Ken Powell, CEO of General Mills
Ken Powell, chairman and CEO of General Mills, said the company is on track to deliver its full-year fiscal 2016 growth objective.

MINNEAPOLIS, MINNESOTA, U.S. — General Mills, Inc. reaped the rewards of its cost-savings projects in the first quarter of fiscal 2016 as earnings improved 24%. Net income in the first quarter ended Aug. 30 was $426.6 million, equal to 71¢ per share on the common stock, up from $345.2 million, or 56¢ per share, in the same period a year ago.

The Minneapolis, Minnesota, U.S.-based company sustained a 1.4% decline in net sales, though, falling to $4.2 billion from $4.26 billion a year ago.

“In July, we said our 2016 plans anticipated strong first-quarter growth thanks to our expanded Consumer First initiatives, the benefit of our cost-savings projects, and an easy prior-year comparison,” said Ken Powell, chairman and chief executive officer.

Operating profit in the U.S. Retail segment increased 38% to $629.7 million from $457.2 million a year ago. General Mills attributed the sharp gain to a comparison to a year-ago period with high promotional expense, a decrease in SG&A (selling, general and administrative) expenses and lower supply chain costs. Net sales rose nearly 4% to $2.53 billion from $2.44 billion.

“The cereal, meals, yogurt and snacks operating units posted net sales gains for the quarter, while sales for the baking products unit were comparable to last year,” General Mills said.

In the International segment, operating profit fell 20% to $117 million from $146 million, while sales decreased 11% to $1.19 billion from $1.35 billion. The operating profit decline included 17 percentage points of unfavorable foreign currency exchange, the company said.

General Mills also experienced a decline in the Convenience Stores and Foodservice segment, which saw operating profit fall 9% to $79.8 million from $87.3 million a year ago. Sales increased 1% to $477.7 million from $473 million. General Mills said snacks, frozen meals, mixes and cereal led sales performance in the quarter, while operating profit was dragged down by higher input costs and a comparison to 18% profit growth in the year-ago period.

“We’re pleased with our progress in the first quarter,” Powell said. “At the same time, we know there is more work to be done to achieve our 2016 objectives. We remain focused on generating sustainable top-line growth by expanding the impact of our consumer first strategy while we continue to increase our efficiency and improve our margins.”