General Mills: Reports Q3-2022 Results and Raises Outlook

Minneapolis / MN. (gm) General Mills Inc. reported results for the third quarter ended February 27, 2022. «Our solid execution in a highly volatile environment enabled us to close the third quarter with improved momentum,» said General Mills Chairman and Chief Executive Officer Jeff Harmening. «Demand for our brands remains robust, and our team has shown great agility to overcome disruptions throughout the supply chain and deliver for our customers and consumers. We expect to drive strong growth in the fourth quarter, fueled by accelerating net price realization. With confidence in our plans and positive momentum on our business, we’re raising our guidance for fiscal 2022.»

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 its recent pet treats acquisition and European yogurt and dough divestitures, to further enhance its growth profile.

General Mills expects 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. In addition, an increase in the pet population and further humanization and premiumization of pet food during the pandemic are expected to create tailwinds for the pet food category. The company plans to capitalize on these opportunities, addressing evolving consumer needs through its leading brands, innovation, and advantaged capabilities to generate profitable growth.

Third Quarter Results Summary

  • Net sales were essentially flat to last year at USD 4.5 billion, including a 3-point net headwind from divestiture and acquisition activity. Organic net sales increased 4 percent, reflecting 7 points of positive organic net price realization and mix, partially offset by a 4-point headwind from lower organic pound volume.
  • Gross margin was down 350 basis points to 30.9 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 down 160 basis points to 31.4 percent of net sales, driven by input cost inflation, supply chain deleverage, and higher other cost of goods sold, partially offset by favorable net price realization and mix and Holistic Margin Management (HMM) cost savings.
  • Operating profit of USD 815 million was down 1 percent, driven primarily by lower gross profit dollars and less favorable investment activity, partially offset by a gain on divestitures. Operating profit margin of 18.0 percent was down 30 basis points. Constant-currency adjusted operating profit declined 6 percent, driven by lower adjusted gross profit dollars. Adjusted operating profit margin decreased 90 basis points to 14.9 percent.
  • Net earnings attributable to General Mills were up 11 percent to USD 660 million and diluted EPS was up 13 percent to USD 1.08, driven primarily by a lower adjusted tax rate and lower net interest expense. Adjusted diluted EPS of USD 0.84 increased 2 percent in constant currency, driven primarily by lower net interest expense, higher after-tax earnings from joint ventures, and lower net earnings attributable to redeemable and noncontrolling interests, partially offset by lower adjusted operating profit.
  • On a 2-year compound growth basis, relative to pre-pandemic levels, third-quarter results included: net sales up 4 percent and organic net sales up 5 percent; operating profit up 12 percent and adjusted operating profit down 1 percent in constant currency; and diluted EPS up 21 percent and constant-currency adjusted diluted EPS up 4 percent.

Nine Month Results Summary

  • Net sales increased 4 percent to USD 14.1 billion, including 1 point of favorable foreign currency exchange and a 1-point net headwind from divestiture and acquisition activity. Organic net sales increased 4 percent, reflecting 5 points of positive organic net price realization and mix, partially offset by a 1-point headwind from lower organic pound volume.
  • Gross margin was down 300 basis points to 32.8 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 down 210 basis points to 32.8 percent of net sales, driven by input cost inflation, supply chain deleverage, and higher other cost of goods sold, partially offset by favorable net price realization and mix and HMM cost savings.
  • Operating profit of USD 2.5 billion was down 5 percent, driven primarily by lower gross profit dollars, partially offset by lower selling, general, and administrative (SG+A) expenses. Operating profit margin of 17.4 percent was down 170 basis points. Constant-currency adjusted operating profit declined 5 percent, driven by lower adjusted gross profit dollars, partially offset by lower adjusted SG+A expenses. Adjusted operating profit margin decreased 130 basis points to 16.4 percent.
  • Net earnings attributable to General Mills were down 2 percent to USD 1.9 billion and diluted EPS was down 1 percent to USD 3.07, primarily reflecting lower operating profit, partially offset by lower net interest expense and a effective tax rate. Adjusted diluted EPS of USD 2.82 was down 2 percent in constant currency, driven primarily by lower adjusted operating profit, partially offset by lower net interest expense.
  • On a 2-year compound growth basis, relative to pre-pandemic levels, nine-month results included: net sales and organic net sales each up 6 percent; operating profit up 8 percent and adjusted operating profit up 3 percent in constant currency; diluted EPS up 10 percent and adjusted diluted EPS up 6 percent in constant currency.

Operating Segment Results

In the third quarter of fiscal 2022, General Mills announced a new organization structure to streamline its global operations. As a result of these changes, beginning in the third quarter of fiscal 2022, the company is reporting results for its four operating segments as follows: North America Retail, Pet, North America Foodservice, and International. Net sales by segment and segment operating profit amounts have been restated to reflect the new operating segments.

20220323-GENERALMILLS-Q3-2022.

bakenet:eu
Back to top