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General Mills (GIS) Q4 Earnings Beat Estimates, Margins Grow
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General Mills, Inc.’s (GIS - Free Report) cost-saving initiatives have helped it to come up with better-than-expected fourth-quarter fiscal 2017 results along with solid adjusted operating profit margin expansion. The company’s shares inched up 0.29% in pre-market trade on Jun 28.
Earnings Beat
The food giant reported fourth-quarter fiscal 2017 adjusted earnings per share of 73 cents, surpassing the Zacks Consensus Estimate of 71 cents by 2.8%. Earnings also improved 11% year over year. On a constant currency basis, earnings grew 14%.
Adjusted earnings exclude restructuring, project-related expenses and mark-to-market valuation effects. Including these items, reported earnings came at 69 cents per share, up 11% year over year.
Sales Surpass
Total revenues of $3.81 billion surpassed the Zacks Consensus Estimate of $3.75 billion by 1.6% but declined 3% year over year owing to lower organic sales. Also, sales were weak in the core U.S. Retail and other segments barring Convenience Stores & Foodservice division.
Organically, excluding currency and acquisitions/divestures, sales were down 3%.
Price/mix improved 4%, whereas volumes declined 7%. Foreign exchange headwinds did not impact quarterly revenues.
Margins Improved
Adjusted gross margin increased 70 basis points (bps) to 35.1%, as input cost inflation and lower volumes were offset by savings from cost-reduction activities.
Adjusted operating margin increased 220 bps to 16.8%, owing to higher adjusted gross margins, benefits from cost-savings initiatives and a 17% decline in advertising and media expense.
Segment Performance
Beginning third quarter of fiscal 2017, the company has been reporting results under four new business groups: North America Retail, which combines U.S. retail segment and Canada region in international segment; Convenience Stores & Food Service; Europe & Australia, which is currently another international region; and Asia & Latin America, which combines the remaining two current international regions.
This structural change aims at maximizing global scale, unlocking global growth opportunities and driving efficiency.
North America Retail: Revenues from this segment declined 3% year over year to $2.39 billion due to double-digit declines in the U.S. yogurt operating units. This was partly offset by growth in the U.S. Snacks unit. Organic sales were down 4%. Volumes dipped 8%, while price/mix added 4% to revenues.
Segment operating profit was up 9% year over year, attributable to lower advertising and media expense and higher pricing.
Convenience Stores & Food Service: Revenues were flat year over year at $488 million. Growth at the Focus 6 platforms, comprising cereal, yogurt, and biscuits, offset the decline in other frozen dough products.
Organically, sales were flat, too. While volumes increased 2%, price/mix impacted revenues by 2% in the quarter.
Segment operating profit also remained unchanged from the year-ago level.
Europe & Australia: On a year-over-year basis, the segment’s revenues declined 14% to $487 million because of the reporting period difference in the year-ago period and unfavorable currency impact. Organically, sales were down 9%.
Foreign exchange headwinds dragged revenues by 5% in the quarter. Volumes were down 16% and price/mix had a 7% favorable impact on the quarter’s results.
Segment operating profit dropped 34% year over year. This was due to the reporting period difference and input cost inflation, including currency-driven inflation on products imported into the U.K. These were partially offset by benefits from cost-savings initiatives.
Asia & Latin America: Revenues were up 10% year over year to $440 million. Organically, sales grew 8%.
While volumes were up 2%, price/mix had a favorable impact of 6% on the quarter’s results.
Segment operating profit was down 17% year over year.
Fiscal 2017 Summary
The company’s earnings in fiscal 2017 came at $3.08, up 5% year over year and 6% on a constant-currency basis.
Total revenue declined 5.7% year over year to $15.6 billion in fiscal 2017. Adjusted gross margin advanced 50 bps to 36.1% and adjusted operating margin increased 130 bps to 18.1%.
Fiscal 2018 Guidance
Organically, year-over-year sales growth is expected to decline 1–2%.
Adjusted earnings per share (constant currency) are anticipated to grow 1–2% from the fiscal 2017 level of $3.08 per share. The company expects currency-related headwind of 1 cent on full-year fiscal 2018 adjusted earnings per share.
Total segment operating profit growth is estimated in the range of flat to 1%, on a constant-currency basis. Adjusted operating margin is expected to remain above the fiscal 2017 level of 18.1%.
General Mills carries a Zacks Rank #4 (Sell).
General Mills, Inc. Price, Consensus and EPS Surprise
Some better-ranked stocks in the consumer staples sector are Nomad Foods Limited (NOMD - Free Report) , B&G Foods, Inc. (BGS - Free Report) and Pinnacle Foods, Inc. .
B&G Foods’ earnings are expected to increase 7.3% this year.
Pinnacle Foods delivered an average positive earnings surprise of 3.91% in the trailing four quarters and has a long-term earnings growth rate of 9.3%.
Both B&G Foods and Pinnacle Foods carry a Zacks Rank #2 (Buy).
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General Mills (GIS) Q4 Earnings Beat Estimates, Margins Grow
General Mills, Inc.’s (GIS - Free Report) cost-saving initiatives have helped it to come up with better-than-expected fourth-quarter fiscal 2017 results along with solid adjusted operating profit margin expansion. The company’s shares inched up 0.29% in pre-market trade on Jun 28.
Earnings Beat
The food giant reported fourth-quarter fiscal 2017 adjusted earnings per share of 73 cents, surpassing the Zacks Consensus Estimate of 71 cents by 2.8%. Earnings also improved 11% year over year. On a constant currency basis, earnings grew 14%.
Adjusted earnings exclude restructuring, project-related expenses and mark-to-market valuation effects. Including these items, reported earnings came at 69 cents per share, up 11% year over year.
Sales Surpass
Total revenues of $3.81 billion surpassed the Zacks Consensus Estimate of $3.75 billion by 1.6% but declined 3% year over year owing to lower organic sales. Also, sales were weak in the core U.S. Retail and other segments barring Convenience Stores & Foodservice division.
Organically, excluding currency and acquisitions/divestures, sales were down 3%.
Price/mix improved 4%, whereas volumes declined 7%. Foreign exchange headwinds did not impact quarterly revenues.
Margins Improved
Adjusted gross margin increased 70 basis points (bps) to 35.1%, as input cost inflation and lower volumes were offset by savings from cost-reduction activities.
Adjusted operating margin increased 220 bps to 16.8%, owing to higher adjusted gross margins, benefits from cost-savings initiatives and a 17% decline in advertising and media expense.
Segment Performance
Beginning third quarter of fiscal 2017, the company has been reporting results under four new business groups: North America Retail, which combines U.S. retail segment and Canada region in international segment; Convenience Stores & Food Service; Europe & Australia, which is currently another international region; and Asia & Latin America, which combines the remaining two current international regions.
This structural change aims at maximizing global scale, unlocking global growth opportunities and driving efficiency.
North America Retail: Revenues from this segment declined 3% year over year to $2.39 billion due to double-digit declines in the U.S. yogurt operating units. This was partly offset by growth in the U.S. Snacks unit. Organic sales were down 4%. Volumes dipped 8%, while price/mix added 4% to revenues.
Segment operating profit was up 9% year over year, attributable to lower advertising and media expense and higher pricing.
Convenience Stores & Food Service: Revenues were flat year over year at $488 million. Growth at the Focus 6 platforms, comprising cereal, yogurt, and biscuits, offset the decline in other frozen dough products.
Organically, sales were flat, too. While volumes increased 2%, price/mix impacted revenues by 2% in the quarter.
Segment operating profit also remained unchanged from the year-ago level.
Europe & Australia: On a year-over-year basis, the segment’s revenues declined 14% to $487 million because of the reporting period difference in the year-ago period and unfavorable currency impact. Organically, sales were down 9%.
Foreign exchange headwinds dragged revenues by 5% in the quarter. Volumes were down 16% and price/mix had a 7% favorable impact on the quarter’s results.
Segment operating profit dropped 34% year over year. This was due to the reporting period difference and input cost inflation, including currency-driven inflation on products imported into the U.K. These were partially offset by benefits from cost-savings initiatives.
Asia & Latin America: Revenues were up 10% year over year to $440 million. Organically, sales grew 8%.
While volumes were up 2%, price/mix had a favorable impact of 6% on the quarter’s results.
Segment operating profit was down 17% year over year.
Fiscal 2017 Summary
The company’s earnings in fiscal 2017 came at $3.08, up 5% year over year and 6% on a constant-currency basis.
Total revenue declined 5.7% year over year to $15.6 billion in fiscal 2017. Adjusted gross margin advanced 50 bps to 36.1% and adjusted operating margin increased 130 bps to 18.1%.
Fiscal 2018 Guidance
Organically, year-over-year sales growth is expected to decline 1–2%.
Adjusted earnings per share (constant currency) are anticipated to grow 1–2% from the fiscal 2017 level of $3.08 per share. The company expects currency-related headwind of 1 cent on full-year fiscal 2018 adjusted earnings per share.
Total segment operating profit growth is estimated in the range of flat to 1%, on a constant-currency basis. Adjusted operating margin is expected to remain above the fiscal 2017 level of 18.1%.
General Mills carries a Zacks Rank #4 (Sell).
General Mills, Inc. Price, Consensus and EPS Surprise
General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the consumer staples sector are Nomad Foods Limited (NOMD - Free Report) , B&G Foods, Inc. (BGS - Free Report) and Pinnacle Foods, Inc. .
Nomad Foods is expected to see 7.6% earnings growth this year. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
B&G Foods’ earnings are expected to increase 7.3% this year.
Pinnacle Foods delivered an average positive earnings surprise of 3.91% in the trailing four quarters and has a long-term earnings growth rate of 9.3%.
Both B&G Foods and Pinnacle Foods carry a Zacks Rank #2 (Buy).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>