General Mills Q3 Operating Profit Falls Well Short Of Its Expectations

(RTTNews) - General Mills (GIS) reported third-quarter operating profit of $593 million, up 9 percent from last year due to lower restructuring, impairment, and other exit costs. Total segment operating profit was $628 million, down 6 percent in constant currency. Adjusted EPS totaled $0.79 in the third quarter, up 10 percent from the prior year. Constant-currency adjusted EPS increased 8 percent, reflecting lower taxes and average diluted shares outstanding in the quarter.

Third-quarter reported net sales increased 2 percent to $3.88 billion. Organic net sales increased 1 percent.

For fiscal 2018, the company expects constant-currency adjusted EPS to range between flat and up 1 percent from the base of $3.08 earned in fiscal 2017, compared to the previous guidance of a 3 to 4 percent increase. The company now estimates currency translation will be a 3 cent benefit to fiscal 2018 adjusted EPS. Constant-currency total segment operating profit is now expected to decline 5 to 6 percent, compared to the previous expectation of a range between down 1 percent and flat. Organic net sales are expected to be in line with last year, which is unchanged from previous guidance.

General Mills CEO Jeff Harmening said: "Our third-quarter operating profit fell well short of our expectations, and cost pressures are impacting our full-year outlook."

The company said it has taken actions to improve profitability in the near term, and has launched initiatives that will reduce long-term cost structure. Initiatives that will have a near-term impact include: various actions to mitigate rising freight costs; increasingly tight control of all expenditures in the balance of fiscal 2018; and targeted strategic revenue management actions to improve net price realization. The company said the specific actions will vary across categories and geographies, with benefits being realized beginning in the fourth quarter of fiscal 2018.

"While these actions will only partially offset the cost headwinds in fiscal 2018, we are confident they will strengthen our bottom-line results beginning in fiscal 2019," said Jeff Harmening.