Pillsbury Maker General Mills Annual Profit Outlook Disappoints, Stock Falls

General Mills, Inc GIS shares are trading lower after the company reported worse-than-expected fourth quarter FY24 revenue.

The company reported a fourth quarter sales decline of 6.3% year-on-year to $4.71 billion, missing the analyst consensus estimate of $4.85 billion.

The revenue decrease reflected unfavorable net price realization and mix and lower pound volume.

Organic net sales decreased 6% and slowed from the third-quarter trend.

North American retail segment sales declined 7% to $2.85 billion, pet segment sales declined 8% to $602 million, and International segment sales fell 10% to $668 million.

Adjusted EPS of $1.01 beat the consensus estimate of $0.99.

Gross margin expanded 140 basis points Y/Y to 35.8%. Adjusted gross margin slipped ten basis points to 34.9%.

Operating margin expanded 20 basis points to 16.5%, and operating income decreased 5% to $779 million.

General Mills held $418 million in cash and equivalents as of May 26, 2024. Operating cash flow for twelve months totaled $3.3 billion.

General Mills repurchased about 29 million shares of common stock in fiscal 2024 for a total of $2 billion.

The board of directors declared a quarterly dividend of $0.60 per share, payable August 1, 2024, to shareholders of record July 10, 2024, representing a 2 percent increase from the previous quarterly rate of $0.59 per share. 

"We delivered on our updated guidance in fiscal 2024 by pivoting our plans and enhancing our efficiency in response to a more challenging operating environment," said Chairman and CEO Jeff Harmening.

Outlook: General Mills sees FY25 organic sales growth of 0 to +1%. The company sees FY25 adjusted EPS of (1)% to +1% in constant currency from the base of $4.52 earned in FY24. The consensus estimate is $4.68.

Price Action: At the last check on Wednesday, GIS shares were trading lower by 4.97% at $63.92 in the premarket.

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