General Mills Inc. missed Wall Street estimates for quarterly profit Dec. 21, as the Cheerios cereal maker grappled with soaring prices of raw materials and higher costs of freight and labour.
Shares of the Minneapolis, Minnesota-based company were down about four per cent in pre-market trade.
Prolonged supply chain disruptions and a shortage of truck drivers in the United States have forced packaged food makers to incur higher costs, adding to spiralling prices of ingredients like wheat, corn and edible oils that have already crimped margins across the sector.
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To ease some of the cost pressures, General Mills has bumped up prices of its products.
However, heightened inflation and supply costs in the quarter outstripped General Mills’ efforts to raise product prices, chief executive officer Jeff Harmening said in his prepared remarks, adding the current environment is as “challenging as I have seen in my 27-plus years in the industry.”
The company said it has taken further pricing actions that will go into effect in the current quarter, adding it expects more price increases in the back half of the year.
