General Mills Inc. (GIS – Analyst Report) reported soft second-quarter fiscal 2016 results, missing the Zacks Consensus Estimate for sales and only managing to deliver in-line earnings.
Moreover, the company lowered the previously issued sales and earnings outlook for fiscal 2016 to account for the Green Giant business divesture. Shares declined 1.8% in pre-market trading.
General Mills divested its Green Giant and Le Sueur brands of frozen and shelf-stable vegetables to food manufacturer, B&G Foods, Inc. (BGS – Snapshot Report), in November.
Earnings Discussion
Second-quarter adjusted earnings per share of 82 cents were in line with the Zacks Consensus Estimate but rose 2% year over year. A stronger U.S. dollar hurt earnings by 6%. On a constant currency basis, earnings improved 5%.
Cost savings from restructuring activities and lower advertising costs offset the slump in revenues to result in a positive EPS growth for the maker of Betty Crocker cake mixes and Progresso soups.
Adjusted earnings exclude mark-to-market valuation effects, restructuring and project-related charges and a divesture gain. Including these items, reported earnings were 87 cents per share, a 55% year-over-year jump.
General Mills is currently pursuing several multi-year restructuring initiatives including job cuts and factory closings to generate cost savings and support key growth strategies. The company expects to record cost savings of $450 million by fiscal 2017 (previously $400 million) and $500 million by fiscal 2015.
General Mills Inc. – Earnings Surprise | FindTheBest
Revenues and Margins
Total revenue declined 6% year over year to $4.42 billion due to lower volumes, currency headwinds and brand divestures. The top line missed the Zacks Consensus Estimate of $4.58 billion by 3.3%. Foreign exchange headwinds dragged revenues by 4%.
In constant currency terms, sales declined 2% as a decent international performance offset the weak sales result in the core U.S. retail segment.
Leave A Comment