General Mills Publishes 1st-Quarter Results
Shares of General Mills Inc. (NYSE:GIS) were down 0.91% to $54.53 at close on Wednesday despite beating estimates on first-quarter fiscal 2020 GAAP earnings per share by 8 cents.
The Minneapolis-based manufacturer and marketer of branded consumer foods worldwide posted GAAP earnings per diluted share of 85 cents, up 30.8% from the year-ago quarter. Revenue was $4 billion, reflecting 2.2% deterioration year-over-year. Revenue fell $80 million short of expectations.
Organic net sales decreased 1% due to lower organic sales volume.
In the quarter, General Mills reported sales declines in Convenience Stores & Foodservice, Europe & Australia and Asia & Latin America segments as a result of lower volumes.
The North America Retail segment was flat. In contrast, the pet segment gained 7% thanks to favorable net price realization and mix as well as volume growth.
"We are making clear progress in becoming a nimbler, more consumer-connected General Mills," Chairman and CEO Jeff Harmening said. "Our first-quarter net sales performance included encouraging improvement in North America Retail and strong growth in Pet, driven by good innovation and effective brand-building investment. We got off to a slower start in our other segments, and we're taking actions to drive topline improvement for those segments and the company starting in the second quarter."
Further, General Mills recorded a 160-basis-point expansion in adjusted gross margin of 35.2% and a 130-basis-point improvement in adjusted operating profit margin of 17%. Helped by higher operating income and lower fiscal and financial burden, attributable net earnings went up 33% to $521 million.
Looking ahead to full fiscal 2020, the company projects 1-2% growth in organic net sales and about 1% growth in net sales. On a constant currency basis, adjusted operating margin is anticipated to increase approximately 2-4% and adjusted earnings per share to range between $3.32 and $3.38 versus the average estimate of $3.36. In addition, General Mills expects to make 95% in free cash flow out of adjusted after-tax earnings in full fiscal 2020.
The balance sheet had $505 million in cash on hand and $1.7 billion in total inventories as of Aug. 25. Debt totaled $13 billion and total equity was worth $7.7 billion.
On Aug. 1, General Mills paid a 49-cent cash quarterly dividend per common share to its shareholders, generating 3.56% forward dividend yield according to the share price at close on Wednesday. The industry has a median of 2.26% for forward dividend yield, and the S&P 500 index yields 1.87% as of Wednesday.
The share price rose 40% so far this year for a market capitalization of $32.91 billion.
The 52-week range is $36.42 to $56.4.
Wall Street recommends holding shares of General Mills Inc. The average target price is $54.31.
Disclosure: I have no positions in any securities mentioned.
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