General Mills, Inc. (NYSE: GIS) stock rose over 0.96% on June 27th, 2018 (as of 11:41 AM GMT-4 ; Source: Google finance) after the company posted better than expected results for the fourth quarter 2018 given their efforts to reduce costs and improve distribution network paid off. The company’s net earnings attributable to GIS fell 13 percent to $354 million, down from a year ago, reflecting lower operating profit and higher net interest expense, partially offset by a lower effective tax rate.
General Mills in the fourth quarter of FY 18 has reported the adjusted earnings per share of 79 cents, beating the analysts’ estimates for the adjusted earnings per share of 75 cents. The company had reported the adjusted revenue growth of 2 percent to $3.89 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $3.81 billion. Organic net sales rose 1 percent, primarily due to benefits from organic net price realization and mix across all four operating segments, partially offset by lower organic volume in the North America Retail, Europe & Australia, and Asia & Latin America segments. The gross margin expanded 180 basis points to 36.5 percent of net sales. Adjusted gross margin, which excludes certain items affecting comparability, expanded 70 basis points to 35.8 percent. This was driven by favorable net price realization and mix, as well as benefits from productivity initiatives including a newly implemented global sourcing program.
Meanwhile, On April 24, 2018, General Mills had acquired Blue Buffalo, which is the leading brand in the fast-growing wholesome natural pet food category in the U.S., for an aggregate purchase price of $8.0 billion. The company financed the transaction with a combination of $6.0 billion in long-term debt, $1.0 billion in equity, and cash on hand. GIS has executed the equity financing by issuing 22.7 million shares of common stock on March 27, 2018.
Additionally, for FY 19, GIS expects Organic net sales to be in a range between flat and up 1 percent. Including the impact of the Blue Buffalo acquisition, the net sales are expected to increase 9 to 10 percent.
Constant-currency adjusted operating profit is expected to increase 6 to 9 percent from the base of $2.7 billion reported in fiscal 2018. Constant-currency adjusted diluted earnings per share are expected to range between flat and down 3 percent from the base of $3.11 earned in fiscal 2018.