General Mills: Continues Advancing Its Accelerate Strategy

Minneapolis / MN. (gm) At the Consumer Analyst Group of New York (CAGNY) 2022 Conference, General Mills Inc. highlighted its progress in advancing its Accelerate strategy to deliver profitable growth and top-tier shareholder returns. The company also reaffirmed its fiscal 2022 full-year financial guidance and provided an update on its second-half expectations.

Advancing the Accelerate Strategy

With its Accelerate strategy, General Mills is prioritizing its core markets, global platforms, and local gem brands that have the best prospects for profitable growth. 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.

Reshaping the Portfolio

The company has made significant progress in recent years reshaping its portfolio with strategic acquisitions and divestitures, including the acquisitions of Blue Buffalo pet food and the Nudges, True Chews, and Top Chews pet treats brands as well as the divestitures of yogurt and dough in Europe. With its portfolio reshaping actions, General Mills has turned over roughly 15 percent of its net sales base and increased its enterprise net sales growth exposure by about a full point since fiscal 2018. The company continues to pursue additional portfolio reshaping transactions to strengthen its ability to generate profitable growth.

Reshaping the Organization

General Mills has made important recent changes to better align its organizational structure with the Accelerate strategy and ensure it is set up for success in a post-pandemic world. The company established a new Strategy + Growth organization, which brings together growth-oriented functions such as Mergers + Acquisitions, Disruptive Growth, Strategic Revenue Management, and Consumer Insights into a central group that operates in service to the business segments and helps unlock opportunities to accelerate growth.

In addition, the company announced a series of changes to its segment structure to streamline its global operations. These segment reporting changes are effective as of the third quarter of fiscal 2022:

  • The North America Retail segment will now include the U.S. convenience store business to better leverage its scale and unlock omnichannel snacking growth.
  • The renamed North America Foodservice segment will now be exclusively focused on the U.S. and Canada foodservice channels.
  • The new International segment will combine the previous Europe + Australia and Asia + Latin America segments, simplifying the company’s global structure after the completion of the Yoplait Europe divestiture.

Driving Value

By executing its Accelerate strategy, General Mills continues to expect to deliver top-tier shareholder returns over the long-term by:

  • Generating organic net sales growth of 2 to 3 percent;
  • Expanding margins to deliver mid-single-digit adjusted operating profit growth in constant currency;
  • Growing adjusted diluted EPS at a mid- to high-single-digit rate in constant currency;
  • Converting at least 95 percent of adjusted net earnings into free cash flow; and
  • Returning approximately 80 to 90 percent of free cash flow to shareholders through dividends and share repurchases.

Reaffirming Full-year Fiscal 2022 Guidance

General Mills reaffirmed its full-year fiscal 2022 guidance, including:

  • Organic net sales are expected to increase 4 to 5 percent
  • Constant-currency adjusted operating profit is expected to decline 1 to 4 percent
  • Constant-currency adjusted diluted EPS is expected to range between down 2 percent and up 1 percent
  • Free cash flow conversion is expected to be at least 95 percent of adjusted after-tax earnings

The company added that it expects second-half earnings results to be more heavily weighted to the fourth quarter than previously expected, driven by recent acute supply shortages on its refrigerated dough, pizza, and hot snacks platforms in North America. The company expects these shortages will cause its U.S. shipments to significantly lag Nielsen-measured retail sales performance in the third quarter. As a result, the company expects third-quarter organic net sales to be up 2 to 3 percent and constant-currency adjusted operating profit to be down high-single digits to low-double digits versus last year. The company has taken actions to address these short-term supply constraints and expects to improve customer service levels and deliver strong top- and bottom-line growth in the fourth quarter.

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