General Mills Sees Stronger EPS Growth in 'Immediate Future'

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Published February 19, 2013

| FOXBusiness

General Mills (GIS) reaffirmed its fiscal 2013 earnings guidance on Tuesday and promised to deliver more cash to shareholders in 2014 through buyback programs and dividends.

For the fiscal year ending May 26, the Minneapolis-based maker of consumer foods and cereals sees earnings in the range of $2.65 to $2.67 a share excluding one-time items, below average analyst estimates of $2.68, according to a Thomson Reuters poll.

General Mills, which had raised the fiscal 2013 EPS view in December, said it anticipates stronger EPS growth in its “immediate future,” with improvements in the high single digits in 2014.

"We are completing a two-year period of significant investment that strengthened our business in our core U.S. market and meaningfully expanded our base in international markets,” said General Mills CEO Ken Powell.  “Our focus now is on integrating the new operations and executing well across the entire company.”

The producer of Cheerios, Green Giant products, Toaster Strudels and Pizza Rolls, which has recorded average operating cash flow after capital investment of $1.3 billion a year since 2008, says it will use the excess funds on increased repurchase activity and higher dividends. The buybacks are expected to reduce the number of its diluted shares outstanding by 2% in 2014.

Meanwhile, General Mills said it will focus on expanding its presence in emerging markets, with plans to grow non-U.S. revenues beyond $5 billion in the current fiscal year.

Helping that target have been several acquisitions, including buying half of French yogurt maker Yoplait in 2011, which has already helped expand its sales overseas, as well as its nearly $1 billion purchase last May of Yoki Alimentos in Brazil.

While shares of General Mills traded virtually flat on Tuesday, they have grown more than 17% in the last 12 months.

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