General Mills' profit plummeted 47% to $294 million in the fourth fiscal quarter ending in May, significantly down from the previous year. While adjusted earnings per share of $0.74 surpassed analyst expectations of $0.71, sales fell 3% to $4.6 billion. For the full fiscal year, revenue dropped 2% to $19.5 billion, and profits decreased by 8% to $2.3 billion. The company anticipates sales for the next 12 months to range from a 1% decline to a 1% increase, with continued pressure on profits.
Analysts had mixed reactions to General Mills' outlook. Brittany Quatrochi at Edward Jones praised the company's navigation of a difficult environment and its investments in digital capabilities, manufacturing, and brand strengthening. Conversely, Arun Sundaram at CFRA expressed concern that lower prices might trigger a "race to the bottom," while Michael Lavery at Piper Sandler expects near-term profit growth to be significantly below their estimates.
CEO Jeff Harmening outlined plans for "heavy reinvestment" in marketing, new product launches, and promotions to boost sales of brands like Old El Paso, Pillsbury, and cereal. He highlighted a focus on protein, bold flavors, and nostalgia, expecting a 25% increase in sales from new products. The nationwide launch of Blue Buffalo fresh pet food later this year is also anticipated to contribute to overall growth. CFO Kofi Bruce acknowledged that consumer response to these initiatives might be slower than hoped but noted the company is entering the new quarter with momentum.
General Mills is also taking steps to address rising costs and economic uncertainty, projecting $100 million in savings from a global transformation initiative, which may include layoffs. The company expects the sale of Yoplait to close soon, and Blue Buffalo's head, Dana McNabb, expressed confidence in the brand's potential. Despite current challenges, Harmening expressed confidence in the company's ability to improve, citing better marketing, new products, and competitive value, aiming for volume growth over immediate profitability in the coming year.
