General Mills has released mixed third-quarter results, as the brand claimed rising input costs cut into its profits in spite of rising net sales.
The brand recorded third quarter net sales of $3.88 billion, which represents a 2.3% rise from last year’s Q3 results, however, the brands’ total segment operating profit fell 5.2% to $628 million.
General Mills claims this was due to higher supply chain costs than the brand initially anticipated, as the cost of freight and logistics, commodities, and other operational costs rose.
In response to this setback, the company claims it will restructure its supply operations by increasing its fleet of qualified freight carriers and utilising different modes of transportation.
General Mills states that this will cut costs by optimising the distribution process between the factory and customers.
General Mills chairman and CEO Jeff Harmening said: “Our primary goal this year has been to strengthen our topline performance while maintaining our efficiency.
“While I’m pleased that we’re delivering on the first part of that goal, with strong consumer marketing, innovation, and in-store execution leading to a second consecutive quarter of organic net sales growth, I’m disappointed in our results on the bottom line.
“Our third-quarter operating profit fell well short of our expectations, and cost pressures are impacting our full-year outlook.
“Like the broader industry, we’re seeing sharp increases in input costs, including inflation in freight and commodities. Because of our improved volume performance, we’re also incurring higher operational costs.”
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