General Mills profit beats estimates as cost cuts pay off

Industries Reuters

A box of Cheerios breakfast cereal made by General Mills is shown in this illustration photograph taken in Encinitas, California, U.S. June 27, 2016. REUTERS/Mike Blake (Copyright Reuters 2016)

Cheerios cereal maker General Mills reported a better-than-expected quarterly profit as the company cut back on promotions and kept a tight lid on costs.

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General Mills and other U.S. packaged food makers such as Conagra Brands and Kellogg have focused on reining in costs to counter soft demand due to a shift among consumers to fresh foods and products seen as healthier.

General Mills has been cutting back on promotions, particularly on high-margin products such as Progresso soups and Pillsbury dough, even at the cost of losing some sales.

Selling and other expenses fell 10.2 percent to $2.80 billion in the fourth quarter, with advertising and media expenses dropping 17 percent.

Net income attributable to the company rose to $408.9 million, or 69 cents per share, in the three months ended May 28, from $379.6 million, or 62 cents per share, a year earlier.

Excluding items, the company earned 73 cents per share.

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The company's net sales fell 3.1 percent to $3.81 billion, capping two years of falling quarterly sales, but beat the analysts' average estimate for the first time in a year.

Analysts on average had expected earnings of 71 cents per share and revenue of $3.75 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila)