General Mills profit drops 17%

General Mills Inc. said accelerating costs for ingredients and fuel may spur additional price increases after it started charging more for cereal and soup in the last few weeks.

The Minneapolis company projected that commodity and energy expenses would rise by $500 million in the year through May 2009, after increasing $345 million last year. The maker of Green Giant frozen vegetables has raised prices of Yoplait yogurt, snacks and other products this year as costs for corn, cocoa and truck fuel have climbed.

Net income in its fiscal fourth quarter ended May 31 fell 17% to $185.2 million, or 53 cents a share, from $224.1 million, or 62 cents, a year earlier, after gains from commodities hedging declined. Profit excluding trading rose to 73 cents, matching the estimate the company gave June 18.

Revenue climbed 13% to $3.47 billion, General Mills said.

Earnings for the 12 months ending May 2009 will rise to $3.78 to $3.83 a share from $3.52, the company reaffirmed.

General Mills shares fell $1.21, or 1.9%, to $61.19.