General Mills Moves with “Urgency” to Improve Sales
29 Jun 2017 --- General Mills has reported its results for the fourth quarter and full fiscal year ended May 28, 2017 - and the company chief executive has vowed to turn sales declines around as they “fell well short our standards”. In a statement, chief executive Jeff Harmening speaks about the entire organization moving with “urgency” to improve sales trends.
The American multinational has been reigning in costs against a backdrop of changing appetites in world markets, including the US, which is leading to a decline in demand as consumers switch to healthier alternatives.
However, General Mills has been spending less, including on advertising and media.
Fourth-quarter net sales have declined 3 percent, organic net sales have also declined 3 percent, while full-year operating profit margin was 16.4 percent, up 10 basis points versus a year ago and adjusted operating profit margin increased 130 basis points to 18.1 percent of net sales.
General Mills Board of Directors also declares dividend increase with fourth-quarter diluted earnings per share (EPS) increasing 11 percent to $0.69; adjusted diluted EPS(1) totaled $0.73, an increase of 14 percent in constant currency.
Meanwhile, full-year net sales decreased 6 percent and organic net sales were 4 percent below last year.
“Our fourth-quarter results finished in line with our expectations, with improved organic net sales trends in total and across three of our four operating segments,” says Harmening.
“While we took important steps in fiscal 2017 to globalize our business structure, accelerate our cost-savings efforts, expand our margins, and drive growth in adjusted diluted EPS, our results on the topline fell well short of our standards.
He adds how General Mills is “urgently” working towards increasing sales.
“Our entire organization is moving with urgency in fiscal 2018 to meaningfully improve our net sales trends while keeping a sharp eye on our efficiency.”
General Mills says it’s committed to pursuing its strategy of “Consumer First” and leveraging its five global platforms – cereal, snacks, yogurt, convenient meals, and super-premium ice cream.
It believes that generating a balance of topline growth and margin expansion, while maintaining disciplined focus on cash conversion and cash returns, is critical to delivering top-tier shareholder returns.
Fourth Quarter Results Summary
Reported net sales declined 3 percent to US$3.81 billion. Organic net sales also declined 3 percent, primarily reflecting volume reductions in the North America Retail and Europe & Australia segments, which were partially offset by benefits from positive net price realization and mix.
Reported net sales declined 3 percent to US$3.81 billion. Organic net sales also declined 3 percent, primarily reflecting volume reductions in the North America Retail and Europe & Australia segments, which were partially offset by benefits from positive net price realization and mix.
Gross margin decreased 40 basis points to 34.7 percent of net sales, reflecting unfavorable commodity mark-to-market effects offsetting benefits from cost-savings initiatives. Adjusted gross margin, which excludes certain items affecting comparability, increased 70 basis points to 35.1 percent, driven by cost-savings efforts more than offsetting the impact of volume deleverage and modest input cost inflation.
Full Year Results Summary
Reported net sales declined 6 percent to US$15.62 billion and organic net sales declined 4 percent.
Reported net sales declined 6 percent to US$15.62 billion and organic net sales declined 4 percent.
Gross margin increased 40 basis points to 35.6 percent of net sales. Adjusted gross margin increased 50 basis points to 36.1 percent.
Operating profit totaled US$2.57 billion, down 5 percent from the prior year. Operating profit margin of 16.4 percent was up 10 basis points. Adjusted operating profit margin increased 130 basis points to 18.1 percent.
Total segment operating profit of US$2.95 billion was down 1 percent in constant currency.
Net earnings attributable to General Mills totaled US$1.66 billion. Diluted EPS of US$2.77 essentially matched year-ago levels.
Adjusted diluted EPS increased 5 percent to US$3.08. Constant-currency adjusted diluted EPS were up 6 percent.
Dividend Increase
The General Mills Board of Directors declared a quarterly dividend of $0.49 per share, payable August 1, 2017, to shareholders of record July 10, 2017. This represents an increase of 2 percent from the previous quarterly rate of $0.48 per share, and marks the thirteenth increase in the quarterly dividend rate in the last ten years.
The General Mills Board of Directors declared a quarterly dividend of $0.49 per share, payable August 1, 2017, to shareholders of record July 10, 2017. This represents an increase of 2 percent from the previous quarterly rate of $0.48 per share, and marks the thirteenth increase in the quarterly dividend rate in the last ten years.
Speaking about the outlook, Harmening continued: “We remain committed to our Consumer First strategy and our focus on driving growth and returns for our shareholders.”
“Our top priority in fiscal 2018 is to make significant strides toward returning our business to sustainable topline growth.”
“Our plans call for investment in product news and innovation to accelerate growth for businesses where we have positive momentum, and to improve those that are underperforming.”
“We'll also increase investment in capabilities like e-commerce and Strategic Revenue Management, which are critical to future growth. And we'll maintain our cost management discipline, with strong levels of savings from Holistic Margin Management and additional benefits from our other cost-reduction initiatives.”
“This cost management discipline has helped us significantly expand our operating margin over the past two years. We continue to see opportunities for further margin expansion, including an increase in adjusted operating profit margin in fiscal 2018, but we will moderate the pace of expansion as we invest to restore topline growth.”
“Looking forward, we're focused on delivering a balance of sales growth and margin expansion, along with strong cash conversion and cash returns, to create top-tier returns for our shareholders.”
To contact our editorial team please email us at editorial@cnsmedia.com
If you found this article valuable, you may wish to receive our newsletters.
Subscribe now to receive the latest news directly into your inbox.
Subscribe now to receive the latest news directly into your inbox.
