General Mills Profit, Sales Drop In Q1
Sales declines in Yoplait yogurt and Progresso soup were particular pain points for General Mills during its first quarter, the company said Monday. However, despite a year-over-year drop from $4.2 billion to $3.9 billion in its revenue, the Golden Valley-based food conglomerate’s results managed to either meet or exceed analysts’ low expectations.
General Mills’ better-than-expected outcome in the June to August period was due, in large part, to two factors: effective cost-cutting measures and strong performances from its organic and Mexican products brands.
By trimming its administrative expenses, production costs and impairment charges by more than 7 percent from the previous year, General Mills wrapped up the quarter with $409 million in profits. That resulted in earnings per share of 67 cents, down from the company’s 69 cents per share on $426.6 million a year ago. Adjusted for one-time items and restructuring costs, General Mills’ per-share earnings were 78 cents, which topped the 75-cent estimation from Thomson Reuters analysts.
“We are taking actions to improve our net sales performance going forward,” General Mills CEO Ken Powell said in a statement. Powell added that the company made “good progress” in productivity and cost-saving initiatives, but ultimately pointed to “the challenging macro environment” and “a difficult year-over-year comparison” as reasons behind General Mills’ slower start.
General Mills, which is one of the largest producers of processed and packaged foods, has been reworking the ingredient lists on a number of its popular food labels. Many of its cereals, in particular, have transitioned (or will soon transition) to include no artificial flavors or colors. Seven of General Mills’ already revamped cereals reported 3 percent sales increases for the quarter.
“We think we can continue to drive improvement in our cereal business” through the renovation process, Powell said in a blog post. He added that the company was “highly focused on improving [its] U.S. yogurt performance,” an area the company has struggled in, particularly in the face of Greek yogurt brands like Chobani. To become more competitive, General Mills said it would begin touting protein contents of its yogurts more heavily, as well as push its new organic yogurt lines from its Annie’s and LibertÃ© labels.
General Mills’ stock stumbled in early morning trading, dropping from its $64.71 close on Tuesday to as low as $63.23. However, the company’s stock has since risen and as of mid-Wednesday afternoon stands at $65.33, nearly one percent above yesterday’s close.