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Packaged food makers have been steadily raising prices on everything from cereals to beef jerky as they look to insulate their margins from increased costs tied to labor, ingredients and transportation without drawing consumer ire.
The positive results echo sentiments from some of its peers, including Kellogg (NYSE:K), J.M. Smucker and Kraft Heinz (NASDAQ:KHC) Co, which have also raised annual forecasts in recent months.
Shares of the Minnesota-based packaged food maker rose 1.5% before the bell as it reported higher average selling prices contributed to its increase in net sales in the first quarter. The rise was partly offset by a decrease in sales volumes and the impact of a stronger dollar.
Still, the Lucky Charms owner said it expects consumers to become more price sensitive over the next three quarters, potentially taking a bigger toll on sales volumes.
The company now expects organic net sales to rise between 6% and 7% in fiscal 2023. It had earlier forecast sales to grow 4% to 5%.
The Betty Crocker cake mix maker also expects fiscal 2023 adjusted profit per share to rise 2% to 5% on constant currency basis, compared with prior forecast range of flat to 3%.
Net earnings attributable to General Mills rose to $820 million, or $1.35 per share, in the three months ended August 28, from $627 million, or $1.02 per share, a year earlier.
Excluding one-off charges, the company earned $1.11 per share, compared with market estimates of $1.00.
It also reported net sales of $4.72 billion in the first quarter, in line with analyst expectations, according to Refinitiv data.
