Those Cheerios commercials must be working. General Mills (NYSE: GIS) reported on Wednesday that its profit for the first quarter of its fiscal year spiked 51%, thanks to a hefty dose of product demand and lower costs for ingredients. Of course, this beat the hell out of analyst expectations. And, it caused General Mills to boost its outlook for the year.
For the quarter, General Mills posted $420.6 million in earnings ($1.25 per share). For the same quarter a year ago, earnings reached only $278.5 million ($0.79 a share). The company's profit was a tad higher when an expense related to commodity positions is excluded, pushing earnings per share up to $1.28. Analysts had expected earnings of $1.03 a share.
The recession is probably the greatest factor in the fantastic General Mills result. It pushed fuel and ingredient costs lower -- certainly down from last year's record highs. Increased demand also played a major role, as cash-strapped customers eat more meals on their kitchen tables than in restaurants.
Revenue ticked up 1% for the quarter for General Mills, reaching $3.52 billion with cereal and Pillsbury products surging 9% and 12%, respectively. Analysts had forecast $3.49 billion. Expenses are up 16%, as the company decided to reinvest some of its new largesse in advertising and marketing.
General Mills has changed its 2010 adjusted profit to the $4.40-to-$4.45 per share range, up from $4.20 to $4.25. Analysts are estimating a profit of $4.26 for the year.
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