[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 23, 2016 / Active Wall St. announces its post-earnings coverage on General Mills, Inc. (NYSE: GIS). The company reported its fiscal first quarter 2017 financial results on September 21st, 2016. The company reported a drop in quarterly net sales for the fifth consecutive quarter, citing declining yogurt sales and Progresso soup and the sale of its Green Giant frozen vegetable business. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the quarter ended August 28th, 2016, General Mills reported earnings of $409 million, or $0.67 per share, down from $426.6 million, or $0.69 per share, a year earlier. Adjusted for certain restructuring and non-recurring costs, earnings came in at $0.78 per share, which was above analysts' expectations of $0.75 per share.
The company, which makes Yoplait yogurt, reported that total net sales declined 7.1% to $3.9 billion in Q1 FY17. The company said this was "due to lower organic net sales, the divestiture of the North American Green Giant business, and the impact of foreign exchange." On a constant currency basis, earnings also dipped 1% due to lower year-over-year sales.
Organically, excluding currency and acquisitions/divesture, sales were down 4%. Price/mix improved 2 percentage points whereas volumes declined 8 percentage points. Foreign exchange headwinds dragged revenues by 1 percentage point.
Segment Details
During Q1 FY17, General Mills' revenues from the U.S. Retail segment declined 8% on y-o-y to $2.33 billion, including a 5% drop in comparable sales. Volumes declined 12 percentage points, while price/mix added 4 percentage points to revenues.
Revenue from the company's International segment dropped 6% y-o-y to $1.13 billion on foreign exchange impact. While volumes declined 4 percentage points and foreign exchange headwinds dragged revenues by another 4 percentage points, price/mix added 2 percentage points to revenues in the quarter. On a y-o-y basis, revenue from General Mills' Convenience Stores and Foodservice segment's revenues tumbled 7% to $446 million owing to market index pricing on bakery flour, partially neutralized by increases for the yogurt, biscuits, and cereal platforms.
Margins Decline
For Q1 FY17, General Mills' adjusted gross margin declined 30 basis points (bps) to 37.4% as lower pricing and higher input cost inflation offset savings from cost reduction activities. Adjusted operating profit slumped 6% to $646 million. Adjusted operating margin, however, increased 80 bps to 19.2%.
Outlook
For FY17, sales are expected to be flat to down 2% in FY 2017. Adjusted earnings are expected to increase in the range of 6 to 8% compared to FY 2016. Adjusted operating profit margin is expected to increase by approximately 150 bps. The company has maintained its guidance for cost savings initiatives. It now projects to generate savings of $600 million by FY18, up from the previous target of $500 million.
Stock Performance
General Mills' share price finished yesterday's trading session at $65.06, slightly sliding 0.31%. A total volume of 4.14 million shares exchanged hands, which was higher than the 3 months average volume of 3.64 million shares. The stock has advanced 7.51% and 16.72% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the company has surged 15.30%. The stock is trading at a PE ratio of 23.46 and has a dividend yield of 2.95%.
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SOURCE: Active Wall Street
