Sept 17 - General Mills maintained its annual sales and profit forecasts on Wednesday, as the Cheerios maker grapples with rising economic uncertainty and softer demand in key markets, including North America.
Rising consumer prices and a cooling U.S. labor market have squeezed household budgets, steering shoppers to cheaper private-label alternatives and pressuring packaged food makers across the region.
The Minneapolis-based company saw quarterly volumes in its North America segment decline 16 percentage points compared with a year earlier and now expects overall category growth to fall below its long-term targets.
General Mills reaffirmed its annual targets of adjusted profit declining 10% to 15% and organic net sales ranging from down 1% to up 1%.
The first-quarter results underscore how tough the current environment is for food makers, who need to invest heavily to reignite volume growth, as consumers remain price-conscious but expect benefits such as added protein and distinctive flavors, Consumer Edge analyst Connor Rattigan said.
Shares were down 1% in choppy early morning trading. The stock has dropped about 22% this year.
General Mills posted a smaller‑than‑expected quarterly sales decline, helped by volume gains in its North America pet food unit and in international markets including India, China, Japan and Europe.
Net sales in the international segment rose 6% in the quarter ended August 24, with pricing up 6 percentage points.
"We continue to see consumers seeking value and prioritize their spending on key benefits like protein, bold flavors, and feelings of nostalgia from brands they love," said CEO Jeff Harmening in prepared remarks.
North America pet food net sales increased 6%, partly due to the recent acquisition of Whitebridge Pet Brands' North America business, after a 1% decline a year earlier.
First-quarter sales fell 6.8% to $4.52 billion, slightly better than expectations for a 6.9% drop to $4.51 billion, according to data compiled by LSEG.
General Mills' adjusted profit of 86 cents per share topped estimates of 81 cents, driven partly by price increases in international and North America pet food segments.
Reporting by Anuja Bharat Mistry and Sanskriti Shekhar in Bengaluru; Editing by Tasim Zahid
Source: Reuters