January 9, 2009 / 1:40 PM / 9 years ago

UPDATE 2-General Mills December sales up, keeps full-year view

(Adds company comments, Kellogg price increase)

CHICAGO, Jan 9 (Reuters) - General Mills Inc (GIS.N) said on Friday December sales rose, helped by stronger results at its Betty Crocker and Pillsbury baking units, underscoring the trend of consumers eating at home more often during tough economic times.

But the company stopped short of raising its 2009 sales and earnings forecasts, during a presentation to analysts.

General Mills, which also makes Cheerios cereal and Yoplait yogurt, still expects to earn $3.83 to $3.87, excluding one-time items, for the current fiscal year ending in May, Chief Financial Officer Don Mulligan said.

Analysts on average forecast earnings of $3.94 a share, according to Reuters Estimates.

Some analysts think the company is being conservative with its forecast. But J.P. Morgan analyst Terry Bivens said earlier this week that General Mills was more likely to raise its earnings forecast at an analyst conference next month.

The company left its sales growth forecast unchanged at a mid-single digit percentage range or higher, Mulligan said.

General Mills shares were down 14 cents at $58.37 on Friday on the New York Stock Exchange.

    Besides the at-home dining trend, sales have also been helped by price increases, which General Mills and other food makers implemented to cope with soaring costs for wheat, energy and other commodities.

    While those costs have declined from historic highs last year, food companies say the costs are still well above historic norms.

    General Mills has said its energy, ingredient and supply chain costs costs would be up 9 percent in fiscal year 2009.

    On Thursday, rival cereal maker Kellogg Co (K.N) said it would push through low-to-mid single digit price increases on most of its cereals, effective Jan. 18.

    A General Mills spokeswoman on Friday declined to comment on her company’s future pricing plans, citing company policy. (Reporting by Brad Dorfman; Editing by Derek Caney)

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