General Mills Inc (GIS) Fiscal Third Quarter Earnings: Low Expectations For Big Cereal Company As It Tries To Adapt To Consumer Preferences

Luring Americans back to the habit of starting the day with a bowl of milk-drenched processed oats and grains has been a difficult challenge for General Mills Inc., the maker of Cheerios and Lucky Charms. Higher-protein alternatives, especially yogurt and breakfast sandwiches, have been making breakfast inroads.

One of the world’s largest food companies is also trying to keep in touch with consumers’ increasing distaste for artificial colors, and a movement demanding stricter labeling rules regarding genetically modified ingredients.

On Wednesday morning, investors will get the latest glimpse into the company’s financials when it reports earnings for its fiscal third quarter ended Feb. 22. Expectations are low despite robust growth in the company’s share price over the past year.

Earlier this year, the 150-year-old company completed an expensive and long transition away from artificial coloring and last week relented to pressure from Vermont to start labeling products that use genetically modified organisms as ingredients.

“Vermont state law requires us to start labeling certain grocery store food packages that contain GMO ingredients or face significant fines,” Jeff Harmening, General Mills’ chief operating officer for U.S. sales, wrote on the company’s blog on Friday.

While General Mills has been expanding aggressively into processed food products, like gluten-free goodies, and cutting down on sodium to cater to more health-conscious consumers, cereals make up 13 percent of the company’s revenue, or $2.31 billion in its fiscal 2015.

Analysts polled by Thomson Reuters expect the Minnesota-based company to report net profit of $380.9 million, or 62 cents per share, in the three months ended Feb. 22, up from $343.2 million, or 56 cents per share, in the same quarter last year. Revenue is expected to fall to $4.08 billion from $4.35 billion, a 6.6 percent drop.

Adjusted for one-time items (the measure preferred by Wall Street), however, that forecast shows a decline in net income to $377.5 million, or 62 cents per share, from $427.6 million, or 70 cent per share. The difference come largely from costly restructuring charges incurred in the third quarter of last year, a 12 percent drop.

General Mills Inc. (NYSE:GIS) stock fell nearly 1 percent Tuesday to $60.79 compared to a gain in the broader S&P 500 Index. Shares in the company are up more than 5 percent for the year and nearly 14 percent over the past 12 months.