General Mills expects its net sales to fall by up to 3% on an organic basis in the US group’s new financial year.
The Old El Paso meals and Nature Valley bars owner sees its organic sales declining 1-3% in its 2022 fiscal year, as its sales channels recalibrate after the swings seen in the early months of the Covid-19 pandemic.
In a statement alongside the publications of its results for the year to 30 May, General Mills said it “expects at-home food demand will decline” in its new fiscal year “across most of its core markets, though will remain above pre-pandemic levels”.
The company added: “Conversely, away-from-home food demand is expected to continue to recover in fiscal 2022, though not fully to pre-pandemic levels. With roughly 85% of the company’s net sales representing at-home food occasions, these dynamics are expected to result in lower aggregate consumer demand in the company’s categories in fiscal 2022 compared to fiscal 2021 levels.”
Inflation is the other factor General Mills expects to affect its performance in the new financial year.
The Cheerios breakfast cereal maker sees its input cost inflation being around 7% of its cost of goods sold in fiscal 2022.
It told investors it was taking action, bringing in price increases and looking for cost savings worth around 4% of its cost of goods sold.
Nevertheless, General Mills expects its constant-currency, adjusted operating profit to fall by 2-4% from the base of US$3.2bn the company made in fiscal 2021.
The group also forecast its constant-currency, adjusted, diluted earnings per share would be in a range of flat year-on-year to down 2%.
General Mills sought to emphasise the comparisons of these forecasts with its results in its 2019 fiscal period, the last full financial year before the pandemic.
It said the mid-point of its forecast declines for organic net sales and constant-currency, adjusted operating profit both represented 2% increases against those metrics in that 2019 financial year. A 1% fall in constant-currency, adjusted, diluted earnings per share in fiscal 2022 would see General Mills be 5% up against that metric in its 2019 financial year.
Looking at the company’s results for the financial year just closed, its net sales rose 3% to US$18.13bn. On an organic basis, net sales were up 4%.
Operating profit climbed 6% to $3.15bn, with net earnings attributable to General Mills was up 7% at $2.34bn.
In the final quarter of the year, net sales dropped 10%, with General Mills lapping the March to May period of 2020, when stockpiling peaked.
Operating profit was down 34% at $547.9m. Net earnings attributable to General Mills fell 33% $416.8m.