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What to Expect from General Mills's Fiscal 3Q17 Earnings

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Part 2
What to Expect from General Mills's Fiscal 3Q17 Earnings PART 2 OF 6

What Analysts Expect from General Mills’s Revenues in Fiscal 3Q17

Revenue sources

General Mills (GIS) classifies its business into three operating segments: US Retail, International, and Convenience Stores and Foodservice. In fiscal 2Q17, the US Retail segment accounted for 61.3% of General Mills’s total revenues. The company’s International and Convenience Stores and Foodservice segments accounted for 26.8% and 11.9%, respectively, of General Mills’s total revenues.

What Analysts Expect from General Mills&#8217;s Revenues in Fiscal 3Q17

What Analysts Expect from General Mills&#8217;s Revenues in Fiscal 3Q17

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Fiscal 3Q17 estimates

Analysts expect General Mills (GIS) to post revenues of ~$3.8 billion, representing a 4.3% fall from $4.0 billion in fiscal 3Q16. The company’s management forecast a 4% decline in its organic sales for fiscal 2017. Its management expects the widening gap in promotional activities by General Mills and its peers in the Yogurt and Soup categories to negatively impact the company’s sales during the second half of fiscal 2017.

Moving to General Mills’s International segment, analysts expects the strengthening US dollar and the restructuring of the Snacks business in China to lower General Mills’s fiscal 3Q17 revenues.

In an effort to overcome the decline in its organic sales, the company is implementing menu innovations, improving the quality of its products, and enhancing its products’ packaging to help drive its sales. The company has removed all artificial colors and flavors from its cereal products.

Peer comparisons

During the same period, peers Kellogg (K), B&G Foods (BGS), and Pinnacle Foods (PF) have posted revenue growth of -0.8%, 20.9%, and 18.8%, respectively.

Outlook

For the next four quarters, analysts expect General Mills (GIS) to post revenues of ~$15.6 billion, which represents a 2.4% fall in the corresponding quarters of the previous fiscal year. The fall in Yogurt and Soup sales could bring the company’s revenues down.

Next, we’ll look at General Mills’s margins in fiscal 2Q17.

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