Cereal Giant's Profit Jumps 12 Percent

General Mills Inc.'s first-quarter net income rose 12 percent on higher prices and stronger sales of products such as Cheerios, Cinnamon Toast Crunch and Yoplait yogurts.

"Economic conditions remain relatively weak and consumer confidence is still pretty low, so it is a challenging time," Ken Powell, the company's CEO, said Wednesday. "But as we've said before, it's still a great time to be in the food business."

The company said it sold more of its products all its operating segments although its performance was hampered slightly by higher costs for ingredients and advertising.

General Mills reported that it earned $472.1 million, or 70 cents per share, for the quarter. That's up from $420.6 million, or 62 cents per share, earned in the same quarter last year.

On an adjusted basis, the company earned 64 cents per share, a penny better than what analysts polled by Thomson Reuters expected.

The company's revenue edged up 1 percent to $3.53 billion, falling short of analyst expectations of $3.57 billion.

General Mills said revenue in its U.S. retail business grew 6 percent. International revenue was up slightly less than 1 percent, but excluding the impact of unfavorable foreign exchange, rose 4 percent. And revenue in its bakeries and food-service segment grew slightly, despite continued weakness in that industry.

Shoppers are still turning to General Mills products as they continue to eat at home more and at restaurants less, Powell said.

The company saw big gains for its cereals, snacks and Yoplait yogurt business. But its Pillsbury and baking products segments both reported revenue declines.

General Mills, which increased its advertising spending by 8 percent during the quarter, said it would continue to reinvest in the creation and marketing of its products to drive future growth.

The company maintained that its adjusted earnings will be between $2.46 and $2.48 per share for fiscal 2011. This is in range of analysts' $2.48 per share.

General Mills shares rose 85 cents, roughly 2 percent, to $36.51 in morning trading.