Packaged foods manufacturer General Mills Inc. (GIS, Financial) reported disappointing fourth-quarter and full-year 2019 results before the opening bell on Wednesday, sending shares lower in early trading.
The Minneapolis-based company, which produces Cheerios, Yoplait yogurt, Fruit Roll-Ups and other popular breakfast and snack foods, posted adjusted earnings of 83 cents per share for the quarter, topping Refinitiv’s estimates of 77 cents per share. Revenue grew 7% from the prior-year quarter to $4.16 billion, but fell short of expectations of $4.24 billion.
For the full year, General Mills recorded adjusted earnings of $3.22 per share and $16.9 billion in revenue.
By segment, sales in the company’s North American retail division, which account for more than half of revenue, declined 2% during the quarter to $2.34 billion on the back of lower demand for its snacks, which include Chex Mix, Fruit Gushers and Nature Valley granola bars. Retail sales of its meals and baking, yogurt and cereal segments were unchanged from a year ago.
General Mills also recorded a 10% sales decline in the Europe and Australia segment to $500 million and a 9% decrease in the Asia and Latin America division to $396 million.
In the convenience stores and foodservice business, sales for the quarter grew 2% to $519 million. The pet segment recorded a 38% sales increase on a pro forma basis to $406 million.
In a statement, Chairman and CEO Jeff Harmening said the company was positively impacted by the addition of Blue Buffalo Pet Products Inc., which was acquired in April 2018.
“I’m pleased to say that we executed well, successfully transitioned Blue Buffalo into our portfolio, and delivered our financial commitment in fiscal 2019,” he said. “We’ll look to improve our performance again in fiscal 2020, and we have plans in place to accelerate our organic sales growth while maintaining our strong margins and cash discipline.”
For 2020, General Mills is guiding for organic net sales growth between 1% and 2% and a 3% to 5% increase in earnings per share.
With a market cap of $29.31 billion, shares of General Mills were down 8.6% at $49.09 on Wednesday morning. GuruFocus estimates the stock has climbed 28% year to date.
According to the GuruFocus Industry Overview page, General Mills is the seventh-largest company in the consumer packaged goods industry, behind Procter & Gamble Co. (PG, Financial), Mondelez International Inc. (MDLZ, Financial), The Estee Lauder Companies Inc. (EL, Financial), Colgate-Palmolive Co. (CL, Financial), Kimberly-Clark Corp. (KMB, Financial) and The Kraft Heinz Co. (KHC, Financial).
Disclosure: No positions.
Read more here:
- Howard Marks' Oaktree Drills Deeper Into Berry Petroleum
- Louis Moore Bacon's Top 5 Holdings as of the 1st Quarter
- Steven Cohen's Top 5 Holdings as of the 1st Quarter
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
