General Mills Inc., the nation’s second-largest cereal producer and largest maker of branded yogurt, said Wednesday that fourth-quarter earnings rose 65 percent from last year, including a gain on the sale of the company’s stake in Snack Ventures Europe and the Lloyd’s barbecue entrees business.
The results missed analysts expectations, and the company forecast 2006 profit below analysts’ expectations.
Net income grew to $460 million, or $1.14 per share, from $278 million, or 68 cents per share, a year ago. Excluding an accounting rule change, the gain from business dispositions, debt repurchases and other items, General Mills would have earned 64 cents per share in the latest quarter.
Sales edged down to $2.72 billion, about 3 percent below prior-year results that included an extra week.
On average, analysts surveyed by Thomson Financial were looking for slightly higher operating profit of 65 cents per share on revenue of $2.69 billion.
The company’s bakeries and foodservice division posted sales of $450 million, down from $465 million last year, and international sales totaled $456 million, compared to year-ago revenue of $417 million.
General Mills said it intends to renew share repurchase activity in 2006, and expects stock buybacks to be a source of profit growth in 2006 and beyond.
For fiscal 2006, the company is targeting low single-digit sales growth, and mid single-digit growth in operating profit driven by margin recovery in the U.S. retail segment. Earnings per share are expected to drop 8 percent to 10 percent from $3.08 in 2005, which included a large gain from dispositions. Excluding items, 2005 earnings per share would have totaled $2.67, and from this adjusted base, General Mills forecasts growth of 7 percent to 8 percent in 2006.
Analysts are predicting 2006 earnings of $3.13 per share on sales of $11.56 billion.
Earlier this month, the company said the Securities and Exchange Commission ended its investigation of the foodmaker’s sales practices and related accounting without taking enforcement action.
The company, whose brands include Cheerios and Wheaties cereals, Yoplait yogurt and Pillsbury rolls, never released details of the investigation, which began in 2003.
