General Mills (GIS 46.57, +0.51, +1.11%) is trading moderately
higher after beating earnings expectations.
The food processing giant reported above-consensus fourth quarter earnings of $0.79 per share on a 2.2% year/year increase in revenue to $3.89 bln, which matched market expectations.
General Mills Chairman and CEO Jeff Harmening stated that “Fiscal 2018 represented an important first step in returning our business to sustainable topline growth,”and intends to keep working in a more competitive direction.
Organic net sales grew 1.0% due to benefits from net price realization and mix across all four segments. The gains were partially offset by lower organic volume in a few segments.
Adjusted gross margin improved to 35.8% from 35.1% thanks to benefits from productivity initiatives and favorable net price realization and mix.
Looking at the segment breakdown, North America retail sales were little changed year-over-year at $2.39 bln. U.S. Snacks and U.S. Cereal sales grew 2.0% while U.S. Yogurt sales fell 5.0%. U.S. Meals & Baking sales declined 2.0%. Net sales in Canada were unchanged year-over-year while organic net sales fell 1.0%. Segment operating profit grew 7.0% to $543 mln thanks to cost savings initiatives and lower selling & general expenses, which were partially offset by higher input costs.
Convenience Stores & Foodservice sales grew 5.0% to $511 mln. Organic net sales also grew 5.0% while segment operating profit improved 11.0% to $117 mln due to positive net price realization and mix and benefits from cost savings initiatives.
Europe & Australia sales grew 14.0% to $556 mln due to favorable exchange rates and benefits from net price realization and mix. Organic net sales improved 4.0% while segment operating profit jumped 55.0% to $57 mln, reflecting benefits from net price realization and mix.
Asia & Latin America sales fell 1.0% to $435 mln. Organic net sales were little changed year-over-year. Segment operating profit fell 54.6% to $10 mln due to higher input costs, higher selling and general expenses, and the impact of a shorter reporting period.
Looking ahead, the company expects that earnings for the fiscal year will be between $3.11 per share and $3.20 per share, which envelops current market estimates. The company expects organic net sales to grow up to 1.0% while net sales, including the results from Blue Buffalo, are expected to grow between 9.0% and 10.0%.
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