MINNEAPOLIS General Mills announced this week that is has raised cereal prices and ay raise prices of other products, as well. This announcement comes in response to mounting production costs for the company, namely in commodity items, such as wheat and sugar, and a drop in reported profits.
The breakfast cereal giant reported that its profit has dropped 17 percent, compared to reporting from the same quarter last year. However, profit still met expectations and the company appears to still be on the right track for the full year’s projections.
To fight the mounting financial pressures of rising commodity prices, the company has cut back on operations. Ken Powell, General Mills’ chairman and chief executive officer told the media that his company has also cut transportation costs from warehouse to warehouse by amending delivery routes to go straight to retailers. The company also devised a plan to save $1 million a year by lowering the number of pretzel varieties in Chex Mix to three, down from 14.
For the fiscal quarter ended May 25, the General Mill reported that its net income dropped to $185.2 million, or 53 cents per share, from $224.1 million, or 62 cents, during the same period the previous year. General Mills said that it faced a loss on commodity hedges of $111 million due to the surging costs of commodities—especially wheat.
General Mills said it expects to see its supply chain expenses rise another 9 percent in the fiscal year ending May 2009.