General Mills (GIS, Financial) released its fiscal first-quarter 2021 results before the market opened on Sept. 23. The maker of Cheerios and other cereal products posted strong results, with earnings and revenue surpassing analysts' projections thanks to strong demand for at-home foods.
Performance at a glance
The Minneapolis-based company posted first quarter adjusted earnings per share of $1, which was more than the $0.79 reported in the prior-year quarter. Revenue of $4.36 billion was up 9% on a year-over-year basis. Analysts had predicted EPS of $0.87 on $4.18 billion in revenue.
Organic sales rose 10% in the reported quarter as weakness in the Convenience Stores and Foodservice segment was offset by solid growth in the North America Retail, Pet and Europe and Australia segments.
Chairman and CEO Jeff Harmening commented the following:
"We continued to drive exceptional results this quarter, highlighted by broad-based market share gains amid elevated at-home food demand due to the COVID-19 pandemic. The fundamentals of our business are strong. We're investing in our brands, executing with speed and agility, and maintaining our focus on the health and safety of our employees and our consumers. And, importantly, we're resuming dividend growth sooner than initially planned. I'm more confident than ever that General Mills is poised to emerge from the pandemic a stronger company and in a position to generate consistent, profitable growth and top-tier returns for our shareholders."
Segment results
In the North America Retail segment, net sales surged 14% to $2.71 billion, largely due to robust demand for at-home food during the pandemic. Sales increased 31% for U.S. Meals and Baking, 10% for U.S. cereal, 3% for Canada and 5% for U.S. Yogurt. By contrast, net sales for U.S. snacks slipped 2%. Segment operating profit totalled $695 million, reflecting a growth of 24% year-over-year.
The pet segment recorded $392 million in revenue, up 6% year-over-year. General Mills cited robust volume growth, which was partly negated by unfavourable net price realization and mix. Operating profit in the division rose 12% to $90 million.
Sales in the Convenience Stores and Foodservice business plunged 12% to $392 million, driven primarily by reduction in the away-from-home food demand resulting from the pandemic. The operating profit was $70 million, down 24% from the prior-year quarter.
Net sales in the Europe and Australia segment climbed 8% to $491 million owing to strong demand for at-home food. Organic sales soared 7%. Operating profit of $53 million rose from $28 million reported last year owing to sales growth in away-from-home channels coupled with double digit net sales growth in Old EI Paso Mexican food and Betty Crocker dessert mixes.
In Asia and Latin America, net sales of $383 million were up 12% due to higher away-from-home food demand, which was partially offset by adverse foreign currency exchange rates. Organic net sales climbed 17% as compared with the year-ago results. The company reported an operating profit of $20 million in the segment.
Guidance
For full-year fiscal 2021, the company did not provide any guidance figures. However, the company said that demand for packaged food is expected to continue to be higher than the pre-Covid level, which would favourably impact its results.
Disclosure: I do not hold any positions in the stocks mentioned.
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