General Mills has forecast full-year profit that came in largely below analysts' estimates as the Cheerios cereal maker battles with slow demand for its ready-to-eat cereals, snacks and meal kits due to higher prices.
Shares of the company fell 4% in premarket trading after General Mills reported a 6% dip in sales volumes in the fourth quarter.
Price hikes to offset input cost inflation has aided top-line growth at US packaged food makers. However, in recent quarters volumes have dipped signalling that inflation-hit customers were pushing back against price increases.
General Mills forecast fiscal 2024 organic net sales to rise 3% to 4%, while it reported growth of 5% in fiscal 2023.
It expects adjusted per-share profit growth for fiscal 2024 to range between 4% and 6%. Analysts polled by Refinitiv were expecting a 5.9% rise to $4.49 per share.
General Mills' saw net sales growth of 3% during the fourth quarter of the financial year, to $5.0 billion, while organic net sales increased 5%.
It was boosted by positive organic net price realisation and mix and partially offset by lower organic pound volume.
Operating profit declined 19% year-on-year, to $818 million, reflecting higher selling, general, and administrative (SG&A) expenses, higher restructuring charges, and lower gross profit dollars.
For the full financial year, net sales increased by 6%, to $20.1 billion, including a 4-point headwind from net divestiture and acquisition activity and 1 point of unfavorable foreign currency exchange.
Operating profit amounted to $3.4 billion, down 1%, primarily due to higher SG&A expenses and higher restructuring charges, partially offset by gains on divestitures and higher gross profit dollars.