Cereal company General Mills (NYSE:GIS) posted a 0.2% dip in fiscal third-quarter profits on Wednesday amid shrinking margins, but the maker of Cheerios and Wheaties revealed sales growth that beat the Street.
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The Minneapolis-based company said it earned $391.5 million, or 58 cents a share, last quarter, compared with a profit of $392.1 million, or 59 cents a share, a year earlier. Excluding one-time items, it earned 55 cents a share, meeting forecasts from analysts.
General Mills said its sales jumped 13% to $4.12 billion, topping estimates for $4.07 billion. International sales soared 51% to $1.04 billion, while U.S. retail sales were up just 4% to $2.61 billion.
However, gross margins contracted to 36.6% from 39.2% as the company grappled with higher costs. General Mills said it was hurt by 10% to 11% in input cost inflation last quarter and fiscal 2012 has been marred with the highest level of commodity inflation in 30 years.
Looking ahead, General Mills reaffirmed its fiscal 2012 non-GAAP EPS view of $2.53 to $2.55, which is about in line with the Street’s view of $2.54.
“In the fourth quarter, we expect to generate continued good sales momentum and we anticipate that gross margin contraction will ease somewhat. This should result in renewed earnings growth as we wrap up 2012 and move into the new fiscal year,” CEO Ken Powell said in a statement.
Shares of General Mills fell 0.7% to $38.51 Wednesday, putting them on pace to extend their 2012 slump of 4%.