General Mills Inc.’s (GIS) fiscal fourth-quarter profit slid 41% as the company reported higher costs and lower sales, while year-earlier results benefited from an extra week and mark-to-market gains.

The packaged-food giant sees earnings for the new year of $2.46 to $2.48 a share on net sales growth in the low single-digits. Analysts polled by Thomson Reuters projected a profit of $2.50 on a 3% increase in sales, to $15.23 billion.

Shares slid 3% to $35.80 in after-hours trading.

The maker of Cheerios, Pillsbury and other brands has benefited from lower commodity prices and higher selling prices in recent quarters. The company has also seen strong sales of household staples such as Hamburger Helper, Multigrain Cheerios and Pillsbury cookie dough as consumers opt to eat more at home rather than going out.

In a sign of strength, the company on Monday boosted its quarterly dividend by 17%, its third increase this fiscal year, while also authorizing a stock repurchase plan of up 15% of the company’s outstanding shares. Many companies in recent months have looked to return value to shareholders, making moves such as implementing or boosting dividends and buying back stock, as the need to hoard cash has waned amid an improving economy.

For the quarter ended May 30, General Mills posted a profit of $211.9 million, or 31 cents a share, down from $358.8 million, or 53 cents a share, a year earlier. Excluding items such mark-to-market adjustments in both quarters and a charged related to the government’s health-care reform in the latest quarter, earnings fell to 41 cents from 43 cents.

Sales slid 2.1% to $3.57 billion as volume was flat.

Wall Street projected a profit of 41 cents on revenue of $3.55 billion.

Gross margin narrowed to 36.2% from 42.4% as costs grew 8.5%.

The company’s U.S. retail business–its biggest by revenue–saw sales fall 1.7% while earnings declined 9.3%. At the bakeries and food-service segments, which has seen recent sales woes, revenue slid 12%, while profit decreased 3.6%.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

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