General Mills Reports Fiscal 2015 Second-Quarter Results Company Reaffirms 2015 Full-Year Outlook

Dec. 17, 2014

MINNEAPOLIS, Dec. 17, 2014 /PRNewswire/ -- General Mills (NYSE: GIS) today reported results for the second quarter of fiscal 2015.

Second Quarter Results Summary

  • Net sales for the 13 weeks ended Nov. 23, 2014, totaled $4.71 billion, down 3 percent from last year's second quarter results. On a constant-currency basis, quarterly net sales declined 1 percent.
  • Segment operating profit totaled $847 million, down 8 percent. In constant currency, segment operating profit declined 6 percent.
  • Diluted earnings per share (EPS) totaled 56 cents compared to 84 cents in last year's second quarter.
  • Adjusted diluted EPS, which excludes certain items affecting comparability of results, totaled 80 cents in the second quarter of 2015 compared to 83 cents in last year's second quarter. On a constant-currency basis, adjusted diluted EPS essentially matched prior-year results.

Constant-currency net sales, total and constant-currency segment operating profit, adjusted diluted EPS and adjusted diluted EPS in constant currency are each non-GAAP measures.  Please see Note 8 to the Consolidated Financial Statements below for reconciliation of these measures to the relevant GAAP measures.

General Mills Chairman and Chief Executive Officer Ken Powell said, "Second-quarter results were broadly in line with the updated outlook we provided in early November.  Net sales declined for the quarter as anticipated, reflecting continued weak food-industry trends in the U.S. and slowing growth in key emerging markets.  Adjusted diluted EPS came in slightly better than our estimate, primarily due to differences in expense timing.  These quarterly results keep us on track to achieve the full-year fiscal 2015 targets announced last month."

Second-quarter net sales of $4.71 billion were 3 percent below year-ago results.  Foreign currency exchange reduced net sales growth by 2 percentage points.  Pound volume subtracted 2 points of net sales growth, and net price realization and mix contributed 1 point of growth.  Gross margin was below year-ago levels reflecting the lower net sales and product mix.  Advertising and media expense declined 9 percent.  Segment operating profit totaled $847 million, down 8 percent from year-ago results.  General Mills recorded restructuring charges totaling $233 million pretax in the second quarter, including $19 million recorded in cost of sales. (Please see the Corporate Items section below for more information on restructuring actions.)  Second-quarter net earnings attributable to General Mills totaled $346 million and diluted earnings per share (EPS) totaled 56 cents.  Adjusted diluted EPS, which excludes restructuring expenses and certain other items affecting comparability, totaled 80 cents this year compared to 83 cents a year ago.  Foreign currency exchange reduced 2015 second-quarter earnings per share by 3 cents.

Six Month Financial Summary

  • Net sales through the first six months of fiscal 2015 declined 3 percent to $8.98 billion. On a constant-currency basis, net sales declined 1 percent.
  • First-half segment operating profit totaled $1.54 billion, down 11 percent as reported and down 10 percent in constant currency.
  • Diluted EPS totaled $1.11 compared to $1.54 in last year's first half.
  • First-half adjusted diluted EPS totaled $1.41 this year compared to $1.53 a year ago. Foreign currency exchange reduced fiscal 2015 first half EPS by 3 cents.

Following a first quarter where year-to-year differences in merchandising expense depressed reported net sales and gross margin, results improved in the second quarter.  Through the first six months, U.S. Retail segment dollar market shares increased in categories representing 68 percent of the company's sales volume in Nielsen-measured outlets.  U.S. Retail products making particularly strong contributions to first-half net sales results included Yoplait Original Style and Greek yogurt varieties, Fiber One cookies and Fiber One Streusel snack bars, Nature Valley breakfast biscuits, Cinnamon Toast Crunch and Cheerios Protein cereals; and Chex gluten-free oatmeal.  In the Convenience Stores and Foodservice segment, Yoplait GoGurt and Parfait Pro yogurt varieties, Nature Valley snacks, and bowlpack cereals were strong net sales contributors.   International products posting strong first-half sales contributions included Old El Paso taco shells and dinner kits in Europeand Australia, Haagen Dazs Triple Sensations ice cream varieties in Europe and Asia, and Nature Valley snacks in Canada.

U. S. Retail Segment Results

Second-quarter net sales for General Mills' U.S. Retail segment totaled $2.86 billion, down 4 percent from prior-year results.  Lower pound volume subtracted 3 points of net sales growth, and unfavorable net price realization and mix subtracted 1 point of growth.  During the quarter, the U.S. Retail businesses were realigned into five operating units.  The Snacks and Yogurt operating units posted net sales gains for the quarter, while sales for the Cereal, Baking Products and Meals units declined.  Advertising and media expense was 10 percent below year-ago levels.  Segment operating profit totaled $616 million, down 10 percent primarily due to the net sales decline. 

Through the first six months, U.S. Retail net sales totaled $5.31 billion, 4 percent below prior-year results.  Lower pound volume subtracted 3 points of net sales growth and unfavorable net price realization and mix subtracted 1 point of growth.  Segment operating profit totaled $1.07 billion, 17 percent below last year.

International Segment Summary

Second-quarter net sales for General Mills' consolidated international businesses decreased 6 percent to $1.32 billion.  Pound volume matched year-ago levels, and favorable net price realization and mix contributed 3 points of net sales growth.  Foreign currency exchange reduced net sales growth by 9 percentage points.  On a constant-currency basis, International segment net sales grew 3 percent overall, with gains of 4 percent in Europe, 2 percent in the Asia / Pacific region and 14 percent in Latin America.  These gains were partially offset by a 7 percent net sales decline in Canada that reflected business disruption caused by a fire at a co-packer.   Advertising and media expense declined 5 percent.  Segment operating profit totaled $134 million, down 12 percent as reported and down 2 percent in constant currency. (Please see Note 8 for reconciliation of non-GAAP measures.)

Through the first six months of fiscal 2015, International segment net sales totaled $2.67 billion, down 2 percent.  Foreign currency exchange reduced net sales growth by 7 percentage points.  On a constant-currency basis, net sales grew 5 percent reflecting favorable net price realization and mix.  Pound volume essentially matched prior-year levels.  Six-month segment operating profit totaled $280 million, up 1 percent as reported and up 7 percent in constant-currency. Full report. 

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Confections, cookies, pastries

General Mills Inc.

May 6, 2013
General Mills is a leading global manufacturer and marketer of consumer foods products, with annual worldwide net sales of $14.9 billion. It has more than 100 U.S. consumer brands...