Held back by rising costs and discounts, cereal maker General Mills (NYSE:GIS) revealed a weaker-than-expected 8.6% rise in fiscal second-quarter profits on Thursday.The Minneapolis-based maker of Cheerios and Wheaties said it earned $613.9 million, or 92 cents a share, in the quarter ended Nov. 28. It earned $565.5 million, or 83 cents a share, in the year-earlier period.Excluding one-time items, it earned 76 cents a share last quarter, missing the Street’s view by two pennies.Revenue inched up just 0.8% to $4.07 billion, trailing consensus calls for $4.11 billion. International sales jumped 7%. Gross margins shrank from 42.8% to 40.2%.“We expected the first half of this fiscal year to be particularly challenging, and it was,” CEO Ken Powell said in a statement. Aside from difficult year-earlier comparisons, “the operating environment in the first half of 2011 included high levels of price promotion by food manufacturers and retailers,” he said.Despite the miss, General Mills stood by its full-year non-GAAP forecast for a profit of $2.46 to $2.48 a share. Only the upper end of that range would meet expectations on Wall Street.Shareholders took the new guidance and results in stride, sending the company’s stock just 0.3% lower to $36.28. Shares of General Mills have rallied just 2% this year, trailing the broader markets.
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