The maker of brands like Cheerios cereal and Yoplait yogurt, General Mills Inc. (NYSE: GIS), lowered its earnings forecast for the current financial year as the Company foresees a weak demand and rising cost squeezing its bottom line.
According to the latest estimates, General Mills believes that its profit per share for 2012 will be in the range of $ 2.53 to $2.55. Earlier, company estimated its profit per share between the ranges of $ 2.59 to $2.61. Analysts were estimating the average profit per share of $2.60, according to Bloomberg survey.
General Mills believes that “weak volume performance” across U.S. retail food categories in December and January spoiled results in its fiscal third quarter. Meanwhile, J.M. Smucker Co., the maker of its namesake jams, warned that its full-year profit may be less than previously anticipated because of weaker consumer demand.
Bloomberg’s senior consumer products analyst, Kenneth Shea believes that U.S consumers are still being frugal. Even though food companies are witnessing rise in the cost on year to year basis, stagnated consumer demand hasn’t helped in offsetting price increases, adds Mr. Shea.
In spite the fall in commodities prices, Mr. Shea does not expect any major relief for food producers as the current prices might not be lower enough to bring down the production cost.
General Mills shares shed 2.2 percent to $38.89 at 9:35 a.m. in New York. Last year the shares soared 14 percent.
The company is slated to report results for its fiscal third quarter on March 21. Adjusted earnings per share will be 53 cents to 56 cents, according to a statement released on Friday, falling short of analysts’ estimate of 60 cents.
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Shares of SunPower (SPWR) gained as the Company reported its fourth quarter loses—when adjusted—turned out to be lower than expected. SunPower announced a fourth-quarter loss of $83.1 million, or 84 cents a share. Last year, the Company reported a profit of $152.3 million, or $1.44 a share, for the same period. The Company also expects to make profits from 2012. Shares climbed 15% to $8.58 in after-hours trading as the company’s adjusted profit beat the market estimations.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht. |