General Mills Reports Fiscal 2020 First-Quarter Results

September 18, 2019 07:00 AM Eastern Daylight Time

MINNEAPOLIS--(BUSINESS WIRE)--General Mills (NYSE: GIS):

Operating profit increased 10 percent; constant-currency adjusted operating profit¹ increased 7 percent
Diluted earnings per share (EPS) totaled $0.85, up 31 percent from the prior year; adjusted diluted EPS of $0.79 increased 13 percent in constant currency
Net sales decreased 2 percent to $4.0 billion; organic net sales were down 1 percent
Company reaffirmed its full-year fiscal 2020 outlook

¹ Please see Note 6 to the Consolidated Financial Statements below for reconciliation of this and other non-GAAP measures used in this release.

General Mills (NYSE: GIS) today reported results for the first quarter ended August 25, 2019.

“We are making clear progress in becoming a nimbler, more consumer-connected General Mills,” said General Mills Chairman and Chief Executive Officer Jeff Harmening. “Our first-quarter net sales performance included encouraging improvement in North America Retail and strong growth in Pet, driven by good innovation and effective brand-building investment. We got off to a slower start in our other segments, and we’re taking actions to drive topline improvement for those segments and the company starting in the second quarter.

“On the bottom line, we delivered profit and earnings growth ahead of our expectations while continuing to invest in our brands and capabilities. We remain on track to deliver our fiscal 2020 goals, including accelerating our organic sales growth, maintaining our strong margins, and reducing our leverage.”

General Mills is pursuing its Consumer First strategy and executing against its global growth framework: 1) competing effectively through strong innovation, effective consumer marketing, and excellent in-store execution; 2) accelerating growth on its four differential growth platforms including Häagen-Dazs ice cream, snack bars, Old El Paso Mexican food, and its portfolio of natural and organic food brands; and 3) reshaping its portfolio through growth-enhancing acquisitions and divestitures, including the acquisition of Blue Buffalo, the leading brand in the fast-growing wholesome natural pet food category in the U.S. The company expects consistent topline growth generated by this growth framework, combined with margin expansion, disciplined cash conversion, and cash returns, will generate top-tier returns for General Mills shareholders over the long term.

First Quarter Results Summary

Net sales declined 2 percent to $4.0 billion. Organic net sales were down 1 percent, reflecting lower organic volume, partially offset by positive organic net price realization and mix across all operating segments.
Gross margin increased 190 basis points to 34.7 percent of net sales. Adjusted gross margin of 35.2 percent was 160 basis points above the prior year result that included a one-time purchase accounting inventory adjustment related to the Blue Buffalo acquisition.
Operating profit totaled $662 million, up 10 percent from last year. Operating profit margin of 16.5 percent increased 180 basis points. Constant-currency adjusted operating profit increased 7 percent, driven by the purchase accounting impact in the prior year. Adjusted operating profit margin increased 130 basis points to 17.0 percent.
Net earnings attributable to General Mills totaled $521 million, up 33 percent from a year ago, primarily reflecting higher operating profit, a lower effective tax rate, and lower net interest expense.
Diluted EPS of $0.85 increased 31 percent from the prior year. Adjusted diluted EPS totaled $0.79 in the first quarter, up 13 percent from the prior year in constant currency, driven primarily by higher adjusted operating profit, lower net interest expense, a lower adjusted effective tax rate, and higher non-service benefit plan income, partially offset by higher average diluted shares outstanding.