General Mills Inc. revealed that their February profits decrease by 16%. The revenue fell because of the restructuring-related charges as well as a stronger U.S. dollar. Other food companies got affected.
However, shares rose 1.9% to $53.05 in recent premarket trading as earnings excluding one-time items beat expectations.
Several major U.S. food companies in recent months have posted disappointing results, and announced leadership changes and cost-cutting programs in an effort to adapt to shifting consumer tastes and global economic challenges. Big packaged food companies have been wrestling for years with diminished demand for established products as consumers increasingly are interested in items deemed healthier or more natural.Image editor
Minneapolis-based General Mills last year completed its $820 million acquisition of organic-food company Annie’s Inc.
The maker of Cheerios and Wheaties cereals, Yoplait yogurt, and Green Giant frozen vegetables said its U.S. retail sales rose 1.3% to $2.65 billion in the quarter ended Feb. 22, led by sales of yogurt and snacks. Overall, higher prices, growth from its Annie’s acquisition and product mix offset lower sales volume. Cereal sales volume was little changed while sales declined for its baking and meal-component products, which include Better Crocker cake mix and Hamburger Helper.
In its international segment, sales fell 6.7% to 1.23 billion on currency effects, which reduced growth by 13 percentage points.
Convenience stores and food service segment sales increased 6.6% to $465.1 million.
In all, General Mills reported a profit of $343.2 million, or 56 cents a share, down from $410.6 million, or 64 cents a share, a year earlier. Excluding restructuring-related charges and other items, earnings rose to 70 cents from 62 cents.
Revenue decreased 0.6% to $4.35 billion. However, excluding currency fluctuations, sales rose 3%, including one percentage point of growth from its Annie’s acquisition.
Analysts polled by Thomson Reuters expected a per-share profit of 67 cents and revenue of $4.35 billion.
General Mills also affirmed its guidance for the year ending in May.