By ANJALI CORDEIRO and TESS STYNES
NEW YORK -- General Mills Inc.'s fiscal first-quarter earnings soared 51% as the company's profit margins widened in tandem with moderating commodity prices and as sales rose of household staples like Hamburger Helper, Multigrain Cheerios and Pillsbury cookie dough.
The results handily topped expectations and the processed-food giant again raised its fiscal-year earnings view, this time by 20 cents to $4.40 to $4.45 a share.
Lower commodity prices have begun to aid the large food makers, who were hit badly last year as their raw material costs surged. Despite the declines in raw material costs, most of these companies have largely been able to avoid the large scale price rollbacks some investors had feared. That is beginning to help their profit margins. ConAgra, maker of Hunt's sauces and Healthy Choice meals, this week also raised its fiscal year earnings forecast. Companies like General Mills have also cut costs aggressively.
General Mills also has introduced products to help drive its U.S. retail segment growth, such as Progresso High Fiber soups. Its Betty Crocker brand entered the profitable gluten-free niche with mixes for cookies, brownies and cakes.
For the quarter ended Aug. 30, the company reported a profit of $420.6 million, or $1.25 a share, up from $278.5 million, or 79 cents, a year earlier.
Excluding items, such as hedging gains and losses, earnings were up at $1.28 from 96 cents. The company earlier this month indicated results likely would top its internal projections but didn't give details.
Revenue edged up 0.6% to $3.52 billion, with currency fluctuations hurting sales results by 2 percentage points. Volume was flat, reflecting the loss of 2 percentage points from divested product lines.
Analysts polled by Thomson Reuters most recently were looking for earnings of $1.03 on revenue of $3.49 billion.
Gross margin jumped to 41.5% from 34.1% amid lower costs for grain and other commodities.
At its U.S. retail business, sales rose 5.8%, with volume up 2%. Profit rose 21%. In its international division, sales dropped 4.1% on the weaker dollar as earnings fell 13%.
The bakery and food-service unit remains under pressure amid restaurant industry weakness, with sales down 16% on divestitures and falling flour prices. However, segment profit more than doubled amid lower commodities prices and cost cuts.