MINNEAPOLIS--(BUSINESSWIRE)--GeneralMills(NYSE:GIS):
1PleaseseeNote6totheConsolidatedFinancialStatementsbelowforreconciliationofthisandothernon-GAAPmeasuresusedinthisrelease.
GeneralMills(NYSE:GIS)todayreportedresultsforthefirstquarterendedAugust25,2019.
“Wearemakingclearprogressinbecominganimbler,moreconsumer-connectedGeneralMills,”saidGeneralMillsChairmanandChiefExecutiveOfficerJeffHarmening.“Ourfirst-quarternetsalesperformanceincludedencouragingimprovementinNorthAmericaRetailandstronggrowthinPet,drivenbygoodinnovationandeffectivebrand-buildinginvestment.Wegotofftoaslowerstartinourothersegments,andwe’retakingactionstodrivetoplineimprovementforthosesegmentsandthecompanystartinginthesecondquarter.
“Onthebottomline,wedeliveredprofitandearningsgrowthaheadofourexpectationswhilecontinuingtoinvestinourbrandsandcapabilities.Weremainontracktodeliverourfiscal2020goals,includingacceleratingourorganicsalesgrowth,maintainingourstrongmargins,andreducingourleverage.”
GeneralMillsispursuingitsConsumerFirststrategyandexecutingagainstitsglobalgrowthframework:1)competingeffectivelythroughstronginnovation,effectiveconsumermarketing,andexcellentin-storeexecution;2)acceleratinggrowthonitsfourdifferentialgrowthplatformsincludingHagen-Dazsicecream,snackbars,OldElPasoMexicanfood,anditsportfolioofnaturalandorganicfoodbrands;and3)reshapingitsportfoliothroughgrowth-enhancingacquisitionsanddivestitures,includingtheacquisitionofBlueBuffalo,theleadingbrandinthefast-growingwholesomenaturalpetfoodcategoryintheU.S.Thecompanyexpectsconsistenttoplinegrowthgeneratedbythisgrowthframework,combinedwithmarginexpansion,disciplinedcashconversion,andcashreturns,willgeneratetop-tierreturnsforGeneralMillsshareholdersoverthelongterm.
FirstQuarterResultsSummary
OperatingSegmentResultsNote:Tablesmaynotfootduetorounding.
ComponentsofFiscal2020ReportedNetSalesGrowth
FirstQuarter
Volume
Price/Mix
ForeignExchange
ReportedNetSales
NorthAmericaRetail
(1)pt
1pt
--
Flat
Pet
7pts
7%
ConvenienceStores&Foodservice
(6)pts
2pts
(4)%
Europe&Australia
(7)pts
(4)pts
(9)%
Asia&LatinAmerica
(11)pts
3pts
(2)pts
(10)%
Total
(2)%
ComponentsofFiscal2020OrganicNetSalesGrowth
OrganicVolume
OrganicPrice/Mix
OrganicNetSales
Acquisitions&Divestitures
(5)%
(5)pts
(3)%
(1)%
Fiscal2020SegmentOperatingProfitGrowth
%ChangeasReported
%ChangeinConstantCurrency
2%
NM
(6)%
(20)%
(15)%
(17)%
(11)%
9%
NorthAmericaRetailSegmentFirst-quarternetsalesforGeneralMills’NorthAmericaRetailsegmenttotaled$2.38billion,essentiallymatchingyear-agolevels,withbenefitsfromnetpricerealizationandmixoffsetbylowercontributionsfromvolume.ThesegmentmaintainedmomentumintheU.S.Cerealoperatingunit,wherenetsaleswereup1percent,whileimprovingtrendsinU.S.YogurtandU.S.Snacks,wherenetsaleswereflatanddown1percent,respectively.NetsalesintheU.S.Meals&Bakingunitdeclined1percent,andconstant-currencynetsalesinCanadawerealsodown1percent.First-quarterretailsaleswereflatinU.S.Nielsen-measuredoutlets.Segmentoperatingprofitof$560millionincreased2percent,drivenbyHMMcostsavingsandbenefitsfrompositivenetpricerealizationandmix,partiallyoffsetbyinputcostinflationandhigherbrand-buildinginvestments.
PetSegmentFirst-quarternetsalesforthePetsegmentincreased7percentto$368million,drivenbypositivecontributionsfromvolumegrowthandpositivenetpricerealizationandmix,partiallyoffsetbythecomparisontoanextraweekofresultsinlastyear’sfirstquarterrelatedtoacquisitiontiming.Excludingthetimingdifference,netsalesincreasedinthemidteens.Petparenttakeawayacceleratedinthequarter,withall-channelretailsalesuplowdoubledigits.Segmentoperatingprofittotaled$81millioncomparedto$14millionintheprioryear,drivenprimarilybya$53millionone-timepurchaseaccountinginventoryadjustmentintheyear-agoperiodaswellashighernetsales.
ConvenienceStores&FoodserviceSegmentFirst-quarternetsalesfortheConvenienceStores&Foodservicesegmentdeclined4percentto$445million,drivenbylowerbakeryflourvolumeandunfavorableindexpricing,partiallyoffsetbylowsingle-digitgrowthfortheFocus6platformsincludingstrongperformanceoncerealandfrozenbakedgoods.Segmentoperatingprofitof$91millionwas6percentbelowtheyear-agoresultthatgrew14percent.
Europe&AustraliaSegmentFirst-quarternetsalesfortheEurope&Australiasegmentdeclined9percentto$454million,drivenbylowervolumeandunfavorableforeigncurrencyexchange,partiallyoffsetbybenefitsfromnetpricerealizationandmix.Organicnetsalesweredown5percent,drivenlargelybyacontinuedchallengingretailenvironmentinFranceforyogurtandicecream,aswellasdifferencesinmerchandisingphasing.Segmentoperatingprofittotaled$28millioncomparedto$34millionayearago.Onaconstant-currencybasis,segmentoperatingprofitwasdown15percent,drivenprimarilybyatimingdifferenceinbrand-buildinginvestmentandlowervolume,partiallyoffsetbybenefitsfromnetpricerealizationandmix.
Asia&LatinAmericaSegmentFirst-quarternetsalesfortheAsia&LatinAmericasegmentdeclined10percentto$360million,drivenbya5-pointheadwindfromdivestituresexecutedinfiscal2019,lowervolume,andunfavorableforeigncurrencyexchange,partiallyoffsetbybenefitsfromnetpricerealizationandmix.Organicnetsalesweredown3percent,drivenbyretailerinventoryreductionsinBrazil,distributionnetworkchangesinIndia,andlowervolumesinChina.First-quarternetsalesresultsalsocomparedagainstthestrongestquarterofgrowthlastyear,whenorganicnetsaleswereup8percent.Segmentoperatingprofittotaled$10millioncomparedto$12millionayearago.
JointVentureSummaryCombinedafter-taxearningsfromjointventurestotaled$22millioncomparedto$18millionayearago,drivenprimarilybyour$5millionafter-taxshareofarestructuringchargeatCPWintheyear-agoperiod.First-quarternetsalesincreased2percentinconstantcurrencyforCerealPartnersWorldwide(CPW),drivenbygrowthintheUK&Australia,LatinAmerica,andAsia,MiddleEast,andAfricaregions,partiallyoffsetbydeclinesinthecontinentalEuroperegion.Constant-currencynetsalesforHagen-DazsJapan(HDJ)increased6percent,drivenlargelybygrowthincoremini-cups.
OtherIncomeStatementItemsUnallocatedcorporateitemstotaled$99millionnetexpenseinthefirstquarteroffiscal2020,comparedto$106millionnetexpenseayearago.Excludingmark-to-marketvaluationeffectsandotheritemsaffectingcomparability,unallocatedcorporateitemstotaled$88millionnetexpensethisyearcomparedto$65millionnetexpenselastyear.
Restructuring,impairment,andotherexitcoststotaled$8millioninthequartercomparedtoa$1millionnetrecoveryayearago.Anadditional$6millionofrestructuringandproject-relatedchargeswererecordedincostofsalesthisyearcomparedto$1millionayearago.
Netinterestexpensetotaled$119millioninthefirstquartercomparedto$134millionayearago,drivenbyloweraveragedebtbalancesandrates.Theeffectivetaxrateinthequarterwas11.7percentcomparedto22.6percentlastyear(pleaseseeNote5belowformoreinformationonoureffectivetaxrate).Theadjustedeffectivetaxratewas20.9percentcomparedto22.7percentayearago.
CashFlowGenerationandCashReturnsCashprovidedbyoperatingactivitiestotaled$572millioninthefirstquarteroffiscal2020,down6percentfromtheprioryear,primarilydrivenbychangesininventoryanddeferredincometaxes,partiallyoffsetbyhighernetearnings.Capitalinvestmentstotaled$70millioncomparedto$113millionayearago.Dividendspaidtotaled$298million.Averagedilutedsharesoutstandingforthefirstquarterincreased1percentto612million.
Fiscal2020OutlookGeneralMillsreaffirmeditskeyfull-yearfiscal2020targets:
ConsolidatedStatementsofEarningsandSupplementaryInformation