General Mills (NYSE: GIS) said today that strong fourth-quarter sales
will lead fiscal 2008 results to exceed targeted levels. In the final
quarter ended May 25, 2008, net sales grew 13 percent. As a result,
fiscal 2008 sales are expected to increase 10 percent to $13.7 billion.
Segment operating profits are expected to grow at a mid single-digit
rate for the full year, despite higher input costs and a double-digit
increase in consumer marketing expense. General Mills now expects fiscal
2008 diluted earnings per share (EPS) to be approximately $3.71. This
includes an estimated 19 cents per share of non-cash net gains from
mark-to-market valuation of certain commodity positions and a favorable
ruling related to a tax contingency. Excluding these non-cash gains,
earnings per share would be approximately $3.52, up 11 percent from
reported earnings of $3.18 per share a year ago.
The company had been targeting earnings excluding these non-cash items
of $3.45 to $3.47 per share, and had estimated reported earnings of
$3.75 to $3.77 per share.
Fourth-quarter diluted EPS are expected to be 53 cents. This includes an
expected reduction of the mark-to-market valuation of certain commodity
positions from a net gain of $168 million at the end of the third
quarter to a net gain of $57 million at the end of the fiscal year,
primarily due to declines in key commodity market prices from the
prevailing levels recognized last quarter. Excluding this $111 million
pre-tax mark-to-market reduction, diluted EPS are expected to be 73
cents, up 18 percent from 62 cents per share reported for the fourth
quarter a year ago.
Fiscal 2009 Outlook
Looking ahead to fiscal 2009, the company expects to generate continuing
sales and earnings growth that meets or exceeds its long-term targets.
Sales and segment operating profits are expected to grow at mid
single-digit rates. Diluted earnings per share will continue to include
mark-to-market valuation of commodity positions, but the company cannot
predict its effect on earnings. Assuming no mark-to-market impact in
fiscal 2009, earnings are expected to be between $3.78 and $3.83 per
share for the year, representing growth of 7 to 9 percent from the $3.52
EPS excluding tax and commodity items in fiscal 2008.
General Mills plans to release fiscal 2008 results on June 25, 2008. A
briefing will be held for investors on that day beginning at 9:00 a.m.
EDT. You may access the web cast from General Mills’
corporate home page: www.generalmills.com.
Earnings per share excluding certain non-cash items is a non-GAAP
measure. Reconciliation of this measure to the relevant GAAP measure
(earnings per share) appears in the table above.
This press release contains forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995 that are
based on management’s current expectations and
assumptions. These forward-looking statements, including the statements
under the caption "Fiscal 2009 Outlook,”
are subject to certain risks and uncertainties that could cause actual
results to differ materially from the potential results discussed in the
forward-looking statements. In particular, our predictions about future
net sales and earnings could be affected by a variety of factors,
including: competitive dynamics in the consumer foods industry and the
markets for our products, including new product introductions,
advertising activities, pricing actions and promotional activities of
our competitors; economic conditions, including changes in inflation
rates, interest rates or tax rates; product development and innovation;
consumer acceptance of new products and product improvements; consumer
reaction to pricing actions and changes in promotion levels;
acquisitions or dispositions of businesses or assets; changes in capital
structure; changes in laws and regulations, including labeling and
advertising regulations; impairments in the carrying value of goodwill,
other intangible assets, or other long-lived assets, or changes in the
useful lives of other intangible assets; changes in accounting standards
and the impact of significant accounting estimates; product quality and
safety issues, including recalls and product liability; changes in
customer demand for our products; effectiveness of advertising,
marketing and promotional programs; changes in consumer behavior, trends
and preferences, including weight loss trends; consumer perception of
health-related issues, including obesity; consolidation in the retail
environment; changes in purchasing and inventory levels of significant
customers; fluctuations in the cost and availability of supply chain
resources, including raw materials, packaging and energy; disruptions or
inefficiencies in the supply chain; volatility in the market value of
derivatives used to hedge price risk for certain commodities; benefit
plan expenses due to changes in plan asset values and discount rates
used to determine plan liabilities; failure of our information
technology systems; resolution of uncertain income tax matters; foreign
economic conditions, including currency rate fluctuations; and political
unrest in foreign markets and economic uncertainty due to terrorism or
war. The company undertakes no obligation to publicly revise any
forward-looking statements to reflect any future events or circumstances.
