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GIS Q4 Earnings Beat Estimates, Sales Decline on Volume Pressure
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Key Takeaways
GIS Q4 EPS of 74 cents beat estimates but fell 27% YoY due to lower operating profit.
Q4 net sales declined 3% to $4.56B, due to lower pound volume and pricing/mix headwinds.
GIS expects FY26 adjusted operating profit and adjusted EPS to decline 10-15% in constant currency.
General Mills, Inc. (GIS - Free Report) reported fourth-quarter fiscal 2025 results, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line missed the same. Both earnings and net sales declined year over year, reflecting weaker performance.
The company’s efforts to deliver greater consumer value in late fiscal 2025 paid off, with improved volume and share trends in the quarter. Building on that momentum, the company plans to sharpen its focus on innovation and marketing in fiscal 2026, supported by cost-saving initiatives and a global transformation strategy. A major product expansion is also slated, including Blue Buffalo’s entry into the fresh pet food space later in the year.
General Mills posted adjusted earnings of 74 cents per share, which beat the Zacks Consensus Estimate of 71 cents. The bottom line declined 27% year over year on a constant-currency (cc) basis, attributed to reduced adjusted operating profit. However, the impact was partially offset by reduced net shares outstanding. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
General Mills, Inc. Price, Consensus and EPS Surprise
Net sales dropped 3% to $4,556.2 million, impacted by reduced pound volume and unfavorable net price realization and mix. Organic net sales also saw a 3% decline, including a 2-point headwind from unfavorable trade expense timing. Organic pound volume was in line with last year. The top line missed the Zacks Consensus Estimate of $4,604 million.
GIS’ Quarterly Margin Performance
The adjusted gross margin declined 220 basis points (bps), reaching 32.7% of net sales, mainly due to input cost inflation and unfavorable net price realization and mix. Moreover, the timing of trade expenses created a 150-bps headwind during the quarter. We expected a gross margin contraction of 320 bps.
General Mills’ adjusted operating profit dropped 22% in constant currency, impacted by reduced adjusted gross profit dollars and increased adjusted selling, general and administrative (SG&A) expenses. The adjusted operating profit margin was down 330 bps, reaching 13.7%, with unfavorable trade expense timing accounting for a 190 bps headwind during the quarter. We expected an adjusted operating margin of 12.9% for the quarter.
Decoding GIS’ Segmental Performance
North America Retail: Revenues in the segment were $2,559.8 million, down 10% year over year. The decrease was due to reduced pound volume and unfavorable net price realization and mix. The Canada yogurt divestiture contributed to a 3% reduction in net sales. Organic net sales declined 7%. Segment operating profit fell 29% to $473.8 million, mainly owing to unfavorable net price realization and mix, input cost inflation and reduced volume. HMM cost savings offered some respite. However, unfavorable trade expense timing represented a 17-point headwind to operating profit growth in the quarter.
International: Revenues in the segment were $738.9 million, up 11% year over year, including a 4-point boost from the Edgard & Cooper acquisition and a 2-point headwind from unfavorable foreign currency exchange. Organic net sales up 9%, thanks to strong growth in Brazil and distributor markets. Segment operating profit increased 50% to $33.7 million.
North America Pet: Revenues rose 12% year over year to $675.2 million, including a 9-point contribution from the acquisition of North America’s Whitebridge Pet Brands. Organic net sales grew 3%, outperforming all-channel retail sales by roughly 3 points, mainly due to increased retailer inventory ahead of first-quarter activations. Segment operating profit declined 3% to $140.1 million, impacted by higher input costs and a double-digit increase in media investment, partially offset by favorable pricing and mix, as well as increased volume.
North America Foodservice: Revenues were $579.4 million, which decreased 2% with organic net sales down 1%. Decline was due to softness in bakery flour and bread. Segment operating profit grew 5% to $83.1 million, supported by HMM cost savings, though input cost inflation posed challenges.
GIS’ Financial Health Snapshot & Other Developments
General Mills ended the quarter with cash and cash equivalents of $363.9 million, long-term debt of $12,673.2 million and total stockholders’ equity (excluding noncontrolling interests) of $9,199.2 million.
GIS generated $2,918.2 million in cash from operating activities in fiscal 2025. Capital investments amounted to $625.3 million during the same period. The company paid out dividends worth $1.3 billion and bought nearly 19 million shares for $1.2 billion in fiscal 2025.
The company has declared a quarterly dividend of 61 cents per share, payable on Aug. 1, 2025, to its shareholders of record as of July 10. This represents a 2% increase from the prior-quarter dividend of 60 cents per share.
Constant-currency sales from the joint venture of Cereal Partners Worldwide inched down 6% in the fiscal fourth quarter. For Haagen-Dazs Japan, sales jumped 1% year over year at cc.
What to Expect From GIS in Fiscal 2026
General Mills’ top priority for fiscal 2026 is to revive volume-driven organic sales growth amid a challenging consumer environment. The company plans increased investment in value, innovation and brand building, including launching Blue Buffalo in the U.S. fresh pet food segment. Still, these growth efforts, along with input cost inflation and tariffs, are expected to exceed savings initiatives. Additionally, yogurt divestitures and the Whitebridge Pet acquisition are projected to reduce adjusted operating profit growth by about 5 points.
The company has provided its full-year fiscal 2026 outlook. Organic net sales are projected to range from a 1% decline to a 1% increase, while adjusted operating profit and adjusted earnings per share (EPS) are expected to decline 10% to 15% in constant currency. Free cash flow conversion is anticipated to be at least 95% of adjusted after-tax earnings.
This Zacks Rank #4 (Sell) company’s shares have lost 14.2% in the past three months compared with the industry’s decline of 3.4%.
The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year earnings implies growth of 27.8% from the prior-year levels. BRFS delivered a trailing four-quarter earnings surprise of 5.4%, on average.
Mondelez International (MDLZ - Free Report) manufactures, markets and sells snack food and beverage products. It presently has a Zacks Rank of 2. MDLZ delivered a trailing four-quarter earnings surprise of 9.8%, on average.
The consensus estimate for Mondelez’s current fiscal-year sales implies growth of 5.3% from the year-ago figures.
Oatly Group AB (OTLY - Free Report) , an oatmilk company, provides a range of plant-based dairy products made from oats. It presently has a Zacks Rank of 2. OTLY delivered a trailing four-quarter earnings surprise of 25.1%, on average.
The consensus estimate for Oatly Group’s current fiscal-year sales and earnings implies growth of 2.3% and 63.8%, respectively, from the year-ago figures.
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GIS Q4 Earnings Beat Estimates, Sales Decline on Volume Pressure
Key Takeaways
General Mills, Inc. (GIS - Free Report) reported fourth-quarter fiscal 2025 results, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line missed the same. Both earnings and net sales declined year over year, reflecting weaker performance.
The company’s efforts to deliver greater consumer value in late fiscal 2025 paid off, with improved volume and share trends in the quarter. Building on that momentum, the company plans to sharpen its focus on innovation and marketing in fiscal 2026, supported by cost-saving initiatives and a global transformation strategy. A major product expansion is also slated, including Blue Buffalo’s entry into the fresh pet food space later in the year.
General Mills posted adjusted earnings of 74 cents per share, which beat the Zacks Consensus Estimate of 71 cents. The bottom line declined 27% year over year on a constant-currency (cc) basis, attributed to reduced adjusted operating profit. However, the impact was partially offset by reduced net shares outstanding. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
General Mills, Inc. Price, Consensus and EPS Surprise
General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote
Net sales dropped 3% to $4,556.2 million, impacted by reduced pound volume and unfavorable net price realization and mix. Organic net sales also saw a 3% decline, including a 2-point headwind from unfavorable trade expense timing. Organic pound volume was in line with last year. The top line missed the Zacks Consensus Estimate of $4,604 million.
GIS’ Quarterly Margin Performance
The adjusted gross margin declined 220 basis points (bps), reaching 32.7% of net sales, mainly due to input cost inflation and unfavorable net price realization and mix. Moreover, the timing of trade expenses created a 150-bps headwind during the quarter. We expected a gross margin contraction of 320 bps.
General Mills’ adjusted operating profit dropped 22% in constant currency, impacted by reduced adjusted gross profit dollars and increased adjusted selling, general and administrative (SG&A) expenses. The adjusted operating profit margin was down 330 bps, reaching 13.7%, with unfavorable trade expense timing accounting for a 190 bps headwind during the quarter. We expected an adjusted operating margin of 12.9% for the quarter.
Decoding GIS’ Segmental Performance
North America Retail: Revenues in the segment were $2,559.8 million, down 10% year over year. The decrease was due to reduced pound volume and unfavorable net price realization and mix. The Canada yogurt divestiture contributed to a 3% reduction in net sales. Organic net sales declined 7%. Segment operating profit fell 29% to $473.8 million, mainly owing to unfavorable net price realization and mix, input cost inflation and reduced volume. HMM cost savings offered some respite. However, unfavorable trade expense timing represented a 17-point headwind to operating profit growth in the quarter.
International: Revenues in the segment were $738.9 million, up 11% year over year, including a 4-point boost from the Edgard & Cooper acquisition and a 2-point headwind from unfavorable foreign currency exchange. Organic net sales up 9%, thanks to strong growth in Brazil and distributor markets. Segment operating profit increased 50% to $33.7 million.
North America Pet: Revenues rose 12% year over year to $675.2 million, including a 9-point contribution from the acquisition of North America’s Whitebridge Pet Brands. Organic net sales grew 3%, outperforming all-channel retail sales by roughly 3 points, mainly due to increased retailer inventory ahead of first-quarter activations. Segment operating profit declined 3% to $140.1 million, impacted by higher input costs and a double-digit increase in media investment, partially offset by favorable pricing and mix, as well as increased volume.
North America Foodservice: Revenues were $579.4 million, which decreased 2% with organic net sales down 1%. Decline was due to softness in bakery flour and bread. Segment operating profit grew 5% to $83.1 million, supported by HMM cost savings, though input cost inflation posed challenges.
GIS’ Financial Health Snapshot & Other Developments
General Mills ended the quarter with cash and cash equivalents of $363.9 million, long-term debt of $12,673.2 million and total stockholders’ equity (excluding noncontrolling interests) of $9,199.2 million.
GIS generated $2,918.2 million in cash from operating activities in fiscal 2025. Capital investments amounted to $625.3 million during the same period. The company paid out dividends worth $1.3 billion and bought nearly 19 million shares for $1.2 billion in fiscal 2025.
The company has declared a quarterly dividend of 61 cents per share, payable on Aug. 1, 2025, to its shareholders of record as of July 10. This represents a 2% increase from the prior-quarter dividend of 60 cents per share.
Constant-currency sales from the joint venture of Cereal Partners Worldwide inched down 6% in the fiscal fourth quarter. For Haagen-Dazs Japan, sales jumped 1% year over year at cc.
What to Expect From GIS in Fiscal 2026
General Mills’ top priority for fiscal 2026 is to revive volume-driven organic sales growth amid a challenging consumer environment. The company plans increased investment in value, innovation and brand building, including launching Blue Buffalo in the U.S. fresh pet food segment. Still, these growth efforts, along with input cost inflation and tariffs, are expected to exceed savings initiatives. Additionally, yogurt divestitures and the Whitebridge Pet acquisition are projected to reduce adjusted operating profit growth by about 5 points.
The company has provided its full-year fiscal 2026 outlook. Organic net sales are projected to range from a 1% decline to a 1% increase, while adjusted operating profit and adjusted earnings per share (EPS) are expected to decline 10% to 15% in constant currency. Free cash flow conversion is anticipated to be at least 95% of adjusted after-tax earnings.
This Zacks Rank #4 (Sell) company’s shares have lost 14.2% in the past three months compared with the industry’s decline of 3.4%.
Image Source: Zacks Investment Research
Some Solid Bets
BRF S.A. (BRFS - Free Report) raises, produces and slaughters poultry and pork for the processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year earnings implies growth of 27.8% from the prior-year levels. BRFS delivered a trailing four-quarter earnings surprise of 5.4%, on average.
Mondelez International (MDLZ - Free Report) manufactures, markets and sells snack food and beverage products. It presently has a Zacks Rank of 2. MDLZ delivered a trailing four-quarter earnings surprise of 9.8%, on average.
The consensus estimate for Mondelez’s current fiscal-year sales implies growth of 5.3% from the year-ago figures.
Oatly Group AB (OTLY - Free Report) , an oatmilk company, provides a range of plant-based dairy products made from oats. It presently has a Zacks Rank of 2. OTLY delivered a trailing four-quarter earnings surprise of 25.1%, on average.
The consensus estimate for Oatly Group’s current fiscal-year sales and earnings implies growth of 2.3% and 63.8%, respectively, from the year-ago figures.