Results from the other GM

There is another important GM in the U.S. economy: General Mills. Today they reported results from their fiscal fourth quarter and they were excellent.

Profits nearly doubled and they said that they not only were comfortable with analysts’ estimates for the upcoming fiscal year, but that they were upping estimates. The most important word in that previous sentence is “profits.” Here is an important firm that is earning money during the economic slowdown.

Many food producers have benefited from an increase in the number of consumers who are staying at home to eat, rather than going out. In fact, General Mills’s U.S. retail segment saw sales up 12%. That 12% represented price increases of 9%, and 3% of volume growth. The fact that the company is able to raise prices in the midst of a recession is a strong sign for the business that they are still passing on value to consumers. If the company was not, then if prices were raised 9% then volumes should have fallen, and they did not.

The moral of this story is that consumers are still spending money, but you have to be making the right kind of product to earn the purchase.

Jason