Minneapolis / MN. (gm) In conjunction with its participation at the 2020 Barclays Global Consumer Staples Conference, General Mills Inc. provided an update on its recent business performance and its progress against its three priorities for fiscal 2021.
As the Covid-19 pandemic continues, General Mills’ most important objectives remain the continued health and safety of its employees and the ongoing ability to serve consumers around the world. The company has adjusted its ways of working to minimize virus transmission, including implementing social distancing, mask use, and temperature screenings. To date, all General Mills manufacturing and distribution facilities have continued to operate without significant disruption related to Covid-19. Through the initial months of its fiscal year, the company has made progress against each of its three priorities for fiscal 2021:
- Compete Effectively, Everywhere We Play: General Mills continues to expect the largest factor impacting its fiscal 2021 performance will be the relative balance of at-home versus away-from-home consumer food demand. Year to date in fiscal 2021, at-home food demand has remained elevated relative to pre-pandemic levels, though it has moderated from the fourth quarter of fiscal 2020 in most of the company’s key markets around the world.
The company continues to compete effectively and win in the current environment, including year-to-date market share gains in the U.S. in retail and away-from-home channels. In addition, the company is gaining market share year to date in each of its largest international markets including Canada, France, the U.K., China, and Brazil. Retail inventory levels, which fell sharply in the early stages of the pandemic, saw modest replenishment in the first quarter of fiscal 2021. The company anticipates retail inventory levels will largely normalize by the end of fiscal 2021 as supply and demand equalize across its product platforms.
The combination of higher at-home food demand and General Mills’ top-tier supply chain, sales, and marketing execution has led to significant increases in household penetration for the company’s brands, including Cheerios, Pillsbury, Old El Paso, Progresso, Yoplait, Betty Crocker, and more. In the past six months, General Mills brands gained more household penetration than the leading branded competitor in 8 of the company’s top 10 U.S. categories.
- Drive Efficiency to Fuel Investment: General Mills remains focused on its objective of delivering a full-year fiscal 2021 adjusted operating profit margin approximately in line with fiscal 2020 levels, with margin tailwinds from Holistic Margin Management savings and volume leverage offset by headwinds from input cost inflation, increased investment in brands and capabilities, higher costs to service elevated demand, and higher ongoing health and safety-related expenses. Strong fixed cost leverage is expected to result in adjusted operating profit margin expansion in the first quarter of fiscal 2021, while higher external supply chain costs and a more difficult prior-year comparison are expected to result in a decline in adjusted operating profit margin in the second quarter.
- Reduce Leverage to Increase Financial Flexibility: Building on its strong track record of capital discipline and cash generation, General Mills remains on track to reduce its net-debt-to-adjusted-EBITDA ratio to below 3.2x in fiscal 2021.