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.
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.