General Mills sales miss estimates on weak U.S. demand, strong dollar

Net income attributable to General Mills rose 53 per cent to $529.5-million (U.S.), or 87 cents per share, in the quarter ended November 29, helped by cost cuts.

The company posted $2.76 billion in United States retail net sales, which shows a 4% year-over-year (YoY) decline, while worldwide net sales dropped 12% YoY to $1.16 billion.

General Mills stock has been consolidating since early August, trading in a narrow range.

USA sales accounted for 62.4 percent of the company’s sales in the quarter. The company’s divestiture of its Green Giant business to B&G Foods (NYSE:BGS) in November for $823 million also cut revenue.

General Mills said that it’s still on target to meet targets it set at the start of the fiscal year when adjusting for the sale of its Green Giant brand.

General Mills cereal sales are still up 1% year to date, however, and according to CFO Don Mulligan, they remain on track to increase during the full fiscal year, which ends in May. In January, General Mills’ Reese’s Puffs and Trix cereals will hit the market free of artificial ingredients and flavors, and supported by a good bit of marketing.

Last quarter, the company broadened the program to find ways to streamline outside of North America, and Thursday said its plans include closing its manufacturing facility in Berwick, England, and another in East Tamaki, New Zealand.

General Mills had earlier said it expected sales to stay flat in 2016. General Mills and other big US cereal makers are wrestling with a prolonged slump in USA demand for cold cereal.

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