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General Mills (GIS) Q2 Earnings & Sales Top Estimates, Up Y/Y

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General Mills, Inc. (GIS - Free Report) released robust second-quarter fiscal 2021 results, with the top and the bottom line increasing year over year. Moreover, earnings and sales surpassed the Zacks Consensus Estimate.

Q2 Highlights

The company’s adjusted earnings per share of $1.06 increased 9% year over year on a constant-currency (cc) basis. Moreover, the bottom line beat the Zacks Consensus Estimate of 97 cents. The uptick can be attributed to improved adjusted operating profit, higher after-tax earnings from joint ventures and reduced net interest expenses.

Net sales of $4,719.4 million advanced 7% year over year and surpassed the Zacks Consensus Estimate of $4,671.4 million. Also, organic sales increased 7% on the back of broad-based market share gains amid increased at-home food demand.

Adjusted gross margin expanded 20 basis points (bps) to 35.5% owing to favorable net price realization and mix. These were somewhat offset by higher input costs.

Adjusted operating profit at cc improved 6% driven by increased adjusted gross profit dollars. These were somewhat offset by higher SG&A expenses, which include greater media investment. Adjusted operating profit margin contracted 10 bps to 18.3%.

General Mills, Inc. Price, Consensus and EPS Surprise

 

General Mills, Inc. Price, Consensus and EPS Surprise

General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote

 

Segmental Performance

North America Retail: Revenues in the segment came in at $2,921.5 million, up 9% year over year. The upside was driven by favorable competitive performance amid coronavirus-induced increased demand for food at home. Organic sales also rose 9%.

Convenience Stores & Foodservice: Revenues dropped 14% to $440.5 million due to lower demand for away-from-home food amid the coronavirus outbreak. Reduced consumer traffic and other pandemic-induced restrictions adversely impacted the segment’s major away-from-home channels like restaurants, schools, lodging and convenience stores.

Europe & Australia: The segment’s revenues rose 8% to $467.4 million, including favorable currency impacts of 6 points. Also, sales were backed by favorable net price realization. Further, sales increased 3% year over year on an organic basis.

Asia & Latin America: Revenues rose 5% from the year-ago quarter’s figure to $430 million on higher volumes and favorable net price realizations and mix, partly countered by currency woes. Organic net sales increased 10%.

Pet Segment: Revenues came in at $460 million, up 18% year over year on the back of solid volume growth and favorable net price realization and mix.

Other Financial Aspects

The company ended the quarter with cash and cash equivalents of $2,582.8 million, long-term debt of $10,952.5 million and total shareholders’ equity of $8,550 million.

General Mills generated $1,426.8 million as net cash from operating activities in six months ended Nov 29, 2020.

Other Developments & Outlook

Constant-currency sales from joint ventures of Cereal Partners Worldwide increased 7% in the quarter. In Haagen-Dazs Japan, sales improved 12% at cc from the prior-year quarter’s figure.

The company anticipates consumer demand for food at home to remain elevated when compared with per-pandemic levels for the rest of fiscal 2021. General Mills envisions continued solid top-and bottom-line growth in the third quarter of fiscal 2021. The company expects third-quarter organic net sales growth to be in line with second-quarter levels. Moreover, management anticipates adjusted operating profit margin to be in line with the year-ago period. The outlook is based on the assumption that third-quarter demand trends are anticipated to be generally consistent with recent months thanks to the ongoing coronavirus-induced concerns in many markets globally.

Impressed with its first-half adjusted operating profit margin performance, General Mills now projects its fiscal 2021 adjusted operating profit margin to be in line with or better than prior-year levels. Before this, management anticipated the metric to be nearly in line with fiscal 2020 levels. Further, owing to uncertainties related to the pandemic the company refrained from providing fiscal 2021 growth outlook for organic net sales, adjusted operating profit, and adjusted earnings per share.

This Zacks Rank #3 (Hold) stock has increased 10% year to date compared with the industry’s growth of 0.7%.

 

Better-Ranked Food Stocks

The Hain Celestial (HAIN - Free Report) , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 24.6%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medifast, Inc. (MED - Free Report) , with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 20.2%, on average.

B&G Foods, Inc. (BGS - Free Report) , with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 9.3%, on average.

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