General Mills achieves record-level results in fiscal 2010

General Mills on June 30 reported strong results for the fourth quarter and full fiscal year ended May 30, 2010. On the last business day of the fiscal year, General Mills common stock split 2 for 1. All per-share data in this release have been adjusted to reflect the stock split.

Fiscal 2010 Financial Highlights
Fiscal 2010 included 52 weeks. The previous year included 53 weeks, with the extra week falling in the fourth quarter.

Net sales for fiscal 2010 grew 1 percent.

Segment operating profit rose 8 percent.

Diluted earnings per share (EPS) increased 18 percent to $2.24.

Excluding certain items affecting comparability, diluted earnings per share grew 16 percent to $2.30, in line with the consensus of analyst estimates.

General Mills net sales in fiscal 2010 increased 1 percent to $14.8 billion. The contribution from volume (measured in pounds) matched prior-year levels, with the impact of one less week and the absence of divested product lines subtracting 3 points of growth. Price and mix contributed 1 point of net sales growth, and foreign currency translation had no meaningful impact on the net sales growth rate. Gross margin expanded to 39.7 percent, reflecting strong operating performance, effective cost-savings initiatives and supply-chain costs that were below prior-year levels. The company increased media expense by 24 percent in fiscal 2010. Including this investment, segment operating profit grew 8 percent to $2.9 billion. Restructuring, impairment and other exit costs totaled $31 million pretax. Tax expense included a $35 million charge related to recent federal health care legislation. Net earnings grew 17 percent to $1.5 billion, including a net decline in mark-to-market valuation of certain commodity positions. Diluted earnings per share rose 18 percent to $2.24. Earnings per share excluding mark-to-market effects and the tax charge related to health care reform would total $2.30. This represents a 16 percent increase from 2009 earnings of $1.99 per share excluding items affecting comparability (please see Note 10 to the consolidated financial statements below for a reconciliation of this non-GAAP number).

Chairman and Chief Executive Officer Ken Powell said, “This was an exceptional year for our company. We achieved broad-based sales growth and expanded gross margin, which allowed us to invest at above-planned levels in media support and selling capabilities. And our 16 percent EPS increase significantly exceeded the high single-digit rate we target in our long-term growth model.”

Fourth Quarter Highlights
Fourth quarter 2010 net sales declined 2 percent from year-ago results that included an extra week.

Segment operating profit declined 9 percent.

Diluted EPS totaled $0.31.

Excluding certain items affecting comparability, fourth-quarter EPS totaled $0.41 cents compared to $0.43 cents a year ago.

Net sales for the fourth quarter totaled $3.6 billion, 2 percent below prior-year results that included the extra week. Contributions from pound volume matched year-ago levels, with the impact of one less week and divestitures subtracting 7 points of growth. Price and mix subtracted 3 points of net sales growth. Foreign currency translation added 1 point of sales growth. Gross margin of 36.2 percent was below year-ago levels, primarily reflecting mark-to-market effects. Media investment grew 10 percent in the quarter. Segment operating profit declined 9 percent to $606 million. Net earnings declined to $212 million, including the $35 million tax charge (5 cents per share) discussed above, as well as $25 million after-tax expense (4 cents per share) associated with a recent debt repurchase.