General Mills To Cut $100M Following Bad Quarter
General Mills Inc. on Wednesday revealed plans to reduce its annual costs by $100 million by 2017 following a disappointing quarterly report that failed to meet Wall Street expectations.
The Golden Valley-based food production company did not say how many—if any—job cuts may take place, but acknowledged that there would be costs associated with severance. “We know we must always be working to reduce costs, streamline operations and improve efficiency across our worldwide business,” General Mills CEO Ken Powell said in a statement.
On Thursday, The Star Tribune reported that the company will close two manufacturing plants: a Lodi, California, cereal plant that employs about 430 people and a Methuen, Massachusetts, yogurt facility that employs 144 people.
General Mills reported net earnings of $345 million, or 55 cents per share, for the quarter ending August 24. Earnings adjusted for non-recurring and restructuring costs were 61 cents per share, missing expectations of 69 cents per share, according to analysts polled by Thomson Reuters. Earnings are down 13 percent from last year’s 70 cents per share. Meanwhile, quarterly net sales in the United States fell 5 percent to $2.44 billion.
The poor performance during the quarter isn't an anomoly. Zacks Investment Research noted that both earnings and revenues failed to meet estimates three quarters in a row during the 2014 fiscal year.
Shares of the company dropped nearly 5 percent after the news with a price at 50.81 around the close of Wednesday trading.
Last week, the company announced plans to acquire Annie’s, the popular organics line of food, for $820 million.