Food giant General Mills (GIS) misses Q2 estimates
13:51, 21 December 2021
General Mills’ earnings fell from last year and missed analyst estimates on Tuesday as the food company faced soaring raw materials costs and supply chain issues.
For the fiscal second-quarter ended 28 November, net profit fell to $597.2m (£450.9m) from $688.4m a year earlier. Net sales rose 6.4% to $5.02bn from $4.72bn in last year’s second-quarter.
Diluted earnings per share (EPS) came in at 97 cents compared with $1.11 a year earlier. Analysts had expected EPS of $1.05, according to figures widely available on financial news sites.
“In the face of an unprecedented combination of input cost inflation and supply chain disruptions, we're moving quickly to keep our trusted brands on store shelves for consumers while driving net price realisation to protect our bottom line," General Mills’ chair and chief executive Jeff Harmening said in a press release.
The company has taken further price setting actions that will go into effect in the current quarter, adding it expects more price increases in the second half of the fiscal year.
“As a result, we now expect to meet or exceed each of our financial targets for the year. We also advanced our portfolio reshaping efforts in the quarter, and we’re more confident than ever that General Mills will emerge from the pandemic a stronger company better geared to generate profitable growth in line with our Accelerate strategy.”
On a conference call, when asked about any potential price increases in 2022, executives said they did not comment on forward-looking prices.
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Stock up 15% on the year
For the year to date, General Mills stock is up 15%. It closed Monday’s session at $67.79.
General Mills also said it expects changes in consumer behaviors driven by the Covid-19 pandemic will result in ongoing elevated consumer demand for food at home. In addition, an increase in the pet population and further “humanisation and premiumisation” of pet food during the pandemic are expected to create tailwinds for its pet food division.
Second-quarter sales at the company’s pet segment was up 29%, driven by strong volume growth and favourable net price realisation and mix.
Pet treats deal
Earlier this year, the company closed its $1.2bn acquisition of Tyson Foods’ pet treats business, which added the Nudges, True Chews and Top Chews brands to General Mills’ portfolio.
Looking ahead, the company now expects net sales to rise between 4% and 5% in its 2022 fiscal year. It had earlier forecast sales to be toward the higher end of a 1% to 3% decline range.
General Mills’ portfolio of brands includes household names such as Cheerios, Nature Valley, Blue Buffalo pet food, Pillsbury and Yoplait.