Shares in General Mills slid today (17 September) after the US food group reported a 25% drop in first-quarter profits.
Net earnings for the quarter to 24 August fell 24.8% to US$345.2m on the back of a continued decline in US sales. Adjusted diluted earnings per share fell 13% to $0.61. Operating profit was down 24.1% at $557.5m.
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Net sales at the Old El Paso and Green Giant maker decreased 2.4% to $4.27bn. General Mills’ top line was affected by foreign exchange but even on a constant-currency basis its sales were down, dropping 1%.
General Mills’ US retail business, which accounts for 60% of annual net sales and three-quarters of EBIT, saw net sales slide 5%, with sales volumes falling 2%.
Price hikes and the effect of sales mix helped General Mills’ international operations, where sales were up 2%.
“Back in June, we said our 2015 plans anticipated first-quarter EPS below year-ago levels,” chairman and CEO Ken Powell said. “Our results were driven by sales and profit declines in the U.S., where industry trends were weak in the quarter. In addition, higher merchandising expense for our US retail businesses in this period depressed reported net sales and gross margin.”
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By GlobalDataHowever, the results missed Wall Street expectations and General Mills’ shares were down 2.84% at $51.66.
