雅虎香港財經 General Mills (GIS) Q4 Earnings Top Despite Adverse Pricing
General Mills, Inc. GIS posted soft fourth-quarter fiscal 2024 results, as both the top and bottom lines declined year over year, and revenues missed the Zacks Consensus Estimate. Results were hurt by the adverse net price realization and mix.
However, the company saw better volume performance in the second half of the fiscal and realized top-tier Holistic Margin Management (“HMM”) cost savings, enabling it to maintain brand investments while fulfilling profit and cash goals. In fiscal 2025, General Mills aims to boost organic net sales growth, especially volume growth, through leading brand experiences. It intends to see another year of significant HMM cost savings, allowing it to reinvest in growth initiatives that cater to evolving consumer needs.
The company remains committed to its Accelerate strategy, which is based on four pillars that include building brands, undertaking constant innovation, leveraging scale and standing for good. The company continues to focus on core markets, global platforms and local gem brands with growth prospects. It is also committed to reshaping its portfolio through prudent buyouts and divestitures.
Quarterly Highlights
General Mills posted adjusted earnings of $1.10 per share, which beat the Zacks Consensus Estimate of 99 cents. However, the bottom line declined 10% year over year on a constant-currency (cc) basis. The downside can be attributed to the lower adjusted operating profit, elevated net interest expenses and an increased adjusted effective tax rate, partly made up by reduced shares outstanding.
General Mills, Inc. Price, Consensus and EPS Surprise
General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote
GIS reported net sales of $4,713.9 million, which fell short of the Zacks Consensus Estimate of $4,873 million. Also, the top line decreased 6% due to the adverse net price realization and mix, along with reduced pound volume. Organic net sales tumbled 6% and slowed down sequentially due to lower retailer inventory, International unit hurdles and comparison of trade expense timing. We had expected organic sales to decline 2.4% in the fourth quarter.
The adjusted gross margin contracted 10 basis points (bps) to 34.9%. This could be attributed to input cost inflation, supply chain deleverage, and adverse net price realization and mix, somewhat made up by HMM cost savings and reduced other supply-chain costs. We had expected the adjusted gross margin to contract 60 bps to 34.4% in the quarter under review.
The adjusted operating profit came in at $800 million, down 10% at cc due to the reduced adjusted gross profit, partially compensated by lower SG&A costs. The adjusted operating profit margin contracted 70 bps to 17%.
Segmental Performance
North America Retail: Revenues in the segment came in at $2,853.3 million, down 7% year over year due to reduced pound volume, and adverse net price realization and mix. Organic net sales also tumbled 7%. The segment’s operating profit declined by 14% to $670 million.
International: Revenues in the segment came in at $667.5 million, down 10% year over year due to adverse net price realization and mix and currency headwinds, partly made up by increased pound volume. Organic net sales also fell 10% due to softness across China and Brazil. The segment’s operating profit slumped from $67 million to $22 million.
Pet: Revenues came in at $602.1 million, down 8% year over year. Revenues were hurt by reduced pound volume, as well as unfavorable net price realization and mix. Segmental organic sales also declined 8%. The segment’s operating profit came in at $144 million, up 8% on a year-over-year basis.
North America Foodservice: Revenues came in at $589 million, up 4% year over year. Also, organic net sales improved 4% from the year-ago quarter’s level. Sales growth was driven by solid growth across breads, cereal and frozen biscuits. The segment’s operating profit grew 9% to $79 million.
Other Financial Aspects
General Mills ended the quarter with cash and cash equivalents of $418 million, long-term debt of $11,304.2 million and total stockholders’ equity (excluding noncontrolling interests) of $9,396.7 million.
GIS generated $3.3 billion in cash from operating activities in fiscal 2024. Capital investments amounted to $774 million during the same period.
The company paid out dividends worth $1.4 billion and bought nearly 29 million shares for $2 billion in fiscal 2024. Additionally, management announced a 2% hike to its quarterly dividend, taking it to 60 cents per share. This is payable on Aug 1, 2024 to shareholders of record as of Jul 10.
Other Developments & Guidance
Constant-currency sales from the joint ventures of Cereal Partners Worldwide increased 2% in the fourth quarter. In Haagen-Dazs Japan, sales went down 3% year over year at cc from the prior year’s figure.
Despite ongoing economic uncertainty affecting consumers in its main markets, General Mills anticipates a gradual improvement in volume trends for its categories in fiscal 2025. However, the overall category dollar growth for the year is likely to fall short of the company's long-term growth targets. To boost organic net sales, General Mills aims to create robust experiences with its top food brands, which should lead to better household penetration and increased market share compared to the previous year.
In fiscal 2025, General Mills plans to launch new products and innovations centered on taste, health, convenience and value. Additionally, the company expects to achieve cost savings of around 4-5% of the cost of goods sold through HMM initiatives. Apart from this, the company plans to reinvest any potential margin gains back into the business, considerably boosting its investment in brand-building efforts to enhance volume performance in fiscal 2025.
For fiscal 2025, organic net sales are anticipated to range between a flat and a 1% increase. The adjusted operating profit growth at cc is anticipated between a decline of 2% and flat. Management anticipates adjusted earnings per share (EPS) growth between down 1% and an increase of 1% at cc. The company envisions a free cash flow conversion of at least 95% of adjusted after-tax earnings.
This Zacks Rank #3 (Hold) company’s shares have risen 3.9% in the past six months compared to the industry’s decline of 2.5%.
3 Appetizing Bets
Vital Farms Inc. VITL offers a range of pasture-raised products. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicates growth of 22.5% and 59.3%, respectively, from the year-ago reported numbers.
Utz Brands Inc. UTZ, which manufactures a diverse range of salty snacks, currently carries a Zacks Rank #2 (Buy). UTZ has a trailing four-quarter earnings surprise of 2%, on average.
The consensus estimate for Utz Brands’ current financial-year earnings indicates growth of 26.3% from the year-ago reported numbers.
Ingredion Incorporated INGR, which manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for INGR’s current fiscal-year earnings indicates growth of 3.6% from the year-ago reported figure.
Ingredion Incorporated has a trailing three-quarter earnings surprise of 10.1%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Mills, Inc. (GIS) : Free Stock Analysis Report
Ingredion Incorporated (INGR) : Free Stock Analysis Report
Vital Farms, Inc. (VITL) : Free Stock Analysis Report
Utz Brands, Inc. (UTZ) : Free Stock Analysis Report
