Foodmakers General Mills and Mondelez reaffirm 2019 outlooks
General Mills and Mondelez have both stuck to their full-year financial forecasts, with both foodmakers pointing to the fruits of recent strategic plans that have been introduced there.
The two companies, like others in the food & beverage industry, are scrambling to reinvent themselves as consumer tastes shift towards more health-conscious snacks. They both raised prices within the past year for their North American products in an effort to claw back rising costs for raw commodities and freight.
The pair separately reaffirmed their targets at the Consumer Analyst Group of New York conference on Tuesday, but investors appeared nonplussed and pushed shares in the two companies lower in morning trade.
Mondelez, the maker of Cadbury chocolates and Oreo cookies, said it expected organic revenue, which strips out the impact of acquisitions and divestitures, to increase by “3 per cent plus” in 2019. That is slightly more optimistic than the forecast accompanying its 2018 results at the end of January for organic revenue growth of between 2 per cent and 3 per cent.
The company said it expected adjusted earnings per share at constant currency to increase in the high-single digit percentage, which compares with its January prediction for 3 per cent to 5 per cent growth. Foreign exchange effects would decrease net revenue by 3 per cent, Mondelez said, or a 7 cent a share impact on adjusted earnings.
Mondelez had adjusted earnings of $2.43 a share in 2018, and analysts polled by Refinitiv expect that to rise 2 per cent to $2.48 this year.
The company also said it expected free cash flow in 2019 of $3bn, a $200m increase on its previous estimate.
“I’m encouraged by early results as we implement our new strategy, which enabled us to meet or exceed our financial commitments in 2018,” Dirk Van de Put, chief executive, said in a statement. “We have entered 2019 with strong momentum, a new commercial structure that is closer to the consumer and clear investment priorities to accelerate growth.”
General Mills reaffirmed its suite of forecasts, including organic net sales being flat to up 1 per cent and currency-adjusted diluted earnings per share expected to be flat to down 3 per cent. It reiterated that currency translation effects might shave 1 to 2 percentage points from net sales growth in fiscal 2019, but “is not expected to have a material impact on full-year adjusted operating profit or adjusted diluted EPS.”
The company said it was competing effectively through consumer marketing and in stores, as well as accelerating growth across its major product categories including Häagen-Dazs ice cream, snack bars, Old El Paso Mexican food, and its portfolio of natural and organic food brands. “Growth-enhancing acquisitions”, namely that of upscale pet foodmaker Blue Buffalo last year, are also tilting it towards fast-growing segments, General Mills said.
Mondelez shares were down 0.6 per cent, while those in General Mills were off 0.3 per cent, versus a 0.1 per cent decline for the benchmark S&P 500.
*FDA ISSUES WARNING ON PLASMA INFUSIONS TO WARD OFF AGING
Gapping down
In reaction to disappointing earnings/guidance:
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Analyst comments:
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