- Company expects to cut costs by $3 billion over four years
- North America Retail sales decline slowed to 4% in the fourth quarter
- Shares up 9% in morning trading
July 1 (Reuters) - General Mills posted better-than-expected fourth-quarter results on Wednesday, helped by higher prices and resilient demand for pantry staples, sending its shares up 9%.
Budget-conscious consumers, pressured by still-high inflation and the rising cost of living, are increasingly eating at home rather than dining out. Packaged food makers like General Mills, meanwhile, have pushed through price increases to protect margins from higher input costs.
Quarterly net sales in General Mills' largest North America Retail segment, which includes brands such as Cheerios, Pillsbury and Betty Crocker, declined 4% — less steep than the 10% slump a year earlier, as it rolled out promotions to draw stretched consumers.
The company does not expect a change in consumer environment in fiscal 2027, CEO Jeff Harmening said. "Rather than hope for the consumer to improve, we are moving with even greater urgency to meet consumers where they are."
General Mills forecast full-year adjusted diluted earnings per share of $3.00 to $3.20. Analysts on average were expecting $3.13 per share, in constant currency, according to data compiled by LSEG.
It expects organic net sales to be in the range of a 1.5% drop to a 0.5% rise, compared to a 2% drop in fiscal 2026. Jefferies analysts called the forecast "better than feared."
The company's adjusted gross margin expanded 150 basis points to 34.2% in the three months ended May 31, helped by a favorable product mix.
General Mills shares have lost a quarter of their value so far this year. The company cut its forecast in February citing weak consumer appetite, which sparked a selloff across packaged food companies.
It also expects to cut costs by $3 billion over four years through several plans, including redesigning its supply chain and streamlining business processes.
"The company is leaning heavily on innovation, renovation and productivity savings to manage inflationary pressures and support margins. That gives it a clearer path than it had a few quarters ago," said Lale Akoner, global market analyst at eToro.
General Mills, which sold its Haagen-Dazs ice cream shops in mainland China last month, swung to a net loss of $87.6 million in the latest quarter from a year-ago profit of $2.23 billion due to non-cash goodwill and brand intangible asset charges.
Adjusted profit per share of 95 cents for the quarter ended May 31 beat an estimated 80 cents, while sales of $4.61 billion compared with estimates of $4.60 billion.
Reporting by Koyena Das in Bengaluru; Editing by Joyjeet Das
Source: Reuters