Cereal and yogurt manufacturer General Mills Inc. (GIS, Financial) reported disappointing results for the first quarter of fiscal 2018 before the opening bell on Sept. 20.
The Minnesota-based company posted earnings per share of 71 cents, which narrowly missed expectations of 76 cents. Quarterly revenue of $3.77 billion was just shy of estimates of $3.79 billion and decreased 3.5% from the year-ago quarter.
The trend in General Mills’ revenue growth over the past decade is illustrated in the graph below.
The company’s shares fell more than 5% in premarket trading following the announcement.
General Mills mainly attributed its disappointing performance to lower yogurt and cereal sales in North America. The company’s U.S. yogurt sales recorded double-digit declines as demand for Yoplait Greek and Yoplait Light was weak. In addition, U.S. cereal sales declined 7% due to customer inventory levels and unfavorable trade expense phasing.
In a statement, CEO Jeff Harmening emphasized the company had “anticipated a slow start to the year” and is focusing on boosting international sales and developing new products.
General Mills reiterated its guidance for fiscal 2018. Organic net sales are projected to decline 1% to 2%, which is an improvement from fiscal 2017. Total segment operating profit, on a constant-currency basis, is expected to be flat to up 1%. Adjusted diluted EPS is forecasted to increase 1% to 2% from $3.08 in 2017.
“We’re encouraged by the improvement we saw in first-quarter retail sales trends, and we’re confident that improved momentum will translate into stronger organic net sales results in the rest of the year, beginning in the second quarter,” Harmening said. “Importantly, we remain on track to deliver our fiscal 2018 goals in a challenging and dynamic environment.”
He stressed the company’s top priority in 2018 is strengthening top-line performance.
“Looking ahead, we’re taking deliberate steps through innovation, brand building and increased organizational agility to position the company for long-term top- and bottom-line growth,” Harmening said.
With 0.59% of outstanding shares, Mairs and Power (Trades, Portfolio) has the largest holding of General Mills among the gurus. During the second quarter, George Soros (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) established positions.
Disclosure: I do not own any stocks mentioned.
