CAGNY: General Mills "establishing base for global growth"
O'Leary sees scope for global expansion
US cereal-to-yoghurt group General Mills claimed today (19 February) it has established a platform to drive growth worldwide.
Speaking at the Consumer Analyst Group of New York annual investor conference, chairman and CEO Ken Powell revealed the firm is focused on driving growth in five global categories: ready-to-eat cereal, yoghurt, wholesome snack bars, ice cream and convenient meals. The five categories generate 70% of General Mills' international sales.
"Outside the US we have taken significant steps to create a stronger and broader base for growth," Powell told analysts. "We have invested to establish a base for growth in three key regions."
In China, General Mills expects to generate revenues of US$600m in 2013, increasing to $900m by 2015. In Brazil, last year's acquisition of Yoki has provided General Mills with "leading brands" and a "nationwide reach", Powell claimed. The General Mills chief acknowledged the company's business in India was "quite small today" but he added: "It is a base we can build on."
Chris O'Leary, who leads General Mills' international businesses, said its operations outside the US were well-positioned to drive sustained growth and has set its sights on sales of more than $5bn by 2015. In General Mills' 2012 financial year, its sales outside the US were $4.2bn.
"We compete in great categories, we are increasing scale in developed and emerging markets, we see great scope for cost savings ahead," he said.
According to O'Leary, recent acquisitions have boosted General Mills' international sales. Through M&A, he said General Mills has "gained infrastructure and scale in key emerging markets". However, he added: "The growth from our base business has been the real story." Excluding acquisitions, international sales have grown in the high single digits over the last five years, he said.
After a period of "significant investment" in acquisitions in recent years, management revealed it now expects its level of M&A to normalise. "As we look forward there are still areas of interest to us... India for example, but we don't see anything big on the horizon."
O'Leary said General Mills has "looked at" expanding its business by introducing existing brands into new markets - Yoplait into Brazil, China or India for instance - but added that there was "no news" on this front.
"The way we are going to continue to grow international is by investing in the categories that we already complete in on the markets where we are at - because we believe that there is so much opportunity there."
Higher LIFO charges and sales depressed by lower prices have hit first-quarter profits at US canned fruit and veg firm Seneca Foods....
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