General Mills (NYSE: GIS)
General Mills on Wednesday announced fiscal 2019 third-quarter profit that flew past Wall Street expectations. The maker of Cheerios cereal and Yoplait yoghurt benefited from its efforts to hike prices and bring down costs, prompting it to raise its earnings guidance for the full year.
As of 8:15 EDT, shares of General Mills indicated a gain of $2.11, or 4.47% to 49.35 in pre-market trade. The stock, which closed Tuesday’s regular trading session at $47.24, is up 21% so far this year.
GIS Earnings & Outlook
General Mills reported fiscal 2019 third-quarter net income of $446.8 million, or $0.74 per share. In the same period a year earlier, the company posted net income of $941.4 million, or $1.62 per share, primarily driven by the Tax Cuts and Jobs Act.
Adjusted for one-time gains and costs, earnings Q3 2019 were pegged at $0.83 per share. On average, analysts surveyed by Refinitiv were expecting adjusted earnings of $0.69 per share.
Group sales, the company said, increased 8% to $4.20 billion largely driven by the addition of pet food maker Blue Buffalo. Analysts polled by Refinitiv had also predicted third-quarter sales of $4.20 billion.
Retail stores in North America posted flat net sales of $2.52 billion, while declines in Canada, U.S. Yogurt, and U.S. Snacks offset growth in the U.S. Meals & Baking and U.S. Cereal operating units.
Looking ahead, the company expects fiscal 2019 adjusted earnings per share to be flat to up 1% from its previous forecast of flat to down 3%.
General Mills CEO Comments
“We had a strong third quarter, with positive organic sales growth and significant operating margin expansion. Our year-to-date performance and fourth-quarter plans give us confidence that we will meet or exceed all of our key fiscal 2019 targets,” said General Mills CEO Jeff Harmening in the earnings statement.
“For the full year, we now expect adjusted diluted EPS and free cash flow conversion will exceed our initial targets, net sales will finish toward the lower end of our guidance range, and adjusted operating profit will finish toward the higher end of the range,” Harmening concluded.
General Mills, Inc.
General Mills manufactures branded consumer foods, like ready-to-eat cereals, convenient meals, snacks, yogurt, baking mixes, and ice cream, to retail and food-service customers. Its key brands include Cheerios, Betty Crocker, Haagen-Dazs, Pillsbury, Nature Valley, Old El Paso, Annie’s, and Yoplait.
The North America retail segment contributed roughly two thirds of sales and above three fourths of operating profits in fiscal 2018. More than 70% of General Mills’ revenue is generated in the United States. The firm is poised to bolster its presence in the natural and organics aisle with its acquisition of Blue Buffalo (now its pet segment), a natural pet food brand.
