General Mills beat first-quarter sales and profit estimates on Wednesday and reaffirmed its annual forecast, as price increases and resilient demand for at-home food helped partially offset higher input costs.
Consumers facing persistently high inflation have been increasingly opting to eat at home, supporting demand of pantry staples and packaged foods.
The Cheerios maker’s sales fell three per cent to US$4.39 billion for the quarter ended August 30, compared with the average of analysts’ estimate of $4.35 billion, according to data compiled by LSEG. However, organic sales were flat for the quarter.
The company said it remains on track to generate at least $750 million in savings this year through its cost-cutting actions as high input costs weigh on the company’s margins.
General Mills’ adjusted gross margin fell 90 basis points to 33.3 per cent of net sales, hurt by higher input costs.
The Pillsbury maker, like several packaged food and beverage companies, has been raising prices to make up for a rise in raw-material costs due to US import tariffs, especially of metals like aluminum and steel that are used for packaging.
General Mills’ North America Retail segment, its largest business that generates more than half of its total revenue, reported a seven per cent decline in sales, compared with a 13 per cent drop a year-ago.
“While most of NAR’s priority businesses delivered improved market share trends in Q1, some are not yet back to absolute share growth, and we’re focused on improving this trajectory,” CFO Dana McNabb said in prepared remarks.
International sales rose four per cent, driven by growth in distributor markets as well as India and China.
Adjusted profit fell 13 per cent to 75 cents per share, but topped analysts’ estimates of 72 cents.
General Mills also reaffirmed its fiscal 2027 outlook, forecasting organic net sales to range from down 1.5 per cent to up 0.5 per cent and adjusted earnings of $3.00 to $3.20 per share.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Leroy Leo)
