General Mills Q2 2022 Earnings Report
Key Takeaways
General Mills reported a 6% increase in net sales to $5.0 billion, with organic net sales up 5%. However, operating profit declined by 13% to $800 million, and diluted EPS decreased by 13% to $0.97 due to significant input cost inflation and supply chain disruptions. The company updated its full-year outlook to reflect stronger net sales growth but higher costs.
Net sales increased 6 percent to $5.0 billion; organic net sales were up 5 percent.
Operating profit declined 13 percent to $800 million; constant-currency adjusted operating profit was down 6 percent.
Diluted earnings per share (EPS) totaled $0.97, down 13 percent from the prior year; adjusted diluted EPS of $0.99 was down 7 percent in constant currency.
Company updates full-year fiscal 2022 outlook to reflect stronger net sales growth, higher costs, and the impact of the European Yoplait divestiture
General Mills
General Mills
General Mills Revenue by Segment
Forward Guidance
General Mills updated its guidance for fiscal 2022 to reflect stronger topline growth and significantly higher input costs than originally expected, as well as the impact of the European Yoplait divestiture.
Positive Outlook
- Organic net sales are now expected to increase 4 to 5 percent.
- Incremental Strategic Revenue Management actions will take effect in the second half.
- Adjusted operating profit was previously expected to be toward the higher end of the range of down 2 to 4 percent.
- Adjusted diluted EPS were previously expected to be toward the higher end of the range of flat to down 2 percent.
- Free cash flow conversion is expected to be at least 95 percent of adjusted after-tax earnings.
Challenges Ahead
- Constant-currency adjusted operating profit is now expected to decline 1 to 4 percent.
- European Yoplait divestiture is estimated to reduce fiscal 2022 adjusted operating profit by approximately 1 percent.
- Cost of goods sold headwinds will be approximately $500 million higher than what was assumed in its initial fiscal 2022 outlook.
- Input cost inflation is now expected to be 8 to 9 percent.
- Elevated costs related to supply chain disruptions.