General Mills Inc (NYSE:GIS) stock fell 0.093% (As on December 21, 11:28:52 AM UTC-4, Source: Google Finance) after the company trimmed its annual sales forecast, hurt by slowing demand for its higher-priced breakfast cereals, snack bars and pet food products. In the three months to 26 November, the cereal, snack bar and pet-food manufacturer saw its second-quarter operating profit increase by 2% year-on-year to $811.8m while higher pricing also helped gross margin rise 170 basis points. Net earnings fell 2% to $595.5m. Cash provided by operating activities totaled $1.5 billion through six months of fiscal 2024 compared to $1.2 billion a year ago. Capital investments totaled $294 million compared to $227 million a year ago.
GIS in the second quarter of FY 24 has reported the adjusted earnings per share of $1.25, beating the analysts’ estimates for the adjusted earnings per share of $1.16. The company had reported 2 percent decline in the adjusted revenue to $5.14 billion in the second quarter of FY 24, missing the analysts’ estimates for revenue of $5.36 billion. Organic net sales were 2 percent below year-ago results that grew double digits; organic net sales were up 4 percent on a 2-year compound growth basis. Gross margin was up 170 basis points to 34.4 percent of net sales, driven by HMM cost savings and favorable net price realization and mix, partially offset by input cost inflation, higher other supply chain costs, and supply chain deleverage. Adjusted operating profit of $989 million increased 13 percent in constant currency, driven by higher adjusted gross profit dollars and lower compensation and benefits expenses. Adjusted operating profit margin was up 240 basis points to 19.3 percent. In light of the slowdown, General Mills is now forecasting fiscal 2024 organic net sales between down 1% and flat, compared to a year earlier. It had previously forecast growth of 3% to 4%. Analysts had expected growth of 2.4%.
General Mills is now expecting fiscal 2024 adjusted operating profit and adjusted diluted EPS to increase 4% to 5% in constant currency, compared to the previous range of 4% to 6% growth, pointing to still-high input costs, primarily of labour.
The group reiterated it is executing its Accelerate strategy to “drive sustainable, profitable growth and top-tier shareholder returns over the long term”.
The strategy involves the company prioritising its core markets and “local gem brands” that have the best prospects for profitable growth.
It added it is committed to reshaping its portfolio with strategic acquisitions and divestitures to “further enhance its growth profile”.