General Mills, the second-largest US cereal manufacturer, told investors yesterday (11 January) that it plans to increase its spending on launching new products in an effort to counter the sales slow-down it has witnessed in the last six months of the company’s financial year.
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Chief financial officer James Lawrence reiterated the company’s profit forecast of between US$3.09 and $3.13 per share for the fiscal year ending in May.
Revenue growth is expected to slow from the first half growth of 6%, Lawrence said in an investor presentation. Several factors are expected to cause the company’s growth to slow, including the higher cost of raw materials, the company said. Lawrence added that General Mills does not expect its bakery and foodservice division to be able to fully offset these cost increases with higher pricing.
In an attempt to reverse this trend, the company said that it will boost advertising spending to promote the launch of more than 80 new products, such as Disney-branded cereal. The release of more than 200 new items in th previous half lifted revenue by an expectation-beating 5.3%.
Investors welcomed the news, with General Mills’ shares rising from an opening value of $56.72 yesterday to close up at $57.31.
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