General Mills, Inc. (NYSE:GIS) raises EPS growth in Q1 2022

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General Mills, Inc. (NYSE:GIS) stock fell 0.40% (As on Sep 23, 12:18:44 AM UTC-4, Source: Google Finance) though the company reported better-than-expected quarterly sales driven by strong growth in its pet foods business cushioned a slowdown in demand for its cooking sauces and baking products. The Adjusted gross margin contracted 150 basis points (bps) to 34.7%, due to input cost inflation, higher other supply chain costs and fixed cost deleverage across the supply chain. The adjusted operating profit fell 2% at cc due to reduced adjusted gross profit dollars. These were somewhat offset by lower administrative costs. Adjusted operating profit margin contracted 110 bps to 18%. The company is seeing a wide widespread impact emerging from raw material vendors, challenges that are internal manufacturing, co-packer manufacturing, in our distribution network. So the company had literally hundreds of disruptions in the supply chain that really changes on daily and weekly basis. The company had ended the first quarter with cash and cash equivalents of $710.6 million, long-term debt of $10,326.9 million and total shareholders’ equity of $9,692.3 million. GIS has generated $370 million as net cash from operating activities during the quarter. Capital investments amounted to $104 million.

GIS in the first quarter of FY 22 has reported the adjusted earnings per share of 99 cents, beating the analysts’ estimates for the adjusted earnings per share of 88 cents, according to Zacks Consensus Estimate. The company had reported the adjusted revenue of $4.5 billion in the first quarter of FY 22, beating the analysts’ estimates for revenue of $4.35 billion.
For fiscal 2022, the company expects organic sales growth to be towards the higher end of the previous guidance of a 1-3% decline. The adjusted operating profit growth (at cc) is expected toward the higher end of the earlier guidance of a 2-4% decline. Adjusted EPS growth at cc is envisioned at the greater end of the previous flat to down 2% view. The upward revision in these guidance ranges can be attributed to the impact of the recent pet treats business buyout from Tyson Foods. The buyout is expected to contribute nearly 2 cents to the bottom line in fiscal 2022. Free cash flow in fiscal 2022 is still likely to be roughly 95% of the adjusted after-tax earnings.

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