General Mills has reported a 6% decline in full-year net sales and a 3% dip in the fourth quarter, with margins and operating profit both improving.
The company’s fiscal results paint a similar picture to other packaged food producers: turnover for the year stood at $15.62 billion, with decline driven by volume reductions in developed markets like North America, Europe and Australia.
Developing markets in Asia and Latin America grew by 10.4% – to $440.3 million – while convenience stores and foodservice recorded nominal growth.
Fourth-quarter sales were down 3% to $3.81 billion. Despite the results, the company beat analyst’s expectations.
There is evidence that General Mills’ cost-cutting programme, as well as its focus on five global growth platforms – cereal, yogurt, snacks, convenient meals and super-premium ice cream – is helping to make it leaner and more competitive. It reported strong adjusted margins and operating profit up 16% – but that will do nothing to arrest the company’s continued decline in quarter-on-quarter sales.
The Minneapolis-headquartered company has not posted growth since the three months to May 2015.
And in December, it unveiled a new organisational structure that centred around four business units, which General Mills said would help it support growth and maximise scale.
The company’s new chief executive officer, Jeff Harmening, said: “Our fourth-quarter results finished in line with our expectations, with improved organic net sales trends in total and across three of our four operating segments.
“While we took important steps in fiscal 2017 to globalise our business structure, accelerate our cost-savings efforts, expand our margins, and drive growth in adjusted diluted EPS, our results on the topline fell well short of our standards. Our entire organisation is moving with urgency in fiscal 2018 to meaningfully improve our net sales trends while keeping a sharp eye on our efficiency.”
Harmening has been in charge for less than a month after taking over from Ken Powell, who announced his retirement at the start of June. He was previously chief operating officer.
There were mixed fortunes for yogurt, which were up in the convenience and foodservice segments but recorded ‘double-digit decline’ in North America retail.
There was strong performance from Häagen-Dazs ice cream in both the Europe & Australia and Asia & Latin America regions.
It’s a similar story to the previous quarter: sales for the three months to 26 February were down 5% to $3.79 billion, impacted primarily by volume reductions in the North American retail segment. The company said that volumes of yogurt, processed meals and bakery products had all fallen.
© FoodBev Media Ltd 2024