Minneapolis / MN. (gm) General Mills Inc. reported results for the fourth quarter and fiscal year ended May 30, 2021. Fiscal 2021 results reflect the impact of one fewer week compared to fiscal 2020.
«I’m pleased with the results the General Mills team delivered in fiscal 2021 under difficult circumstances,» said General Mills Chairman and Chief Executive Officer Jeff Harmening. «We competed effectively, generated strong top- and bottom-line growth, and further improved our balance sheet, allowing us to resume dividend growth and share repurchases. In addition, we advanced our Accelerate strategy by investing in our brands, strengthening our capabilities, building on our leading position as a force for good, and taking significant steps to reshape our portfolio and our organization for future growth.
«We enter fiscal 2022 ready to compete and win in a highly dynamic consumer environment. We’re taking actions to address near-term cost pressures while remaining focused on the long-term growth opportunities we will capture through our Accelerate strategy.»
General Mills is executing its Accelerate strategy to drive sustainable, profitable growth and top-tier shareholder returns over the long term. The strategy focuses on four pillars to create competitive advantages and win: boldly building brands, relentlessly innovating, unleashing scale, and being a force for good. The company is prioritizing its core markets, global platforms, and local gem brands that have the best prospects for profitable growth and is committed to reshaping its portfolio with strategic acquisitions and divestitures, including the acquisition of Tyson Foods’ pet treats business and the proposed divestiture of its European Yoplait operations, to further enhance its growth profile.
General Mills expects that changes in consumer behaviors driven by the Covid-19 pandemic will result in ongoing elevated consumer demand for food at home, relative to pre-pandemic levels. These changes include more time spent working from home and increased consumer appreciation for cooking and baking. The company plans to capitalize on these opportunities, addressing evolving consumer needs through its leading brands, innovation, and advantaged capabilities to generate profitable growth.
Fourth Quarter Results Summary
- Net sales declined 10 percent to USD 4.5 billion, including a 5-point headwind from an extra week of results in last year’s fourth quarter and 2 points of favorable foreign currency exchange. Organic net sales were down 6 percent, driven by lower organic pound volume reflecting the comparison against the surge in at-home food demand at the outset of the pandemic in the prior year. On a 2-year compound growth basis, relative to pre-pandemic levels, fourth-quarter organic net sales were up 4 percent.
- Gross margin was down 20 basis points to 35.0 percent of net sales, driven by higher input costs, partially offset by a mark-to-market gain compared to a loss in the prior year and comparison against a product recall charge in the prior year. Adjusted gross margin decreased 160 basis points to 34.5 percent, primarily driven by unfavorable manufacturing leverage.
- Operating profit of USD 548 million was down 34 percent, driven by lower gross profit Dollars, higher restructuring charges, and a loss on the sale of the Laticínios Carolina yogurt business in Brazil, partially offset by lower selling, general, and administrative (SG+A) expenses. Operating profit margin of 12.1 percent was down 440 basis points. Adjusted operating profit of USD 740 million was down 18 percent in constant currency, primarily driven by lower constant-currency adjusted gross profit Dollars, partially offset by lower SG+A expenses. Adjusted operating profit margin was down 140 basis points to 16.3 percent.
- Net earnings attributable to General Mills were down 33 percent to USD 417 million and diluted EPS were down 33 percent to USD 0.68, primarily reflecting lower operating profit. Adjusted diluted EPS of USD 0.91 were down 19 percent in constant currency, primarily reflecting lower adjusted operating profit.
Full Year Results Summary
- Net sales increased 3 percent to USD 18.1 billion, driven by higher organic net sales and 1 point of favorable foreign currency exchange, partially offset by a 2-point headwind from an extra week of results in last year’s fourth quarter. Organic net sales increased 4 percent, reflecting strong execution and broad-based market share gains amid elevated at-home food demand resulting from the pandemic.
- Gross margin was up 80 basis points to 35.6 percent of net sales, primarily driven by favorable net price realization and mix, lower mark-to-market expenses, and lower restructuring charges in cost of sales, partially offset by higher input costs. Adjusted gross margin was down 40 basis points to 34.8 percent of net sales, primarily driven by input cost inflation, costs to secure incremental capacity, and higher logistics costs, partially offset by Holistic Margin Management (HMM) cost savings and favorable manufacturing leverage.
- Operating profit of USD 3.1 billion was up 6 percent, primarily driven by higher gross profit Dollars and favorable net corporate investment activity, partially offset by higher restructuring charges, a loss on the sale of the Laticínios Carolina yogurt business in Brazil, and higher other SG+A expenses, including higher investment in media and capabilities. Operating profit margin of 17.3 percent was up 50 basis points. Adjusted operating profit of USD 3.2 billion increased 2 percent in constant currency, primarily driven by higher constant-currency adjusted gross profit Dollars, partially offset by higher SG+A expenses, including increased investment in media and capabilities. Adjusted operating profit margin increased 10 basis points to 17.4 percent.
- Net earnings attributable to General Mills were up 7 percent to USD 2.3 billion and diluted EPS were up 6 percent to USD 3.78, primarily reflecting higher operating profit. Adjusted diluted EPS of USD 3.79 were up 4 percent in constant currency, primarily reflecting higher adjusted operating profit, lower net interest expense, and higher after-tax earnings from joint ventures, partially offset by a higher adjusted effective tax rate and higher average diluted shares outstanding.
For additional information please read General Mills’ PDF file below (150 KB).
20210630-GENERALMILLS-Q4-2021.