General Mills misses by $0.05, misses on revs; guides FY15
Reports Q4 (May) adj. earnings of $0.67 per share, $0.05 worse than the Capital IQ Consensus of $0.72; revenues fell 2.9% year/year to $4.28 bln vs the $4.42 bln consensus.
- Lower pound volume subtracted 2 points of net sales growth, while net price realization and mix added 1 point. Foreign currency exchange reduced net sales growth by 2 points in the quarter.
- Adjusted gross margin was 10 basis points below the year-ago level.
- General Mills fiscal 2015 net sales are expected to grow at a mid single-digit rate in constant currency, including the contribution of a 53rd week in the fiscal period (consensus +4%, as reported). Adjusted segment operating profit also is expected to grow at a mid single-digit rate in constant currency. Benefit of the extra fiscal week will be reinvested to support increased advertising and digital media initiatives, along with project expenses related to several key fiscal 2016 product launches.
- Adj. diluted EPS is expected to grow at a high single digit rate in constant currency (consensus +10% to $3.10). At current exchange rates, the co estimates a 3-cent headwind from currency translation in 2015.
- "Our Number One objective in the new fiscal year is to accelerate our topline growth," Powell said. "Our fiscal 2015 plans include a strong new-product lineup, compelling news or renovation on many existing brands, and a full slate of consumer-focused marketing initiatives. In addition, supply chain cost-savings from our ongoing Holistic Margin Management (HMM) program are expected to exceed $400 million in 2015. We anticipate these savings will offset input cost inflation, which we estimate at 3 percent for the new year.
- General Mills said it has begun a formal review of its North American manufacturing and distribution network with the goals of streamlining operations and identifying potential capacity reductions. The company also has initiated efforts focused on further reducing overhead costs. Together, the new cost-reduction initiatives are targeted to generate savings of $40 million pretax in fiscal 2015, with additional savings expected in fiscal 2016. The company plans to announce further details in the coming months as specific actions are determined.