General Mills Q2 Profit Misses Estimates; Revises 2016 Growth Targets

(RTTNews) - General Mills (GIS) reported that its second-quarter adjusted earnings per share totaled 82 cents, up 2 percent from prior year. On a constant-currency basis, adjusted EPS increased 5 percent. On average, 15 analysts polled by Thomson Reuters expected the company to report profit per share of $0.83 for the quarter. Analysts' estimates typically exclude special items.

For the second-quarter, net earnings attributable to General Mills was $529.5 million or $0.87 per share compared to $346.1 million or $0.56 per share, last year. The company recorded a $199 million gain in the second quarter from the sale of the Green Giant business. Total segment operating profit declined 1 percent to $839 million. On a constant-currency basis, total segment operating profit increased 2 percent.

Net sales for the 13 weeks ended November 29, 2015, declined 6 percent to $4.42 billion. Foreign currency exchange reduced net sales growth by 4 percentage points. Analysts expected revenue of $4.61 billion for the quarter.

General Mills Chairman and CEO Ken Powell said, "Constant-currency net sales declined modestly in the quarter, due in part to the divestiture of our North American Green Giant business. Our adjusted gross margin increased for the third consecutive quarter, which, combined with our continued cost savings efforts, helped drive mid single-digit constant-currency growth in adjusted EPS."

In the first half of fiscal 2016, General Mills announced incremental actions related to Project Century in North America and in Europe region. The company now is targeting $450 million in cumulative cost savings by fiscal 2017 and $500 million by fiscal 2018 from the combination of Project Century, Project Catalyst, Project Compass, and our policies and practices update, including zero-based budgeting.

General Mills revised its 2016 full-year growth targets to reflect the impact of the Green Giant divestiture. The company now expects: net sales in constant currency to decline at a low single-digit rate from the 2015 levels that included a 53rd week; total segment operating profit to essentially match last year's levels in constant currency; and constant-currency adjusted EPS to grow at a low single-digit rate from the base of $2.86 earned in fiscal 2015.