Food company General Mills, Inc (NYSE: GIS), the maker popular brands like Cheerios and Natural Valley, reported fourth-quarter earnings that surpassed wall street expectations. Earnings, adjusted for one-time items, grew 6% to 83 cents per share, versus the Wall Street prediction of 77 cents per share.
Revenue grew 7% to $4.16 billion, driven primarily by the addition of Blue Buffalo, even as the street was expecting $4.24 billion. Organic net sales declined 1 percent, reflecting lower contributions from organic volume.
GIS shares fell over 3% during pre-market trading on the topline miss. General Mills shares have maintained an upward trajectory since December last year – when it plunged to the lowest level in six years – gaining about 45% during this period.
Adjusted gross margin declined 50 basis points to 35.3%, driven by higher input costs.
Cost escalation continues to be a concern as far as margins are concerned and the trend is expected to continue throughout this year, with the main contributors being the high costs of packaging, shipment, and raw materials.
Outlook
For fiscal 2020, General Mills expects a 1-2% increase in organic net sales, while constant-currency adjusted EPS is expected to grow 3-5% from the base of $3.22 earned in fiscal 2019.
Among the other food companies, Kraft Heinz (KHC) has delayed the release of its first-quarter results pursuant to an investigation into its procurement practices. Based on an SEC notification, the company recently restated the financial reports for a period of more than two years to rectify certain errors.
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