General Mills Cuts Profit Forecast Amid Weak Demand

General Mills Cuts Profit Forecast Amid Weak Demand

General Mills Inc., the maker of
Cheerios cereal and Yoplait yogurt, reduced its earnings
forecast for its current fiscal year as weak demand and rising
costs squeeze food producers.
Profit for 2012 will be $2.53 a share to $2.55 a share, the
Minneapolis-based company said today in a statement. Previously,
General Mills forecast $2.59 a share to $2.61 a share. Analysts
projected $2.60, the average of estimates compiled by Bg.
General Mills said “weak volume performance” across U.S.
retail food categories in December and January hurt results in
its fiscal third quarter. Yesterday, J.M. Smucker Co., the maker
of its namesake jams, said its full-year profit may be less than
previously forecast because of lower consumer demand.
“Consumers are still being frugal,” said Kenneth Shea,
senior consumer products analyst with Bg Industries.
“Food companies are experiencing year-over-year cost increases
and they aren’t being offset by price increases.”
While commodity prices are coming down, they may not fall
enough to give food producers relief for the next couple of
quarters, Shea said.
“It’s just a tough competitive landscape,” he said.
General Mills fell 2.2 percent to $38.89 at 9:35 a.m. in
New York. The shares rose 14 percent last year.
The company is scheduled to report results for its fiscal
third quarter on March 21. Adjusted earnings per share will be
54 cents to 56 cents, according to today’s statement. Analysts
projected 60 cents.