Cheerios maker General Mills Inc has reported better-than-expected first-quarter sales, as strong growth in its pet foods business cushioned a slowdown in demand for its cooking sauces and baking products.
Purchases of pet food, such as General Mills' premium brand Blue Buffalo, have soared in the past year, as stuck-at-home customers adopted cats and dogs to help ease the stress of the pandemic.
General Mills chairman and chief executive officer, Jeff Harmening, said, “I’m proud of the way our team is performing in a dynamic and challenging operating environment.
“Our strong execution in the first quarter enabled us to deliver top- and bottom-line results ahead of our expectations. We delivered these good results while continuing to advance our Accelerate strategy, including making important progress on portfolio reshaping in the quarter.”
On a reported basis, net sales in General Mills' pet foods division increased 25% to $488 million in the quarter.
Total net sales rose to $4.54 billion in the quarter ended 29 August, from $4.36 billion a year earlier, beating the analysts' average estimate of $4.29 billion, according to Refinitiv data.
In the company’s North America Retail segment, net sales declined 3% year-on-year to $2.64 billion, impacted by lower at-home food demand and the comparison to the prior-year period when net sales benefited from retailers rebuilding inventory that had been drawn down at the onset of the pandemic.
On a two-year compound growth basis, relative to pre-pandemic levels, first-quarter organic net sales saw a 5% increase, the company added.
First-quarter net sales in its Europe and Australia division saw a 5% year-on-year growth to $518 million, driven by favourable foreign currency exchange.
On a two-year compound growth basis, relative to pre-pandemic levels, first-quarter organic net sales were up 3%.
Net sales growth for snack bars and yoghurt was offset by a decline in demand for ice cream.
General Mills has reaffirmed its full-year fiscal 2022 targets and added that it expects organic net sales toward the higher end of the company’s initial guidance range of down 1% to 3%.
Constant-currency adjusted operating profit and constant-currency adjusted diluted EPS are each expected to be toward the higher end of the company’s initial guidance ranges of down 2% to 4% and flat to down 2%, respectively.