General Mills, Inc. (NYSE:GIS) Profit Falls

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General Mills, Inc. (NYSE:GIS) stock fell 0.42 % (As on Dec 22, 11:21:03 AM UTC-4, Source: Google Finance) after the company’s bottom line came in at $597.2 million compared with $688.4 million, in last year’s second quarter. The quarter is affected by input cost inflation which is at a 10-year high, labor shortages and other issues are causing disruptions across the supply chain, from the suppliers to manufacturing to distribution. These disruptions are driving down service levels and driving up costs above and beyond inflation throughout the industry. Operating profit of the North American Retail segment of General Mills was $649 million, down 7% from the second quarter of fiscal 2021. Sales were $2.98 billion, down 2%. Adjusted operating profit margin in the quarter was down 200 basis points, driven by lower adjusted gross margin, partially offset by lower SG&A (sales, general and administrative) expenses.

GIS in the second quarter of FY 22 has reported the adjusted earnings per share of 99 cents, missing the analysts’ estimates for the adjusted earnings per share of $1.05. The company had reported the adjusted revenue growth of 6.4 percent to $5.024 billion in the second quarter of FY 22, beating the analysts’ estimates for revenue of $4.9 billion.

The company forecast organic net sales growth to be in the range of 4% to 5% for the year, versus previous guidance of down 1% to 3%. The company’s earnings per share forecast for the full year currently is down 2% to up 1%, versus down 2% to flat previously.

Meanwhile, the company has taken important steps to further advance its portfolio reshaping efforts in the second quarter, in line with its Accelerate strategy. On November 24, the company had announced the conclusion of agreements to sell its European dough businesses to Cérélia. These transactions, which are expected to close by the end of fiscal 2022 subject to competition approvals, are not expected to have a material impact on adjusted diluted EPS. On November 30, the company completed the sale of its European Yoplait operations to Sodiaal. The company estimates the European Yoplait transaction will reduce fiscal 2022 adjusted operating profit and adjusted diluted EPS by approximately 1 percent. With these divestitures and the pet treats acquisition that closed in the first quarter, General Mills is increasing its focus on its faster-growing global platforms, enhancing its organic net sales growth rate, and improving its adjusted operating profit margin profile.

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