General Mills Profit Drops 5% in Quarter

General Mills Inc. said fiscal third-quarter profit fell 5%, hurt by higher taxes and plummeting shipments of cereal. Its shares fell 4.1%, the biggest decline in more than two years.

Net income for the quarter ended Feb. 27 was $230 million, or 58 cents a share, compared with $242 million, or 60 cents, a year earlier, the Minneapolis-based company said. Sales rose 2.6% to $2.77 billion.

Profit was cut by a $45-million tax payment on the sale of a European unit and a 9% drop in the volume of cereal sold. General Mills, maker of Cheerios, increased cereal prices 4.3% in July, driving shoppers to less expensive private-label brands offered by supermarkets, Chief Executive Stephen Sanger said.

Shares of General Mills fell $2.10 to $49.42 on the NYSE.