During the second quarter, General Mills’ pet sector drives growth.
During the second quarter of fiscal 2020, dividends from General Mills, Inc.’s 2018 acquisition of Blue Buffalo pet food products were received. Sales of General Mills’ pet segment business unit increased 16% to $389 million during the quarter, contributing to a 1% increase in the company’s overall organic revenues. The company’s weak growth in the food business was somewhat mitigated by the pet food strength.
Jeffrey L. Harmening, chairman and chief executive officer, stated during a conference call with financial analysts on December 18 that “strong growth in the food, drug, and mass and e-commerce channels, positive price/mix, and a benefit from the timing of shipments in advance of holiday merchandising” were the main drivers of the Pet segment’s Q2 growth. “Blue’s two net sales saw substantial double-digit increase, driving its net sales result.
For the quarter that ended on November 24, General Mills’ net income was $580.8 million, or 96 cents per share of common stock. Compared to the same time last year, there had been a 69% increase.
From $4,411.2 million in the previous year to $4,420.8 million this quarter, sales increased little.As per the corporation, the enhanced quarterly performance was a result of reduced consumer promotion expenses, cost savings, and increased inventory balances at the conclusion of the quarter.
During the quarter, sales in the other four business groups of General Mills were either unchanged or decreased. Retail sales in North America were unchanged from the second quarter of the 2019 fiscal year.
According to Mr. Harmening, net sales of cereal increased by 5% in the United States and 2% in Canada on a constant currency basis. “Net sales decreased by 4% in U.S. yogurt, 2% in snacks, and 1% in meals and baking in the United States.”
According to Mr. Harmening, “strong execution against the fundamentals” was the reason for the strength of American cereal.
“In fiscal years 2018 and 2019, we saw modest growth in our U.S. cereal retail sales. However, in the first half of fiscal year 2020, we saw an acceleration to 2% growth,” he stated. “By supporting innovative consumer concepts like the Cheerios heart health campaign, which increased retail sales on the Cheerios brand by 4% in the first half of the year, we have increased our share leadership position.
“We saw great first-half performance on Blueberry Cheerios and Cinnamon Toast Crunch Churros, and we benefited from consumer support behind Cinnamon Toast Crunch and our partnership with Travis Scott on Reese’s Peanut Butter Puffs.”
The company’s introduction and investment in yogurt the year before was blamed for its downfall.
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“We are encouraged by growth on our core products,” Mr. Harmening stated, noting that retail sales of Go-Gurt had increased by 10% and original style yogurt had increased by 1% over the first half of the year. “With the support of numerous targeted measures, we firmly anticipate improving our U.S. yogurt performance in the second half of the year. Oui by Yoplait is a new dairy-free option with a coconut base that is part of our innovation program for the second half. We’ll introduce Just 3 by Yoplait, a new range of classic yogurts made with just three basic ingredients, as well as a new limited-edition line of original style Yoplait in four of the company’s most popular Starburst flavors.
“In the second half, we’ll also strengthen customer assistance for Oui by Yoplait and our core goods. Lastly, there will be a smaller distribution
challenges as the year 2020 approaches. All things considered, we anticipate that these initiatives will boost our U.S. yogurt company’s retail sales growth in the second part of the year.Convenience and foodservice segment sales of organic products were likewise flat.
“Second-quarter segment operating profit increased 5% from the previous year due to cost of goods sold (COGS) and holistic margin management (H.M.M.) savings, which were partially offset by inflation in input costs and unfavorable price/mix,” stated Mr. Harmening.
Management restated the company’s outlook for the entire year. For the year, organic sales are predicted to increase by 1% to 2%. From the $3.22 per share produced in fiscal 2019, adjusted earnings per share are anticipated to rise by 3% to 5%.
In comparison to the first half of fiscal 2019, when the business made $735.7 million, or $1.23 per share, General Mills earned $1,101.4 million, or $1.82 per share, for the first half of fiscal 2020.The first half of the fiscal year saw a 1% decline in sales to $8,423.3.