The low-carb diet craze failed to eat a big hole in
bottom line, as the company Wednesday delivered a higher fourth-quarter profit and sweetened its dividend.
The Minnesota-based food company known partly for its breakfast cereals earned $278 million, or 72 cents a share, on revenue of $2.79 billion, vs. $225 million, or 59 cents a share, on revenue of $2.55 billion, a year ago.
Restructuring, merger activity and other costs totaled $8 million on an after-tax basis. Excluding those items, the company posted fourth-quarter EPS of 74 cents in 2004 and 64 cents in 2003. The consensus estimate was for 72 cents a share, according to Thomson First Call.
The company achieved strong results "despite the challenges of rising commodity costs, increasing employee benefits expense and the recent popularity of low-carbohydrate diets, which slowed sales in several of our major product categories."
Cereal volume grew 2% in 2004, while revenue at its bakeries and food service unit grew slightly, to $465 million in the quarter.
In a statement accompanying the results, General Mills addressed the impact of low-carb diets without making a fuss about it. Other companies, including
Krispy Kreme Doughnuts
, have cited the diets as a threat to sales.
In the fourth quarter, international sales grew 21% to $417 million
General Mills forecast 2005 EPS of $2.75 to $2.80, which reflects higher commodity prices and includes costs for restructuring and other items worth 10 cents to 15 cents a share. The consensus estimate is $2.95 a share.
The company is raising its annual dividend from $1.10 a share to $1.24 a share, effective Aug. 2, with a 31-cent quarterly payment.
General Mills shares rose 85 cents, or 1.8%, to $46.97.