General Mills Misses Q2 Estimates, Organic Sales Down 4%; Lowers Sales Target

(RTTNews) - General Mills (GIS) reported that adjusted EPS totaled $0.85 in the second quarter, up 4 percent from the prior year. Constant-currency adjusted EPS increased 5 percent. On average, 16 analysts polled by Thomson Reuters expected the company to report profit per share of $0.86, for the quarter. Analysts' estimates typically exclude special items. Total segment operating profit was $830 million, down 1 percent. Total segment operating profit essentially matched year-ago results in constant currency.

Second-quarter reported net sales declined 7 percent to $4.11 billion due to lower organic net sales and the divestiture of the North American Green Giant business. Organic net sales declined 4 percent, with volume reductions in the U.S. Retail and International segments partially offset by benefits from positive net price realization and mix. Analysts expected revenue of $4.23 billion, for the quarter.

General Mills Chairman and CEO Ken Powell, said: "Our organic sales declines reflect the actions we've taken to optimize our spending and prioritize profitable volume, as well as weakening food-industry trends in the U.S. We're making targeted adjustments to our plans in the second half to improve our topline performance while still delivering our margin expansion and EPS growth commitments."

General Mills updated its key fiscal 2017 targets. The company now expects organic net sales growth to decline between 3 and 4 percent, below the previous range of flat to down 2 percent. Constant-currency total segment operating profit is now expected to increase 2 to 4 percent, reduced from previous guidance of 6 to 8 percent growth due to lower sales expectations.

For fiscal 2017, General Mills maintained its targets for adjusted operating profit margin expansion of approximately 150 basis points and constant-currency adjusted EPS growth of 6 to 8 percent from the base of $2.92 earned in fiscal 2016. The company now expects free cash flow to increase at a high single-digit rate, up from previous guidance of mid single-digit growth driven by accelerated progress on core worin pre marketking capital management.

Shares of General Mills were down more than 4% in pre-market trade on Tuesday.