, maker of some of the best-known food products in the world, served up a fall in profits in the year to the end of May, it announced today.
The company reported both fourth-quarter and full-year figures today, with generally buoyant sales failing to be matched by an equally sunny profit picture.
Net sales in the fourth quarter were 2% higher at $3.89 billion than during the comparable period of the previous year, and 1% higher in the full year.
But profit margins may have proved the company’s weak point. Gross margins declined by 1.1 percentage points in the full year to 34.5% of net sales, while in the fourth quarter they dropped by 1.8 percentage points to 36.5%.
General Mills said: “We are currently pursuing several multi-year restructuring initiatives designed to increase our efficiency and focus our business behind our key growth strategies.”
“In the fourth quarter of 2018, we approved global cost savings initiatives designed to reduce administrative costs and align resources behind high growth initiatives. These actions will affect approximately 625 positions, and we expect to incur approximately $55 millionof net expenses.”
In April General Mills paid $8 billion to buy Blue Buffalo, a supplier of “wholesome” pet foods.
Close to its roots
Admitting that full-year profits fell short of the company’s plans, Jeff Harmening, chairman and chief executive, said: “Fiscal 2018 represented an important first step in returning our business to sustainable topline growth.”
The company can trace its roots back to 1869 and is still based in the city where its story began, Minneapolis in Minnesota. General Mills products are marketed in more than 100 countries. Brands include the cereal Cheerios, Pillsbury refrigerated dough, Haagen-Dazs ice cream, French yoghurt Yoplait, Betty Crocker Deserts and Old El Paso Mexican food.
In the General Mills annual report for 2017, the company stated: “Our goal is to create market-leading growth to deliver top-tier returns to shareholders. And we’ll do that by focusing on our consumers – giving them the foods they love and the brands they trust.”
In previous General Mills financial statements, the company announced a fourth-quarter dividend of $0.49 per share, unchanged from the third quarter. General Mills is to host an “investor day” on 11 July to brief shareholders on its plans for the year ahead.