You can now read 5 articles in a month for free on BostonGlobe.com. Read as much as you want anywhere and anytime for just 99¢.

General Mills will cut costs after earnings miss estimates

NEW YORK — General Mills reported fiscal fourth-quarter earnings Wednesday that trailed analysts’ estimates and said it began a review of its North American manufacturing and distribution network as part of a wider effort to reduce costs.

The maker of Cheerios cereal said the cost-cutting plan is expected to generate pretax savings of $40 million in fiscal 2015 and will have additional savings in 2016, according to a statement Wednesday.

Continue reading below

Chief executive Ken Powell said sales and operating profit were disappointing in the last fiscal year as promotional spending in developed markets was less effective than planned. Revenue in the quarter ended May 25 dropped 2.9 percent to $4.28 billion.

The cost savings at General Mills will likely go into product development and market support, Erin Lash, an analyst at Morningstar Inc. in Chicago, said Wednesday in a phone interview. The question is whether General Mills will lower prices to drive sales volume or if it will bring in higher cost products popular with consumers, she said.

‘‘By taking costs out of the business — we’re not expecting that to drive material margin improvement,’’ said Lash, who has a hold rating on the shares. ‘‘We’re expecting them to reinvest that back into the brand.’’

Loading comments...

Wake up with today's top stories.

Want each day's news headlines delivered fresh to your
inbox every morning? Just connect with us
in one of the following ways:
or
Please enter a valid email
BostonGlobe.com will never post anything without asking.
Privacy Policy
Subscriber Log In

You have reached the limit of 5 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of BostonGlobe.com
Marketing image of BostonGlobe.com