General Mills Announces New Structure to Increase Growth

General Mills (GIS) has a market cap of $36.7 billion. It rose 0.31% to close at $61.13 per share on December 5, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.5%, 0.02%, and 9.2%, respectively, on the same day.

GIS is trading 0.82% below its 20-day moving average, 1.3% below its 50-day moving average, and 4.5% below its 200-day moving average.

The Fidelity MSCI Consumer Staples ETF (FSTA) invests 1.9% of its holdings in General Mills. The YTD price movement of FSTA was 1.8% on December 5.

The market caps of General Mills’s competitors are as follows:

• Kellogg (K) — $25.1 billion
• Hershey (HSY) — $20.6 billion
• Post Holdings (POST) — $5.0 billion

General Mills (GIS) has made use of restructuring to increase its growth and efficiency. The company announced the following group presidents for its business group, effective January 1, 2017:

• Jon Nudi will lead North America Retail (US Retail & Canada)
• Bethany Quam will lead Europe & Australia
• Christina Law will lead Asia & Latin America
• Shawn O’Grady will lead Convenience Store & Foodservice

The company reported, “The company will also enhance its growth capabilities in several areas including strategic revenue management ([or] SRM), e-commerce, and marketing innovation, and intends to augment its current talent with external expertise in these areas over the next several months.”

The report added, “The new structure is expected to impact approximately 400-600 positions world-wide, subject to consultation with employees and employee representatives in locations as required.”

General Mills (GIS) reported fiscal 1Q17 net sales of $3.9 billion, a fall of 7.1% from its net sales of $4.2 billion in fiscal 1Q16. Sales of the US Retail, International, and Convenience Stores & Foodservice segments fell 7.9%, 5.8%, and 6.6%, respectively, between fiscal 1Q16 and fiscal 1Q17.

The company’s net income and EPS (earnings per share) fell to $409.0 million and $0.67, respectively, in fiscal 1Q17, compared with $426.6 million and $0.69 in fiscal 1Q16. It reported adjusted EPS of $0.78 in fiscal 1Q17, a fall of 1.3% from fiscal 1Q16. General Mills’s cash and cash equivalents and inventories rose 0.26% and 9.5%, respectively, between fiscal 4Q16 and fiscal 1Q17.

General Mills (GIS) made the following projections for fiscal 2017:

• organic net sales growth of 0% to -2%
• total segment operating profit growth in the range of 6%–8% on a constant currency basis
• adjusted operating profit margin to expand by ~1.5%.
• adjusted EPS growth in the range of 6%–8% on a constant currency basis

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