General Mills raises outlook after strong first quarter

General Mills raises outlook after strong first quarter

General Mills has raised its outlook for fiscal 2023 after reporting better-than-expected first-quarter results. In a statement released on September 21, Jeffrey L. Harmening, Chairman and CEO of the company, attributed the positive performance to pricing actions taken in the previous year, which allowed General Mills to keep pace with inflation. The company recorded 10% organic net sales growth in the quarter, fueled by strong net price realization in response to significant levels of input cost inflation, according to Harmening. Adjusted operating profit was up 8%, and adjusted diluted EPS was up 13%, both in constant currency.

General Mills raises outlook after strong first quarter

Harmening added that inflation and reduced consumer spending power led to an increase in at-home eating and other value-seeking behaviors that benefited General Mills. “We think elevated demand for food at home was one reason we saw lower-than-expected volume elasticities in Q1, particularly in North America Retail,” he said. “We expect elasticities will increase over the remainder of the year, though remain below historic levels.”

The company’s net income for the quarter ended Aug. 22 rose 31% to $820 million, equal to $1.37 per share on the common stock, compared to $627 million, or $1.03 per share, during the same quarter of the previous year. Quarterly sales rose 4% to $4.7 billion.

General Mills’ North America Retail segment sales rose 10% to \$3 billion during the quarter, and segment operating profit was \$778 million, up 20% when compared with the year prior. The company’s Pet Segment unit saw sales rise 19% to \$580 million, with the pet treats acquisition resulting in a 5-point benefit. North America Foodservice sales rose 21% to \$496 million, but segment operating profit was down 25%, driven by higher input costs. General Mills raises outlook after strong first quarter

Sales for the company’s International segment were down 30% to \$652 million, and segment operating profit of \$35 million was down 43%, due to lower pound volume combined with divestitures of some yogurt and dough businesses affecting results.

General Mills raised its full-year outlook, expecting organic net sales to increase 6% to 7%, constant-currency adjusted operating profit growth to range between flat and up 3%, and constant-currency adjusted diluted earnings per share to be up 2% to 5%, according to Kofi Bruce, Chief Financial Officer. The company also plans to accelerate investments in brand building and other growth-driving activities, and it expects the impact of the ice cream recall to be lower than originally anticipated. Both Harmening and Bruce said market conditions remain volatile, but the company chose to raise its outlook because management expects lower volume elasticities and better volume performance during the rest of the year, General Mills raises outlook after strong first quarter