By Aarthi Sivaraman
NEW YORK (Reuters) - General Mills Inc
The food maker, whose shares rose 3 percent in early trading, is taking steps to introduce dozens of new products, such as Progresso high fiber soups, Yoplait smoothies, gluten-free baking mixes, and Wanchai Ferry branded frozen entrees.
It also plans to boost marketing spending as it works to polish its appeal to consumers who are making more meals at home to save money in the recession.
"Consumers are spending more of their food dollars for meals at home and that trend is a tailwind for our U.S. retail and our international businesses," Chief Executive Ken Powell said in a conference call with analysts.
While the trend to eat at home more often is helping its retail segment, sales have suffered at General Mills' bakeries and food service unit, which caters to restaurants and bakeries.
For fiscal year 2010, ending in May, General Mills expects net sales to be "comparable" to 2009, when it posted sales of $14.7 billion.
The company forecast earnings of $4.20 per share to $4.25 per share for the year, excluding the impact of commodity costs. Analysts expect $3.17 per share.
At least one analyst expressed surprise about the food maker's outlook.
"We had been expecting Mills to take a more conservative posture," said J.P. Morgan analyst Terry Bivens in a note.
PROFIT BEAT
General Mills' net profit was $358.8 million, or $1.07 per share for the fourth quarter that ended May 31, compared with $185.2 million, or 53 cents a share, a year earlier.
Excluding a loss on product lines it sold off in the fourth quarter and the effect of commodity costs, its profit was 86 cents a share, above the average expectation for 80 cents a share, according to Reuters Estimates.
Net sales rose 5 percent to $3.6 billion, boosted by U.S. demand for items such as cereal and Pillsbury baking products.
For fiscal 2010, General Mills forecast net sales for its U.S. retail unit to grow in the low-single-digit percentage, driven by volume rather than price increases.
The company had said in June that it expects the rate of U.S. retail net sales growth to "moderate" in 2010 from 2009 levels, when it hiked prices to counter higher commodity costs. It forecast low commodity inflation for the year.
General Mills expects its international segment to post a mid-single-digit sales increase on a constant currency basis.
It expects bakeries and food service unit sales to be "below" 2009 levels, the company said.
General Mills shares were up $1.68 to $57.70 in early trading on the New York Stock Exchange.
(Additional reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Himani Sarkar and Derek Caney)
