General Mills raises sales and profit forecast due to higher prices and demand

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Cheerios, owned by General Mills, are seen in a store in Manhattan, New York, U.S. November 11, 2021. Picture taken November 11, 2021. REUTERS/Andrew Kelly

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March 23 (Reuters) – General Mills Inc (GIS.N) raised its core sales and profit forecast for the full year on Wednesday, encouraged by higher prices and strong demand for grains, snacks and pet food manufacturer Cheerios, pushing its shares up 6%.

Consumers sticking to pandemic-induced home cooking habits have boosted sales for packaged food makers, which are also benefiting from price hikes, with General Mills joining peers Kraft Heinz (KHC.O) and Kellogg (KN) reporting better-than-expected quarterly earnings.

Margins, however, remain under pressure in the food industry as pandemic-induced supply chain gaps have led to skyrocketing transportation and labor costs, adding to soaring costs. costs of packaging materials and ingredients.

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General Mills had warned in February that supply issues in categories such as refrigerated dough, pizza and hot snacks in North America would affect shipments in the third quarter, but measures such as securing other sources of sourcing helped the company exceed its organic sales growth expectations, up 4%.

“Our stocks led to a stronger-than-expected rebound late in the third quarter, and we see this improvement continuing into the fourth quarter,” Chief Executive Jeff Harmening said.

The company’s forecast has analysts surprised. “It’s not every day in this typically predictable industry that results arrive before a pre-announcement at the end of the quarter (February),” said Ken Goldman of JP Morgan.

Cake mix maker Betty Crocker expects organic net sales to grow about 5% in fiscal 2022, compared to its previous estimate of a 4% to 5% increase.

It forecast adjusted earnings per share between flat and a 2% increase, compared to its previous range of a 2% decline to a 1% increase.

General Mills’ net sales were below estimates, but its adjusted earnings of 84 cents per share for the quarter ended Feb. 27 beat market expectations by 78 cents.

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Reporting by Deborah Sophia and Mehr Bedi in Bengaluru; Editing by Vinay Dwivedi

Our standards: The Thomson Reuters Trust Principles.

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