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Feb 23, 2020
General Mills Q3 2020 Earnings Report
General Mills reported flat net sales and updated full-year guidance.
Key Takeaways
General Mills reported flat net sales of $4.2 billion, with organic net sales also flat. Diluted EPS of $0.74 matched last year, while adjusted diluted EPS of $0.77 were down 6 percent in constant currency. The company updated its full-year fiscal 2020 guidance, raising the ranges for adjusted operating profit and adjusted diluted EPS.
Net sales of $4.2 billion were flat to last year; organic net sales were also flat.
Operating profit of $651 million essentially matched year-ago results; constant-currency adjusted operating profit was down 8 percent, including a strong increase in media investment.
Diluted earnings per share (EPS) of $0.74 were flat to last year; adjusted diluted EPS of $0.77 were down 6 percent in constant currency.
Company updates its full-year fiscal 2020 guidance, raising the ranges for adjusted operating profit and adjusted diluted EPS
General Mills
General Mills
General Mills Revenue by Segment
Revenue by Segment
North America Retail Revenue
CapyFin.com Forward Guidance
General Mills updated its full-year fiscal 2020 targets. Organic net sales are still expected to increase 1 to 2 percent. Constant-currency adjusted operating profit is now expected to increase 4 to 6 percent from the base of $2.86 billion reported in fiscal 2019, which is ahead of the previous range of 2 to 4 percent growth. Constant-currency adjusted diluted EPS are now expected to increase 6 to 8 percent from the base of $3.22 earned in fiscal 2019, which is ahead of the previous range of 3 to 5 percent growth.
Positive Outlook
- Organic net sales are still expected to increase 1 to 2 percent.
- The combination of currency translation, the impact of divestitures executed in fiscal 2019, and contributions from the 53rd week in fiscal 2020 are expected to increase reported net sales by approximately 1 percentage point.
- Constant-currency adjusted operating profit is now expected to increase 4 to 6 percent from the base of $2.86 billion reported in fiscal 2019, which is ahead of the previous range of 2 to 4 percent growth.
- The primary drivers of the increased outlook for constant-currency adjusted operating profit are increased Holistic Margin Management productivity savings, a modest reduction in the outlook for input cost inflation, and continued tight control over administrative expenses.
- Constant-currency adjusted diluted EPS are now expected to increase 6 to 8 percent from the base of $3.22 earned in fiscal 2019, which is ahead of the previous range of 3 to 5 percent growth.
Challenges Ahead
- The impact of the recent COVID-19 virus outbreak on the company’s full-year fiscal 2020 results is still uncertain.
- The company’s current outlook incorporates increased orders from retail customers in North America and Europe subsequent to the end of the third quarter in response to increased consumer demand for food at home, as well as headwinds in Häagen-Dazs shops and other foodservice channels resulting from lower consumer traffic.
- The most significant element of uncertainty in the company’s full-year outlook is the intensity and duration of increased demand for food at home across all its major markets.
- Additionally, the company’s outlook assumes its supply chain continues to operate with minimal disruption for the remainder of fiscal 2020.
- Currency translation is expected to have an immaterial impact on fiscal 2020 adjusted operating profit and adjusted diluted EPS.