General Mills underwhelms with Q1 results as profits fall

18th Sep 2024 12:54

(Sharecast News) - Shares in General Mills were falling in pre-market trade on Wednesday despite the American processed foods giant reiterating its full-year targets, as the company reported a decline in sales and profits in its first quarter.

The Minnesota-based manufacturer, known for its cereal brands like Lucky Charms and Cheerios, said net sales fell 1% year-on-year to $4.8bn in the three months ended 25 August - broadly in line with analysts' expectations.

Volumes were flat compared with last year but the company blamed "unfavourable" pricing and product mix for the top-line decline.

Meanwhile, adjusted operating profits were down 4% at $865m, with the gross margin slumping 130 basis points to 34.8% due to rising input costs, mark-to-market effects and a negative price/mix impact.

Adjusted earnings fell by two cents to $1.07 a share but came in just ahead of the $1.08 consensus estimate.

"Our top priority in fiscal 2025 is to accelerate our organic net sales growth, and we made expected progress on that goal in the first quarter along multiple fronts, with more work still ahead," said chair and chief executive Jeff Harmening.

Harmening said product news and innovation, along with higher investments fuelled by cost savings, should improve the company's competitiveness moving forward.

"With those strong plans and having delivered expected improvement in Q1, we are reaffirming our full-year outlook for fiscal 2025," he said.

General Mills expects full-year net sales to be flat to 1% higher on an organic basis, while adjusted operating profit should decline by up to 2% at constant currencies.

The stock was down 1.3% at $73.51 by 0803 ET.