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General Mills Beats 2Q18 Sales Estimate, Returns to Growth

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Sales exceed estimate

The company’s top line benefited from a 7.0% increase in the US (SPY) cereal division, driven by strong performance by its new Chocolate Peanut Butter Cheerios. Meanwhile, the US snacks division grew 5.0%, reflecting higher sales of fruit snacks and Lärabarand Nature Valley snack bars partially offset by lower sales of Fiber One snack bars. Yogurt sales continued to disappoint, as benefits from newly launched Oui by Yoplait and Yoplait Mix-Ins were more than offset by lower sales of Yoplait Light and Yoplait Greek.

To compare, analysts expect Conagra Brands’ (CAG) fiscal 2Q18 top line to fall YoY, reflecting the impact of brand divestitures and weak demand. Meanwhile, sales for J.M. Smucker (SJM), Kraft Heinz (KHC), and Kellogg (K) improved sequentially during their last reported quarters thanks to favorable currency movement.

General Mills raises guidance

Buoyed by healthy fiscal 2Q18 sales, General Mills has raised its fiscal guidance. The company now expects its organic sales to stay flat or fall by 1.0% in fiscal 2018. Earlier, organic sales were projected to mark a decline of 1.0%–2.0%. Innovative products, backed by efficient marketing, are expected to drive the company’s top line. However, weak demand for packaged foods and the tough retail landscape are expected to remain a drag.

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