Jun 26 - General Mills' fourth-quarter profit rose 13 percent but its outlook disappoints Wall Street. Fred Katayama reports.
General Mills' results satisfied investors for the fourth quarter, but its outlook could use a spoonful of Wheaties. The "breakfast of champions" met expectations with earnings that grew 13 percent to $366 million. New businesses it bought overseas helped push sales up more than 8 percent. But the maker of cereals like Cheerios and food products like Betty Crocker cake mixes saw its margins shrink. And it issued a weaker outlook for the current fiscal year than what Wall Street had been expecting. Despite that forecast, Morgan Stanley analyst Matthew Grainger says some positive trends could help the company. He said in a note, " ... the company appears positioned to benefit from a number of tailwinds - modest inflation, increased accretion from recent acquisitions, lapping of one-time costs - that could provide scope for modest guidance increases during the balance of the year." General Mills has beaten the overall market this year, up 20 percent, as investors flocked toward defensive stocks with steady payouts - what some analysts like to call "stocks with bond-like characteristics." But with Treasury yields rising, the stock has shed 4 percent over the past 7 weeks, making it less attractive as an alternative to bonds.