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General Mills Goes Big for Healthier Products


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Bulk food products from Costco for Money & Finance, but can be used throughout the service. Cereal Cheerios toasted whole grain
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General Mills (GIS) is launching healthier products and revamping and promoting its existing ones to revive sales that have slipped for three straight quarters.

The company is jumping into an increasingly crowded market for healthier foods. But the industry has little choice as long-standing brands lose ground to cheaper store brands. "Consumers today are seeking more protein at breakfast, and we are responding," Chief Executive Officer Ken Powell said on a post-earnings conference call Wednesday.

General Mills has launched protein-based Nature Valley granola bars and Cheerios cereals and has struck a deal with McDonald's (MCD) to have its Yoplait yogurts offered with Happy Meals in thousands of outlets from next month.

Rival ConAgra Foods (CAG) has said that its Healthy Choice frozen meals and soups continued to face challenges and substantial volume decline in the third quarter ended Feb. 23. Kraft Foods (KRFT), Kellogg (K), Unilever (UL) and many other large food companies have also taken steps as health-conscious consumers lose their taste for highly processed foods.

Cutting Costs in the Supply Chain

To cut costs, General Mills said it was reviewing its North American manufacturing and distribution network with a view to save $40 million pretax in the year ending May 2015. The company said savings from an ongoing cost-cutting program in its supply chain are expected to exceed $400 million in 2015.

General Mills said it expected net sales to grow at a mid-single-digit percentage rate in fiscal 2015, with adjusted earnings per share growing by high-single digits.

Sales in the company's U.S. branded goods retail business, which accounted for 60 percent of revenue in the year ended May 25, fell 1 percent to $2.4 billion in the fourth quarter. The division's brands include Green Giant vegetables, Progresso soup and Pillsbury frozen foods.

Sales in the company's international business -- its second-largest division, including Old El-Paso Mexican foods and Haagen-Dazs ice-creams -- fell 7 percent to $1.3 billion.

Net sales fell 2.9 percent to $4.28 billion. Analysts had expected sales of $4.42 billion. Net income rose 10.4 percent to $404.6 million, or 65 cents a share from $366.3 million, or 55 cents a share, a year earlier.

Excluding items, earnings were 67 cents per share. Analysts had expected 72 cents a share, according to Thomson Reuters I/B/E/S. One-time items include a 6 cents a share gain from the sale of several grain elevators and a 9 cents a share charge associated with the devaluation of Venezuela's currency.


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