Earnings beat, sales in-line
Segment performance
In Q1, General Mills saw sales decline 2% YoY in its North America Retail segment and 1% in its North America Pet segment. Sales for the North America Foodservice segment and International segment remained flat versus last year.
Within Retail, sales declined in US Snacks and US Morning Foods. However, volumes in the US retail categories benefited from shifts in consumer behavior, as value-seeking customers opted for more at-home meal options than dining out. Within Pet, sales declined for pet treats and wet pet food, while in dry pet food, it remained flat.
In Foodservice, GIS saw growth and market share gains on cereals, biscuits, and frozen baked goods in away-from-home channels such as schools, colleges, and healthcare. In International, the company recorded market share growth in Europe and Australia, but continued to face headwinds in China.
Yogurt business divestiture
General Mills is selling its North American yogurt business to French dairy companies Lactalis and Sodiaal for $2.1 billion, with Lactalis acquiring the US business and Sodiaal acquiring the Canadian business. The deal is expected to close in calendar 2025, and is anticipated to be approx. 3% dilutive to adjusted EPS in the first 12 months after the close. The divestiture is expected to help drive growth and improve margins and allow GIS to focus on areas where it can drive more profitable growth.
Reaffirms outlook
General Mills anticipates that consumers across its core markets will continue to face macroeconomic uncertainty in fiscal year 2025. Even so, the company expects a gradual improvement in category volume trends during the year. Full-year category dollar growth is expected to be below GIS’ long-term growth projections.
General Mills reaffirmed its outlook for fiscal year 2025. The company expects organic sales to be flat to up 1% for the year. Adjusted EPS is expected to be down 1% to up 1% in constant currency. Adjusted operating profit is expected to be down 2% to flat in constant currency.