General Mills' profit falls 14% on inflation woes, margin pressure

By Steve Gelsi

Stock rises as food giant sticks to forecast for full-year 2025 sales growth of flat to up 1%

General Mills Inc.'s stock rose Wednesday after the packaged-food giant beat Wall Street estimates for adjusted profit and revenue, although it said it continues to face inflation and pressure on margins.

The Minneapolis-based maker of Cheerios and Cinnamon Toast Crunch said its first-quarter net income dropped 14% to $579.9 million, or $1.03 a share, from $673.5 million, or $1.14 a share, in the year-ago quarter.

The company's adjusted profit of $1.07 a share beat the FactSet consensus estimate of $1.06 a share.

Sales fell 1% to $4.85 billion, ahead of the analyst estimate of $4.79 billion.

General Mills' stock (GIS) was up 1.1% on Wednesday.

Gross margin fell 130 basis points to 34.8% of net sales.

General Mills cited "input cost inflation, unfavorable mark-to-market effects, and unfavorable net price realization and mix."

These trends were partially offset by the company's cost-saving efforts.

Looking ahead, General Mills said it continues to expect full-year 2025 sales to be flat to up 1%, not including the divestment of its North American yogurt business.

Wall Street analysts expect General Mills to post full-year 2025 sales of $19.92 billion, up from $19.86 billion, according to FactSet.

General Mills also said it's facing a "continued uncertain macroeconomic backdrop for consumers across its core markets" but with a gradual improvement in volume trends in 2025.

General Mills warned that "full-year category dollar growth is expected to be below the company's long-term growth projections."

The company said it will focus on product news and "innovation focused on taste, health, convenience, and value, supported with strong brand campaigns and omnichannel visibility."

CFRA analyst Arun Sundaram reiterated a hold rating on General Mills and boosted his price target on the stock to $79 a share from $75 a share.

"GIS kept its outlook unchanged, but we're optimistic that [it] can hit the higher end of its guidance," Sundaram said.

While General Mills faces weakness in its U.S. snacks, U.S. morning foods, wet pet food and pet treats, and China units, it still has a "strong" balance sheet which could lead to more share buybacks and acquisitions, Sundaram said.

General Mills' stock has risen 15.6% in 2024, while the S&P 500 SPX has advanced 18.2%.

-Steve Gelsi

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09-18-24 1402ET

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