General Mills Q4 2020 Earnings Report
Key Takeaways
General Mills reported strong Q4 results driven by increased at-home food demand due to the COVID-19 pandemic. Net sales increased by 21% to $5.0 billion, with organic net sales up 16%. Diluted EPS increased by 9% to $1.02, and adjusted diluted EPS rose by 33% in constant currency. The company is focused on delivering superior execution during the COVID-19 situation while continuing to invest in its brands and capabilities.
Net sales increased 21 percent to $5.0 billion and organic net sales were up 16 percent.
Operating profit of $830 million increased 16 percent; constant-currency adjusted operating profit was up 24 percent.
Diluted earnings per share (EPS) of $1.02 were up 9 percent; adjusted diluted EPS of $1.10 increased 33 percent in constant currency.
General Mills contributed $10 million in monetary and food donations to organizations addressing hunger and food access.
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Forward Guidance
General Mills expects the largest factor impacting its fiscal 2021 performance will be relative balance of at-home versus away-from-home consumer food demand. As a result, the company is not currently providing an outlook for fiscal 2021 growth in organic net sales, adjusted operating profit, and adjusted diluted EPS.
Positive Outlook
- General Mills expects net sales growth in fiscal 2021 will be positively impacted by its superior execution
- General Mills expects net sales growth in fiscal 2021 will be positively impacted by elevated at-home food demand, relative to the pre-pandemic period.
- The company anticipates that the combination of benefits from its HMM initiatives and volume leverage
- The company expects to make further progress in fiscal 2021 in reducing its net-debt-to-adjusted-EBITDA ratio
Challenges Ahead
- The company anticipates headwinds to fiscal 2021 net sales growth from comparisons against the 53rd week
- The company anticipates headwinds to fiscal 2021 net sales growth from the extra month of Pet results
- The company anticipates headwinds to fiscal 2021 net sales growth from the pandemic-related increase in demand in the fourth quarter of fiscal 2020.
- fiscal 2021 net sales growth may be negatively impacted by a potential reduction in consumers’ at-home food inventory
- headwinds from input cost inflation, increased investment in brands and capabilities, higher costs to service elevated demand, and higher ongoing health and safety-related expenses will result in an adjusted operating profit margin that is approximately in line with fiscal 2020 levels.