General Mills Reports Fiscal 2021 Q2 Results

• Net sales increased 7 percent to $4.7 billion; organic net sales¹ were up 7 percent
• Operating profit increased 13 percent to $917 million; constant-currency adjusted operating profit was up 6 percent
• Diluted earnings per share (EPS) totaled $1.11, up 17 percent from the prior year; adjusted diluted EPS of $1.06 increased 9 percent in constant currency
• Company outlines expectations for continued strong top- and bottom-line growth in the third quarter and updates outlook for full-year adjusted operating profit margin

¹ Please see Note 6 to the Consolidated Financial Statements below for reconciliation of this and other non-GAAP measures used in this release.

December 17, 2020 07:00 AM Eastern Standard Time

MINNEAPOLIS--(BUSINESS WIRE)--General Mills (NYSE: GIS) today reported results for the second quarter ended November 29, 2020.

“We executed very well again in the second quarter, driving strong performance on the top and bottom lines,” said General Mills Chairman and Chief Executive Officer Jeff Harmening. “In this dynamic environment, I’m proud of the way we’re taking care of our people and serving our consumers with brands they love and trust. We strongly believe that the work we’re doing today to strengthen our brands and capabilities and deepen our connection with consumers will translate to profitable growth and shareholder value creation for the long term.”

Second Quarter Results Summary

• Net sales increased 7 percent to $4.7 billion and organic net sales were also up 7 percent, reflecting broad-based market share gains amid elevated at-home food demand resulting from the COVID-19 pandemic.
• Gross margin increased 100 basis points to 36.5 percent of net sales, driven by favorable net price realization and mix, lower mark-to-market expenses, and lower restructuring charges recorded in cost of sales, partially offset by higher input costs, including costs to secure incremental capacity, as well as the comparison to the prior-year period that included favorable manufacturing leverage. Adjusted gross margin increased 20 basis points to 35.5 percent of net sales, driven by favorable net price realization and mix, partially offset by higher input costs, including costs to secure incremental capacity, as well as the comparison to the prior-year period that included favorable manufacturing leverage.
• Operating profit of $917 million was up 13 percent, primarily driven by higher gross profit dollars and a net gain on investment activity, partially offset by higher selling, general, and administrative (SG&A) expenses, including higher media investment. Operating profit margin of 19.4 percent increased 110 basis points. Constant-currency adjusted operating profit increased 6 percent, driven by higher adjusted gross profit dollars, partially offset by higher SG&A expenses, including higher media investment. Adjusted operating profit margin decreased 10 basis points to 18.3 percent.
• Net earnings attributable to General Mills increased 19 percent to $688 million and diluted EPS increased 17 percent to $1.11, primarily reflecting higher operating profit, lower net interest expense, and higher after-tax earnings from joint ventures. Adjusted diluted EPS totaled $1.06, up 9 percent in constant currency, primarily driven by higher adjusted operating profit, lower net interest expense, and higher after-tax earnings from joint ventures.

Six Month Results Summary

• Net sales increased 8 percent to $9.1 billion and organic net sales also increased 8 percent, reflecting positive pound volume and favorable net price realization and mix.
• Gross margin increased 140 basis points to 36.5 percent of net sales, driven by favorable net price realization and mix, lower mark-to-market expenses, and lower restructuring charges recorded in cost of sales, partially offset by higher input costs. Adjusted gross margin increased 60 basis points to 35.9 percent of net sales, driven by favorable net price realization and mix, partially offset by higher input costs.
• Operating profit of $1.8 billion increased 20 percent, primarily driven by higher gross profit dollars, partially offset by higher SG&A expenses, including higher media investment. Operating profit margin of 19.5 percent was up 200 basis points. Adjusted operating profit of $1.7 billion increased 13 percent in constant currency, driven by higher constant-currency adjusted gross profit dollars, partially offset by higher SG&A expenses, including higher media investment. Adjusted operating profit margin increased 90 basis points to 18.7 percent.
• Net earnings attributable to General Mills increased 21 percent to $1.3 billion and diluted EPS of $2.14 increased 19 percent, primarily reflecting higher operating profit, lower net interest expense, and higher after-tax earnings from joint ventures, partially offset by a higher effective tax rate and higher average diluted shares outstanding. Adjusted diluted EPS of $2.06 was up 17 percent in constant currency, primarily driven by higher adjusted operating profit, higher after-tax earnings from joint ventures, and lower net interest expense, partially offset by higher average diluted shares outstanding and a higher adjusted effective tax rate.

The full report may be viewed here.