MINNEAPOLIS, Nov. 7, 2014 /PRNewswire/ -- General Mills (NYSE:
GIS) said today that in response to continued weak food-industry
trends in the U.S. and slowing growth in key emerging markets, the
company is reducing its sales and earnings expectations for the
fiscal year ending in May 2015.
General Mills fiscal 2015 net sales in constant currency are now
expected to grow at a low single-digit rate from the 2014 base of
$17.9 billion. This includes an
estimated 2 points of sales growth from the 53rd week in
fiscal 2015 and approximately $120
million of incremental sales from the Annie's organic and
natural food businesses acquired Oct. 21,
2014. Annie's will be consolidated into General Mills' 2015
results on a one-month lag basis.
Total segment operating profit in constant currency is expected
to decline at a low single-digit rate from prior-year results of
$3.15 billion. This includes
more than $400 million in cost of
goods savings from holistic margin management (HMM), along with
$40 million in savings from projects
initiated this year to streamline the company's North American
supply chain and further reduce overhead costs.
Fiscal 2015 adjusted diluted earnings per share are expected to
grow at a low single-digit rate in constant currency from the base
of $2.82 earned in fiscal 2014. This
includes an estimated contribution from Annie's of one cent per share. Adjusted diluted
earnings per share for the second quarter ending Nov. 23, 2014, are expected to be between
$0.75 and $0.77. This compares to
adjusted diluted EPS of $0.83 earned
in the prior year's second quarter.
Previously, General Mills had been targeting mid single-digit
constant-currency growth in net sales and segment operating profit,
and high single-digit constant-currency growth in adjusted diluted
EPS for fiscal 2015.
General Mills said that its International and Convenience Stores
& Foodservice operating segments remain on track to achieve
their full-year operating profit growth targets for fiscal
2015. The company's U.S. Retail operating segment is now
expected to show an operating profit decline for fiscal
2015. In Nielsen-measured U.S. retail outlets, General Mills
fiscal 2015 year-to-date (YTD) sales are growing in key categories
such as yogurt, grain snacks, fruit snacks and frozen pizza. The
company's YTD market shares are flat or up in categories
representing 75 percent of the company's sales volume in measured
outlets. Businesses posting market share increases include
cereal, yogurt, grain and fruit snacks, ready-to-serve soup, and
frozen pizza and hot snacks. General Mills' YTD composite
dollar share in measured outlets is 15 basis points below the
prior year, led by market share declines in frozen vegetables and
dessert mixes. The company is making tactical adjustments in
its marketing plans for these categories in response to competitive
activity.
Update on Recently Announced Cost Savings Initiatives
In June 2014, General Mills announced
the initiation of projects designed to generate cost savings and
fuel accelerated topline growth for the company. These
projects focus on streamlining the company's North American supply
chain network and reducing overhead costs. Together, these
initiatives are expected to generate $40
million in cost savings in fiscal 2015. The company
said today that by fiscal 2016, cumulative annual savings from
these efforts are expected to total between $260 and $280 million. Cumulative annual
savings in fiscal 2017 are expected to exceed 2016 levels.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are based on our current expectations and assumptions. In
particular, our predictions about future net sales and earnings
could be affected by a variety of factors, including: competitive
dynamics in the consumer foods industry and the markets for our
products, including new product introductions, advertising
activities, pricing actions, and promotional activities of our
competitors; economic conditions, including changes in inflation
rates, interest rates, tax rates, or the availability of capital;
product development and innovation; consumer acceptance of new
products and product improvements; consumer reaction to pricing
actions and changes in promotion levels; acquisitions or
dispositions of businesses or assets; changes in capital structure;
changes in the legal and regulatory environment, including labeling
and advertising regulations and litigation; impairments in the
carrying value of goodwill, other intangible assets, or other
long-lived assets, or changes in the useful lives of other
intangible assets; changes in accounting standards and the impact
of significant accounting estimates; product quality and safety
issues, including recalls and product liability; changes in
consumer demand for our products; effectiveness of advertising,
marketing, and promotional programs; changes in consumer behavior,
trends, and preferences, including weight loss trends; consumer
perception of health-related issues, including obesity;
consolidation in the retail environment; changes in purchasing and
inventory levels of significant customers; fluctuations in the cost
and availability of supply chain resources, including raw
materials, packaging, and energy; disruptions or inefficiencies in
the supply chain; volatility in the market value of derivatives
used to manage price risk for certain commodities; benefit plan
expenses due to changes in plan asset values and discount rates
used to determine plan liabilities; failure or breach of our
information technology systems; foreign economic conditions,
including currency rate fluctuations; and political unrest in
foreign markets and economic uncertainty due to terrorism or war.
The company undertakes no obligation to publicly revise any
forward-looking statement to reflect any future events or
circumstances.
We have included measures in this release that are not defined
by generally accepted accounting principles (GAAP). Total
segment operating profit and diluted EPS excluding certain items
affecting comparability are each reconciled in the tables below to
the relevant GAAP measure.
|
Fiscal
Year
|
|
2014
|
Operating
profit:
|
|
U.S. Retail
|
$
2,311.5
|
International
|
535.1
|
Convenience Stores
& Foodservice
|
307.3
|
Total segment
operating profit
|
3,153.9
|
Unallocated corporate
items
|
196.2
|
Divestiture
(gain)
|
(65.5)
|
Restructuring,
impairment, and other exit costs
|
3.6
|
Venezuela currency
devaluation
|
62.2
|
Operating
Profit
|
$
2,957.4
|
|
Quarter
Ended
|
Fiscal
Year
|
Per Share
Data
|
November 24,
2013
|
2014
|
Diluted earnings per
share, as reported
|
$
0.84
|
$
2.83
|
Mark-to-market
effects
|
(0.02)
|
(0.05)
|
Divestiture
(gain)
|
-
|
(0.06)
|
Restructuring
costs
|
0.01
|
0.01
|
Venezuela currency
devaluation
|
-
|
0.09
|
Diluted earnings per
share, excluding certain items affecting comparability
|
$
0.83
|
$
2.82
|
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SOURCE General Mills