Sales of General Mills Inc's breakfast cereals, snack bars and pet food outstripped estimates in the fourth quarter despite higher prices.
The Cheerios maker also raised its quarterly dividend by 6%, sending shares up nearly 3% in premarket trade on Wednesday, even though it forecast annual earnings below expectations.
US packaged food makers have jacked up prices of everything from condensed soup to chocolates to protect their profit margins from rising freight and raw material expenses.
So far, demand has held up, but analysts have said further hikes would be hard to implement as inflation-hit Americans turn frugal.
General Mills is 'planning for volume elasticities to increase' over the course of the year, it said, and expects input cost inflation to touch about 14% in fiscal 2023 from 8% in the reported year.
The Blue Buffalo pet foods maker is reshaping its portfolio to focus on more profitable businesses such as pet foods, with deals to carve off its Helper main meals, Suddenly Salad side dishes and its European yogurt division.
Net sales increased 8% to $4.89 billion for the fourth quarter ended 29 May, beating estimates of $4.81 billion, according to IBES data from Refinitiv.
The company forecast fiscal 2023 adjusted per-share profit growth between flat and a 3% rise. Analysts were expecting a 3.5% increase.
General Mills chairman and chief executive officer Jeff Harmening, said, “Fiscal 2022 was another successful year for General Mills, marking the fourth consecutive year that we’ve delivered results that met or exceeded our targets for top and bottom-line growth and cash generation.[...]
“Though significant inflation and supply chain disruptions put pressure on our margins, we responded quickly to address those challenges and keep our brands on shelf for our customers and consumers.”