General Mills (GIS, Financial) released its fiscal second-quarter 2021 results before the market opened on Dec. 17. The maker of Cheerios and other cereal and shelf-stable products posted strong results, with earnings and revenue surpassing analysts' projections.
Performance at a glance
The Minneapolis-based company posted second quarter adjusted earnings per share of $1.06, which increased 11.6% as compared to the same quarter last year. Revenue of $4.72 billion was up 6.74% on a year-over-year basis. Analysts had predicted EPS of $0.97 on $4.67 billion in revenue.
Organic sales rose 7% in the reported quarter. Weakness in the Convenience Stores and Foodservice segment was offset by solid growth in the North America Retail, Pet and Europe and Australia segments
Chairman and CEO Jeff Harmening commented the following:
"We executed very well again in the second quarter, driving strong performance on the top and bottom lines. In this dynamic environment, I'm proud of the way we're taking care of our people and serving our consumers with brands they love and trust. We strongly believe that the work we're doing today to strengthen our brands and capabilities and deepen our connection with consumers will translate to profitable growth and shareholder value creation for the long term."
Segment results
In the North America Retail segment, net sales surged 9% to $2.92 billion, largely due to robust demand for at-home food during the pandemic. Sales increased 18% for U.S. Meals and Baking, 4% for U.S. cereal, 7% for Canada and 3% for U.S. Yogurt. By contrast, net sales for U.S. snacks slipped 2%. Segment operating profit totalled $702 million, reflecting a growth of 9% year-over-year.
The pet segment recorded $460 million in revenue, up 18% year-over-year. General Mills cited robust volume growth and favourable net price realization and mix. Operating profit in the division rose 48% to $119 million.
Sales in the Convenience Stores and Foodservice business plunged 14% to $440 million, driven primarily by reduction in the away-from-home food demand. The operating profit was $78 million, down 32% from the prior-year quarter. Lower net sales coupled with fixed cost deleverage in the supply chain negatively impacted the metric.
Net sales in the Europe and Australia segment climbed 8% to $467 million owing to strong demand for at-home food and favorable foreign currency exchange rates. Organic sales soared 3%. Operating profit of $36 million rose 14% owing to sales growth in away-from-home channels coupled with net sales growth in Old EI Paso Mexican food and Betty Crocker dessert mix. Mounting input costs partly negated the growth.
In Asia and Latin America, net sales of $430 million were up 5% due to higher away-from-home food demand, which was partially offset by adverse foreign currency exchange rates. Volume growth and favorable net price realization and mix also helped. Organic net sales climbed 10% as compared with the year-ago results. The company reported an operating profit of $30 million in the segment.
Looking ahead
For full-year fiscal 2021, the company did not provide any guidance figures. However, the company said that demand for packaged food is expected to continue to be higher than the pre-Covid level.
Disclosure: I do not hold any positions in the stocks mentioned.
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