General Mills has cut its annual sales forecast, hurt by slowing demand for its higher-priced breakfast cereals, snack bars and pet food products.
Its shares were down about 4% in premarket trading as the Cheerios cereal maker also lowered the upper end of its annual adjusted profit growth forecast to between 4% and 5% due to still-high input costs, primarily of labour.
Performance Highlights
General Mills' net sales fell 2% to $5.14 billion (€4.7 billion) in the second quarter, below estimates of $5.35 billion.
Operating profit amounted to $812 million (€741.9 million), up 2% year on year, while adjusted operating profit increased 13% in constant currency to $989 million (€903.7 million).
General Mills chair and chief executive officer, Jeff Harmening stated, “While we saw a slower-than-expected volume recovery in the second quarter amid a continued challenging consumer landscape, we generated bottom-line growth thanks primarily to strong HMM (Holistic Margin Management) cost savings.”
In the first half, the company saw net sales growth of 1% to $10.0 billion (€9.14 billion), driven by favourable net price realisation and mix, partially offset by lower pound volume.
Operating profit for the period declined 8% year on year to $1.7 billion, while adjusted operating profit increased 7% year on year to $1.9 billion.
'Long-Term Growth'
Harmening added, “We’re adapting our plans to the evolving consumer environment and staying focused on driving long-term growth, with a priority on winning through innovation, brand building, and in-store execution.
“At the same time, we’re stepping up our HMM performance and further eliminating disruption-related costs in the supply chain.”
News by Reuters, additional reporting by ESM.
