General Mills profit up on price hikes
( Reuters ) - General Mills Inc, the world's second-biggest maker of breakfast cereal, on Wednesday said profit rose 8.2 percent, helped by a move to reduce the size of cereal boxes and charge consumers more per ounce.
General Mills hasn't been hurt by the market volatility that has recently affected other companies since basic food items such as cereal are unlikely to disappear from household budgets, General Mills Chief Operating Officer Ken Powell told Reuters in an interview.
"People eat, and food is a very good value in the United States," Powell said. "In terms of the grocery store market basket, we really don't see much trading around" from higher- to lower-priced items.
Net income was $289 million, or 81 cents per share, compared with $267 million, or 74 cents per share, a year ago.
The maker of Cheerios cereal, Pillsbury dough and Progresso soup said earlier this month it expected to earn 81 cents a share, including restructuring costs.
On a comparative basis, Wall Street analysts on average expected earnings of 79 cents per share, according to Reuters Estimates.
General Mills, like many other food companies, has been spending more on marketing to help boost sales. At the same time, it has been pressured by rising costs for commodities like corn, dairy products and energy.
To help offset those costs, General Mills recently decreased the size of its cereal boxes and trimmed box prices, but not as much as it cut box size. As a result, it is now charging consumers more per ounce of cereal.