* Q4 adj EPS 52 cents, matches average Wall Street forecast
* Sales $3.63 bln; Wall Street expected $3.67 bln
* Sees FY 2012 EPS $2.60-$2.62; Wall Street expected $2.67
* Shares down 2.4 pct
(Adds analyst comment, 2011 inflation forecast)
By Martinne Geller
NEW YORK, June 29 General Mills Inc (GIS.N)
forecast weaker fiscal-year earnings than Wall Street expected
as the food company gets hammered by higher costs for
ingredients and fuel.
The maker of Cheerios cereal and Progresso soups, whose
shares fell nearly 2 percent in premarket trading, said it
expects costs to rise 10 percent to 11 percent in its fiscal
year 2012, which began May 30. That is more than double the
inflation it had forecast for the previous year.
As a result, General Mills forecast fiscal 2012 earnings
per share of $2.60 to $2.62 excluding special items, up from
$2.48 in fiscal 2011.
Analysts on average were expecting $2.67, according to
Thomson Reuters I/B/E/S.
"We believe the operating environment in many developed
markets will remain challenging over the next 12 months,"
General Mills Chief Executive Ken Powell said in a statement
He said the company's full-year plan assumes volume will be
lower, with mid-single-digit sales growth driven by price
increases, new products and marketing initiatives.
Jefferies analyst Scott Mushkin said the inflation forecast
is the highest seen so far in the sector and noted that higher
prices will lead to volume declines. He also said price
increases will not be enough to fully offset the cost
For the just-ended fourth quarter, General Mills on
Wednesday posted net income of $320.2 million, or 48 cents per
share, up from $211.9 million, or 31 cents per share, a year
Excluding the impact of one-time items, earnings were 52
cents per share, matching analysts' average estimate, according
to Thomson Reuters I/B/E/S.
Sales rose to $3.63 billion from $3.53 billion. Analysts
were expecting $3.67 billion.
Volume fell 4 percent due to fewer discounts compared with
the year-earlier period. Price increases and selling a greater
proportion of higher-priced items added 6 percentage points of
sales growth, while foreign exchange rates added 1 percentage
In the U.S. retail segment, sales fell 2 percent as the
benefit of price increases was offset by a 6 percent decline in
volume. Internationally, sales grew 16 percent.
General Mills shares fell to $36.30 in premarket trading
from a close at $37.21 on Tuesday on the New York Stock
(Reporting by Martinne Geller; Editing by Lisa Von Ahn, Dave
Zimmerman and John Wallace)