the segment posting a 2 percent revenue decline as higher prices were offset by a 6 percent drop in pound volume.

For the year, General Mills earned $1.8 billion, or $2.70 per share, compared with $1.53 billion, or $2.24 per share, in the prior year. Adjusted earnings climbed to $2.48 per share from $2.30 per share.

Annual revenue improved to $14.88 billion from $14.64 billion.

The Minneapolis company saw its biggest revenue gain in its Small Planet Foods organic and natural foods division, which reported a 13 percent increase thanks to double-digit growth by Larabar fruit and nut bars.

Revenue rose 5 percent for the snacks unit on better sales of Nature Valley and Fiber One grain snack bars. The Yoplait division reported a 1 percent revenue gain.

Cereal revenue slipped 2 percent, while revenue for the baking products unit fell 4 percent. The meals division reported a 1 percent decline as better sales of Old El Paso Mexican products, Progresso soup, and Wanchai Ferry and Macaroni Grill frozen entrees was offset by softness in Helper dinner mixes and Green Giant canned vegetables. Pillsbury revenue dropped 2 percent on weaker sales of Totino's frozen pizza.

Sales rose 7 percent in Europe and 9 percent in the Asia/Pacific region in 2011 on a constant currency basis.

(Copyright 2011 by The Associated Press. All Rights Reserved.)