The maker of Cheerios cereal General Mills posted a smaller-than-expected drop in quarterly sales on Wednesday, benefitting from improved demand as it cut prices on some of its products.
General Mills and other packaged food peers have been grappling with lower volume sales over the past few years as cost-conscious customers balked at the increased cost of branded items which companies implemented to tackle high input costs.
As a result, General Mills has been trying to pare back prices in the past two quarters to boost volumes.
Volumes were flat in the reported quarter, compared to a 2 percentage point decline in the last one.
Prices were down 1 percentage point in the first quarter, compared with a 6 percentage point rise a year ago.
Consumers choosing home-cooked meals to economise contributed to a 1% pound volume growth in US retail categories in the quarter, according to CEO Jeff Harmening.
The company expects volume trends to improve gradually in fiscal 2025, although full-year category dollar growth is expected to be below its long-term growth projections.
However, General Mills said it would sell its North American yoghurt business to French dairy firms Groupe Lactalis and Sodiaal in a $2.1 billion deal to focus on its core brands in a bid to lure value-seeking customers.
Its quarterly sales fell 1% to $4.85 billion from a year ago, with analysts on average expecting a drop of 2.11% to $4.80 billion, according to data from the London Stock Exchange Group.
The company reported a per-share profit of $1.07 on an adjusted basis, edging past estimates by 1 cent.
Shares of the company were up about 1% in early trading.
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