Earnings 2016
Sep 22, 2015 • By

General Mills reports first quarter fiscal 2016 results

This morning, General Mills released earnings results for the first quarter of fiscal 2016. The full financial results are detailed in this press release.

A quick overview of the quarter is summarized in this infographic on a constant-currency basis:

Perf-FY16Q1-summary

“We’re pleased with our progress in the first quarter,” said General Mills Chairman and CEO Ken Powell. “At the same time, we know there is more work to be done to achieve our 2016 objectives.”

Ken was joined on a webcast to financial analysts, summarizing the company’s performance this quarter, by Chief Financial Officer Don Mulligan and Shawn O’Grady, senior vice president, and president, Sales and Channel Development.

Here are the key takeaways from this morning’s call:

Ken Powell: In cereal, we’re encouraged by recent trends in the category.

“We believe product renovation and innovation are two keys to restoring the cereal category to growth, and we’ve been doing our part with many of our recent launches,” said Ken.

Product Renovation

Ken said that consumer response to the new Gluten-Free Cheerios has been positive. Also, Nature Valley Protein granola and Cascadian Farm cereals are both benefiting from the increased interest in granola.

And Nature Valley is expanding its presence in the cereal aisle with new Soft-baked Granola Bites and Toasted Oat Muesli introduced this summer, with more to come, including new Baked Oat Bites and two varieties of Oat Clusters in early calendar year 2016.

Powell: We’re expecting another year of solid growth for our yogurt business.

In the first quarter, our U.S. Retail segment posted good retail sales growth for Yoplait Greek varieties, up 11 percent on the strength of Greek 100 Whips. And Yoplait Original drove 4 percent retail sales growth on reduced sugar messaging and positioning as an all-family snack.

Ken also said our Yoplait yogurt launch in China is off to a good start, with strong performance on Perle de Lait premium varieties.

And in the Convenience & Foodservice segment, Yoplait Greek varieties and Parfait Pro drove mid-single digit net sales growth for yogurt in the first quarter.

Shawn O’Grady: We’re working hard to drive growth for our natural and organic portfolio.

As sales works to increase distribution, Shawn said we are seeing continued good performance from our natural and organic brands. In the first quarter, retail sales across LÄRABAR nutrition bars, Food Should Taste Good savory snacks and Cascadian Farm granola bars were up a combined 13 percent in Nielsen-measured outlets.

Shawn noted that his sales team is focused on growing distribution on core Annie’s products, as well as expanding Annie’s into relatively-untapped channels, including Club, e-Commerce and Foodservice. And the company is leveraging its broad category expertise to help launch Annie’s into new categories like soup and yogurt.

In January, Annie’s will introduce organic yogurt. This three-flavor line will be made with real, organic fruit and whole milk for a creamy taste and texture with great kid and all-family appeal.

Annie's Organic Yogurt

Powell: International segment first-quarter net sales led by solid performance in developed markets.

Canada posted particularly strong performance on grain snacks as summer launches of Nature Valley Nut and Seed bars and Fiber One Crumble bars exceeded expectations. And in Europe, the launch of Häagen-Dazs premium stick bars in France was a success, as was the continued expansion of Old El Paso Stand ‘n Stuff taco shells.

However, Ken said that the company is seeing an impact on its categories due the economic slowdown in emerging markets.

Don Mulligan: We’re on track to deliver $400 million in cost of goods HMM savings.

Don mentioned we’re also making good progress on the company’s incremental cost savings initiatives, which remain on track to deliver between $285 and $310 million dollars in annual savings this fiscal year, and more than $400 million in fiscal 2017.

Don also said the company is reaffirming its full-year fiscal 2016 growth targets which currently exclude the impact of the proposed Green Giant divestiture.

“We expect net sales to be approximately flat in constant currency. Excluding the difference in weeks, we expect 2016 net sales to be up 1 percent in constant currency,” Don said. “We project our total segment operating profit will grow at a low single-digit rate. And we’re targeting a mid single-digit constant-currency growth in adjusted diluted earnings per share.”

If you missed today’s webcast, you can listen to a replay here.

Editor’s Note: This post contains non-GAAP financial information and forward looking statements regarding future results. Please see our press release dated September 22, 2015 for a reconciliation of these non-GAAP measures and for risk factors that could affect the results anticipated in these forward looking statements.

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