General Mills Reports First Quarter 2024 Earnings
Intellectia.AI2024-09-18
General Mills Reports First Quarter 2024 Earnings
General Mills, Inc. (NYSE:GIS) has released its financial results for the first quarter ending August 25, 2024. The company reported a decline in net sales and earnings per share, with several key metrics not meeting Wall Street's consensus estimates.
Key Financial Metrics
| Metric | Q1 2024 | Year-over-Year (YoY) Change | Consensus Estimate |
|---|---|---|---|
| Total Revenue | $4.8B | -1% | $4.8B |
| Earnings Per Share (EPS) | $1.03 | -10% | $1.06 |
| Adjusted EPS | $1.07 | -2% (constant currency) | |
| Operating Profit | $832M | -11% | |
| Adjusted Operating Profit | $865M | -4% (constant currency) |
The financial performance of General Mills in the first quarter reflected a 1% decrease in both total and organic net sales, primarily driven by unfavorable net price realization and mix. Despite achieving the consensus revenue estimate, the diluted EPS missed expectations, attributed to lower operating profit, increased net interest expense, and higher tax rates. This performance highlights the ongoing challenge of managing costs amidst input price inflation and currency fluctuations.
Revenue Performance by Segment
| Segment | Net Sales | YoY Change | Operating Profit YoY Change |
|---|---|---|---|
| North America Retail | $3.0B | -2% | -6% (constant currency) |
| North America Pet | $576M | -1% | +7% |
| North America Foodservice | $536M | Flat | +21% |
| International | $717M | Flat | Dropped to $21M from $50M |
The North America Retail segment saw a slight decline in net sales driven by decreased pound volume, while the North America Pet and Foodservice segments showed resilience with flat or increased operating profits. Notably, International segment's operating profit significantly decreased, largely due to inflationary pressures and currency headwinds. The segment analysis underscores differing performances across regions and product lines, with standout improvements in the Foodservice segment's profitability.
Key Developments and Operational Highlights
- General Mills announced the proposed sale of its North American Yogurt business to Lactalis and Sodiaal for approximately $2.1 billion in cash.
- The acquisition of Edgard & Cooper pet food business, impacting the International segment's comparability.
- Total cash provided by operations increased significantly to $624 million, reflecting favorable account payable changes.
Executive Commentary
Chairman and CEO Jeff Harmening highlighted the company's commitment to accelerating organic net sales growth in fiscal 2025. He emphasized the strategic portfolio reshaping with the yogurt business divestiture and outlined a plan for increased investment in product innovation and brand strength. Harmening remains confident in the company's strategy to drive long-term sustainable growth through the Accelerate strategy focused on brand building, innovation, scale, and standing for good.
Dividends and Share Repurchase Program
General Mills paid dividends totaling $338 million in the quarter and repurchased approximately 4.5 million shares for $300 million, reflecting ongoing efforts to return value to shareholders.
Forward Guidance
General Mills reaffirmed its outlook for fiscal 2025, anticipating organic net sales to range from flat to up 1%. The company expects adjusted operating profit to be down 2% to flat and adjusted EPS to range between a 1% decrease to a 1% increase in constant currency. The divestiture of the yogurt business is not included in these forecasts, and guidance will be updated post-closure of the transaction.
Stock Price Movement
Following the earnings report, General Mills' stock experienced a decline of 1.50%, indicating investor reaction to the misses in key financial metrics compared to expectations.
Overall, while General Mills faces challenges amidst an uncertain macroeconomic environment, strategic initiatives and affirmed guidance suggest a focused path toward steady long-term growth.
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