General Mills booked a steep decline in second-quarter earnings due to restructuring costs and lower sales.
The company said operating profit fell 35.8% to US$559m in the three months to 24 November. Restructuring costs rose to $214.6m, compared to $700,000 in the year ago period. General Mills has embarked on a cost-cutting drive that has seen it place production plants under review and slash jobs.
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Net profit attributable to General Mills was down 37.1% to $346.1m in the quarter.
General Mills also witnessed ongoing soft sales trends, with revenue down 3.4% to $4.7bn. CEO and chairman Ken Powell said the company’s top line has been hit by issues facing the food sector as a whole. “Net sales declined for the quarter as anticipated, reflecting continued weak food-industry trends in the US and slowing growth in key emerging markets,” Powell said.
Last month, General Mills cut its full-year sales and earnings forecasts. The company said operating profit for the financial year ending in May, excluding the impact of currency exchange, is expected to see a low single-digit decline from last year’s level of US$3.15bn. Powell said the second quarter result meant the group was on-track to meet these expectations.
Click here for coverage of General Mills’ results conference call, in which the company outlined improving market share in some key categories in the US.
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