General Mills Shares Dive As Revenue Misses Expectations

General Mills

General Mills Inc (NYSE: GIS) reported mixed fiscal fourth-quarter results before markets opened on Wednesday, June 26. The maker of Yoplait yogurt, Cheerios cereal, and other packaged foods beat profit estimates but missed slightly on sales.

General Mills has been ramping up efforts to adapt to changing consumer preferences. Last year, the company moved into the booming pet food business by spending roughly $8 billion in cash to acquire Blue Buffalo Pet Products.

Shares of the Minneapolis-based food giant declined 8% in premarket trading hours and were down 5.83% to $50.57 at the time of writing. The stock has gained 29% since the beginning of the year, and more than 16% over the past 12 months.

GIS Earnings & Outlook

General Mills had net income of $570.2 million, or $0.94 per share, up from $354.4 million, or $0.59 per share, in the same period last year. On an adjusted basis, earnings came to $0.83 per share in the three months ended May 26, 2019. Analysts surveyed by Refinitiv had forecast adjusted earnings of $0.77 per share in the period.

Revenue jumped 7% to $4.16 billion, but fell short of the Refinitiv consensus of $4.24 billion. The company attributed the revenue growth to its acquisition of Blue Buffalo Pet Products.

General Mills’ North America segment posted retail sales of $2.34 billion, down 2% on a year-over-year basis. Analysts were expecting the segment to bring in retail sales of $2.38 billion during the quarter.

General Mills expects adjusted per-share earnings for the current fiscal year to grow in the range of between 3% to 5% from the $3.22 per share that the company earned in calendar 2019.

Management also forecasts organic net sales growth of between 1% to 2% for the full year.

General Mills CEO Comments

“I’m pleased to say that we executed well, successfully transitioned Blue Buffalo into our portfolio, and delivered our financial commitments in fiscal 2019,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.

“We’ll look to improve our performance again in fiscal 2020, and we have plans in place to accelerate our organic sales growth while maintaining our strong margins and cash discipline,” Harmening added.

General Mills Inc Profile

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. – Warrior Trading News