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How General Mills’ Sales Fared in the Fourth Quarter

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Pricing and mix supported sales

General Mills (GIS) reported its fiscal fourth quarter results on June 27. The company impressed with its good all-around performance, but lower volumes are a concern. General Mills reported net sales of $3.9 billion, which fell marginally short of analysts’ estimate but increased 2.2% YoY (year-over-year).

Also, General Mills sustained growth momentum with its organic sales, but the rate of growth wasn’t impressive. During the fiscal fourth quarter, General Mills’ organic sales increased 1% as benefits from higher net price realization and favorable mix were partially offset by lower volumes across all business segments.

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Outlook

General Mills remains upbeat on sales in fiscal 2019. The company expects its net sales to see 9.0% to 10.0% growth, primarily driven by its Blue Buffalo Pet Foods acquisition. Moreover, the company’s top line is also expected to benefit from planned investments in brands and its e-commerce platform.

Packaged food manufacturers are restructuring their portfolios by acquiring fast-growing brands and divesting underperforming ones to accelerate sales growth. For instance, other major food companies like Conagra Brands (CAG), Kellogg (K), J.M. Smucker (SJM), and Hershey (HSY) acquired fast-growing brands to boost their top-line growth.

Alongside these positives, General Mills’ organic sales guidance was disappointing. General Mills expects organic sales to remain flat or increase 1.0% in fiscal 2019, which indicates persisting challenges.

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