General Mills: Reports Fiscal Q4-2023 and Full-year Results

Minneapolis / MN. (gm) General Mills Inc. reported results for the fourth quarter and fiscal year ended May 28, 2023. «We delivered excellent results in fiscal 2023, including generating double-digit growth in organic net sales and constant-currency adjusted diluted EPS and exceeding USD 20 billion in annual net sales for the first time in our company’s history,» said Chairman and Chief Executive Officer Jeff Harmening. «Led by our Accelerate strategy, our team successfully navigated a highly dynamic operating environment with agility, focus, and resilience.»

«As we turn to fiscal 2024, we’ll lean on these same traits to continue to succeed in an evolving business landscape. We’ll focus on continuing to compete effectively, driving efficiency in our operations, and maintaining our disciplined approach to capital allocation, which we expect to result in financial performance that meets or exceeds each of our key long-term goals. To underscore our commitment to driving strong returns to General Mills shareholders, our Board approved a nine percent dividend increase effective with the August 2023 payment.»

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 standing 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 to further enhance its growth profile.

Fourth Quarter Results Summary

• Net sales increased 3 percent to USD 5.0 billion, including a 1-point headwind from net divestiture and acquisition activity and 1 point of unfavorable foreign currency exchange. Organic net sales increased 5 percent, driven by positive organic net price realization and mix, partially offset by lower organic pound volume, including a headwind from a reduction in retailer inventory in North America Retail.
• Gross margin was down 180 basis points to 34.4 percent of net sales, driven by higher input costs and unfavorable mark-to-market effects, partially offset by favorable net price realization and mix. Adjusted gross margin was up 120 basis points to 35.0 percent of net sales, driven by favorable net price realization and mix, partially offset by higher input costs, including 9 percent input cost inflation in the quarter.
• Operating profit of USD 818 million was down 19 percent, reflecting higher selling, general, and administrative (SG+A) expenses, higher restructuring charges, and lower gross profit dollars, partially offset by favorable net investment activity. Operating profit margin of 16.3 percent was down 450 basis points. Adjusted operating profit of USD 889 million effectively matched year-ago levels in constant currency, with higher adjusted SG+A expenses, including a double-digit increase in media investment, offset by higher adjusted gross profit dollars. Adjusted operating profit margin was down 60 basis points to 17.7 percent.
• Net earnings attributable to General Mills of USD 615 million were down 25 percent and diluted EPS was down 24 percent to USD 1.03, driven primarily by lower operating profit. Adjusted diluted EPS of USD 1.12 increased 1 percent in constant currency, driven primarily by lower net shares outstanding, partially offset by lower benefit plan non-service income.

Full Year Results Summary

• Net sales increased 6 percent to USD 20.1 billion, including a 4-point headwind from net divestiture and acquisition activity and 1 point of unfavorable foreign currency exchange. Organic net sales increased 10 percent, driven by positive organic net price realization and mix, partially offset by lower organic pound volume.
• Gross margin was down 110 basis points to 32.6 percent of net sales, driven by higher input costs and unfavorable mark-to-market effects, partially offset by favorable net price realization and mix. Adjusted gross margin was up 120 basis points to 34.2 percent of net sales, driven by favorable net price realization and mix, partially offset by higher input costs, including 13 percent annual input cost inflation.
• Operating profit of USD 3.4 billion was down 1 percent, driven primarily by higher SG+A expenses and higher restructuring charges, partially offset by gains on divestitures and higher gross profit dollars. Operating profit margin of 17.1 percent was down 120 basis points. Adjusted operating profit of USD 3.46 billion increased 8 percent in constant currency, driven by higher adjusted gross profit dollars, partially offset by higher adjusted SG+A expenses, including a double-digit increase in media investment. Adjusted operating profit margin increased 30 basis points to 17.2 percent.
• Net earnings attributable to General Mills were down 4 percent to USD 2.6 billion and diluted EPS was down 2 percent to USD 4.31, primarily reflecting lower operating profit, a higher effective tax rate, and lower after-tax earnings from joint ventures, partially offset by lower net shares outstanding. Adjusted diluted EPS of USD 4.30 was up 10 percent in constant currency, driven primarily by higher adjusted operating profit, a lower adjusted effective tax rate, and lower net shares outstanding, partially offset by lower benefit plan non-service income and lower after-tax earnings from joint ventures.

Notes on Comparability

The following transactions had a significant impact on the comparability of financial results between fiscal 2022 and fiscal 2023: the acquisition of Tyson Foods’ pet treat business in the first quarter of fiscal 2022; the divestiture of the European yogurt business in the third quarter of fiscal 2022; the divestiture of certain international dough businesses in the third and fourth quarters of fiscal 2022; the acquisition of the TNT Crust foodservice business in the first quarter of fiscal 2023; and the divestiture of the Helper main meals and Suddenly Salad side dishes business in the first quarter of fiscal 2023.

In addition, fiscal 2023 results included the impact of a voluntary recall on certain international Häagen-Dazs ice cream products, which was a headwind to net sales and operating profit results in the International segment. Unallocated corporate items in fiscal 2023 included an additional USD 22 million of charges related to product disposals associated with the ice cream recall that were excluded from adjusted operating profit results. The company does not expect a material impact from the ice cream recall beyond fiscal 2023.

For additional information please read the company’s PDF file below (193 KB):

20230629-GENERALMILLS-Q4-2023.