North American retail marks growth
In the past, General Mills’ (GIS) sales have been impacted by weakness in its largest business segment, North American retail. However, in fiscal 2Q18, the segment returned to growth, thanks to improvement in pricing and mix coupled with favorable currency rates. US (SPY) cereal sales returned to growth and rose 7% during the reported quarter. Whereas the US snacks division reported improved top-line performance, the US meals and baking division reported a 2% fall in sales. Yogurt sales continued to slide, falling 11%.
In comparison, major US food processing companies Kellogg (K), Kraft Heinz (KHC), Conagra Brands (CAG), and Hershey (HSY) are also seeing sequential improvement in their sales, driven by innovation-led new products and incremental sales from acquired brands.
How other segments performed
The convenience store and food service segment’s sales rose 5% during the reported quarter, driven by growth in cereals, snacks, and frozen meals. Organic sales rose 5%, driven by an improved mix and volumes.
Meanwhile, the company’s European and Australian sales rose 7%, driven by favorable currency rates (+6%) and improvement in volumes (+1%). Sales of Häagen-Dazs ice cream, Nature Valley, and Fiber One snacks benefited from innovation, geographic expansion, and brand-building initiatives. Organic sales grew 1%, reflecting improved volumes.
The company’s Asian and Latin American sales rose 2%, reflecting favorable currency rates (+2%) and higher pricing and an improved mix (+7%) partially offset by a 7% decline in volumes. Organic sales remained flat as lower sales in Latin America offset growth in Asian markets.