Consumer giant General Mills beat analysts’ profit estimates in the second quarter, on the back of price increases and cost savings.
The Old El Paso manufacturer’s shares jumped 4.8% prior to trading, after it revealed improved margins in a half-year trading announcement.
Gross margin rose to 34.5% for the second quarter ending 25 November, beating the average analyst estimate of 33.8%, according to Refinitiv data.
Net sales, however, missed predictions, as they increased 5% to $4.41bn, $0.1bn behind estimates.
Sales in General Mills’ Europe and Australia catchment slipped 3% to $454m for the quarter, as it was impacted by unfavourable exchange rates.
Performance was particularly impacted by “currency-driven inflation on products imported into the U.K” and a “challenging retail environment in France”, it added.
Snack bar brands Nature Valley and Fibre One, Häagen-Dazs ice cream and Old El Paso all performed “positively, it said, but growth was offset by a decline in sales of yoghurt brand Yoplait.
Fibre One has seen significant growth over past year, with seal increasing £10.1m to £19.6m for the year ending 8 September 2018 (Nielsen), according to data for The Grocer’s Top Products survey.
Last week, General Mills announced plans to expand its healthier snack bar portfolio with the first UK-wide rollout of Lärabar, its $178m brand from the US.
European profits slipped 18.5% to $22m as a result of cost inflation, falling from $27m the previous year.
“I’m pleased that our results through six months keep us on track to deliver our full-year targets,” said General Mills chairman and CEO Jeff Harmening.
“Our cost and capital discipline has driven profit growth ahead of our expectations in the first half. Our job to do in the second half is to accelerate our sales growth while maintaining that same discipline.
“We’re taking actions to strengthen our second-half topline trends in North America Retail, led by US cereal and snacks.”