US packaged-food major General Mills has told analysts that most of its pricing actions have been taken as consumer resistance to such moves increases.

But it warned that there may be circumstances where hikes are still necessary.

Speaking to analysts after the release of its full-year 2023 and Q4, 2023 results yesterday (28 June), CEO Jeff Harmening said: “When it comes to pricing, we’re not going to comment specifically on forward-looking pricing. Having said that, we did say that the majority is in the marketplace already. That is true.”

He added: “We feel good about what we see right now with our pricing and the inflationary environment that we see, but we all know these things can change over time. And so, we think we have most of what we need in the marketplace already, but there may be a category where we need a little bit more, [or] maybe a geography where we need a little bit more because the inflationary prices are different.”

On increasing resistance to price increases from cash-strapped consumers, Harmening said: “As you look at the last 12 weeks, it’s pretty clear that elasticity – volume elasticities – have increased.

He added: “We would anticipate as the year goes on that elasticities will increase, and that’s what we have seen. And so, I want you to know, we’re not too surprised by the last quarter’s trend, and it’s anticipated in our guidance.”

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Volumes were down 6% in Q4 and 8% over the year.

Harmening told analysts he sees that picture improving. “I’m confident that our pounds will be better in fiscal ’24 than they were in fiscal ’23, which is to say they’ll certainly decline less. Whether they get to positive or not, we’ll see,” he said.

For the year to 28 May, the Haagen-Dazs ice cream and Cheerios cereal brand owner reported net sales of $20.1bn, 6% up year-on-year. Adjusted operating profit of $3.4bn was an increase of 8%.

In Q4, sales of $5bn were up 3% while adjusted operating profit was flat at $889m.

For FY2024, the Betty Crocker manufacturer is predicting net sales will increase by 3% to 4% and adjusted operating profit to rise by 4% to 6%, figures largely below analysts’ estimates.

General Mills CFO Kofi Bruce commented: “The interaction of frankly all of the interest rate environment and the expectation of potential economic slowdown on consumer behaviour is certainly a variable that’s very front and centre for us as we set the guidance.”

Reporting the results, Harmening said: “We delivered excellent results in fiscal 2023, including generating double-digit growth in organic net sales and constant-currency adjusted diluted EPS and exceeding $20bn in annual net sales for the first time in our company’s history.

“Led by our ‘accelerate’ strategy, our team successfully navigated a highly dynamic operating environment with agility, focus, and resilience.

“As we turn to fiscal 2024, we’ll lean on these same traits to continue to succeed in an evolving business landscape. We’ll focus on continuing to compete effectively, driving efficiency in our operations, and maintaining our disciplined approach to capital allocation.”

He added: “We’ll continue to invest for growth while we continue to drive higher levels of productivity, which you saw in our release and while supply chain disruptions get less, which, again, allow us to drive gross margin, which creates a really good fly-wheel for growth.”

Last month, General Mills said it is to shut a pet-food factory in the US by the end of the year.

The Blue Buffalo brand owner said it is to close its plant in Independence, Iowa, “in direct support of our pet supply chain strategy, which supports the long-term growth of our business”.

Speaking to analysts about its pet-food operations yesterday, Harmening said: “We had a rough start to the first half of the year. There’s no question about that. And the primary driver of that was lack of capacity.

“What I feel very good about in our pet business is that we’ve rebounded, and our service levels are back in the 90s. The pet team worked very hard to get there. It’s more expensive than we would like because we have to go outside for external supply chain, but we’ve rebuilt our capacity. So, that’s not a concern going forward.”

Reflecting on the overall results, analyst John Baumgartner of Mizuho Securities described it as a “solid performance” but said “de-load and macro headwinds are uncertainties”.

But he added: “Underlying positives are numerous – supply chain stabilising (level of disruption at pre-pandemic levels and US customer service now low-90% vs. FQ3’s 90% and FQ1’s mid-80%), persistent but moderating inflation supports rational pricing/enables productivity savings to ramp [and] more normalised operating environment increases opportunities.”