November 7, 2014 / 3:53 PM / 4 years ago

UPDATE 1-General Mills cuts sales, profit growth forecast

(Adds details, current-quarter forecast, background; updates shares)

Nov 7 (Reuters) - General Mills Inc, the maker of Cheerios cereal and Betty Crocker cake mixes, cut its full-year sales and profit growth forecast, blaming weak demand in the United States and slowing growth in its key emerging markets.

The company’s shares fell as much as 4 percent to $51.10 in morning trading on the New York Stock Exchange.

General Mills’ sales in recent quarters have been hit by intense competition from private-label brands and new breakfast options such as frozen egg sandwiches and yogurt.

In an interview in September, Chief Executive Ken Powell pointed to a tough retail environment where sales of non-durable goods, which include food and beverage items, have been flat to down.

The company said on Friday its U.S. foods business, which accounts for more than half of its revenue, is now expected to show an operating profit decline.

Sales in the division have fallen in the past four quarters. Its brands include Green Giant canned and frozen vegetables, Progresso soup and Pillsbury frozen foods.

The Minneapolis, Minnesota-based company’s sales in international markets, which include Canada, Latin America, Asia-Pacific, Europe, and the Middle East, have also been slowing.

In a bid to curb a slide in sales, General Mills acquired organic foods producer Annie’s Inc for $820 million in September.

General Mills has also launched protein-based Cheerios cereals and Nature Valley granola bars as it seeks to expand itself in the high-growth health foods market.

The company, which has also missed both profit and sales forecasts in the past four quarters, said it expects annual cost savings of $260-$280 million for fiscal 2016. It had announced an annual cost saving initiative in June.

General Mills said it expects net sales for the year ending May to grow at a low single digit rate in constant currency, compared with its previous forecast of mid single-digit growth.

The company said it expects full-year adjusted earnings per share to grow at a low single-digit rate in constant currency. It earlier forecast high single-digit growth.

General Mills also estimated an adjusted profit of 75-77 cents per share for the second quarter ending Nov. 23. Analysts on average were expecting a profit of 88 cents per share, according to Thomson Reuters I/B/E/S. (Reporting by Shailaja Sharma in Bangalore; Editing by Maju Samuel)

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