General Mills Posts Positive Q1, Profits Up 25 Percent
General Mills posted a first quarter net profit increase of 25 percent on Tuesday, arguably the first indication of a payoff for the packaged food company after its numerous reform efforts.
Within its thirteen-week quarter ending August 30, the Golden Valley-based business had sales of $4.21 billion, which fell slightly short of Wall Street’s expectations of $4.25 billion.
Its net earnings amounted to $426.6 million, a more than 23 percent jump from last year’s Q1 posting of $345.2 million. Similarly, General Mills’ diluted earnings per share increased from 55 cents a year ago to 69 cents in its most recent report.
Foreign currency fluctuations posed some negative effects to General Mills’ bottom line, yet, with that element removed, sales rose 4 percent for the food distributor from the prior year.
A particularly sweet spot for the company was its Annie’s Homegrown division, which it purchased in October 2014 for $821 million. Annie’s, which makes natural and organic meals and snacks, contributed about half of General Mills’ 4 percent sales growth.
Areas of continued improvement were the cereal, meals, yogurt and snacks market, General Mills said in its quarterly release, adding that its baking products division remained steady.
“In July, we said our 2016 plans anticipated strong first-quarter growth thanks to our expanded Consumer First initiatives, the benefit of our cost-savings projects, and an easy prior-year comparison,” General Mills CEO Ken Powell said in a statement. He pointed out the company’s $826 million in segment operating profit, adding that this area of “double-digit growth [or approximately 23 percent]” was a highlight in the company’s “positive first step in delivering [the] full-year fiscal 2016 growth objectives.”
On September 3, General Mills announced the sale of its Green Giant and Le Sueur canned vegetable brands for $765 million in cash. In its report, the packaged food company reiterated that it would be using the net proceeds from the sale for share repurchases and debt reduction. Specifically, the company expects the purchase to be a one-time gain and dilutive to its fiscal 2016 earnings of about 5 to 7 cents per share. When TCB spoke with General Mills at the time of sale, spokeswoman Bridget Christenson said the company was trying to prioritize on other growth areas, particularly cereal, yogurt and snacks.
Over the past year, General Mills has experienced a major overhaul as it shed about 2,500 jobs and made numerous acquisitions. It has even shifted to improve animal welfare and remove artificial colors and flavors from many of its products.
By midday Tuesday, shares of the company were up slightly to $57.05.