General Mills (GIS) Tops Q2 EPS by 4c; Raises Outlook

General Mills (NYSE: GIS) reported Q2 EPS of $1.10, $0.04 better than the analyst estimate of $1.06. Revenue for the quarter came in at $5.2 billion versus the consensus estimate of $5.18 billion.

GUIDANCE:

Fiscal 2023 Outlook

General Mills continues to expect the largest factors impacting its performance in fiscal 2023 will be the economic health of consumers, the inflationary cost environment, and the frequency and severity of disruptions in the supply chain. Relative to its previous outlook, the company now expects to generate stronger organic net sales growth through better volume performance and improved price/mix. Volume elasticities in the second half of fiscal 2023 are expected to remain below historical levels. For the full year, the company expects input cost inflation of 14 to 15 percent of total cost of goods sold, HMM cost savings of 3 to 4 percent of cost of goods sold, moderately lower supply chain disruptions compared to the prior year, and increased investment in brand building and other growth-driving activities.

The company’s updated full-year fiscal 2023 financial targets are summarized below:

• Organic net sales are now expected to increase 8 to 9 percent, compared to the previous expectation of 6 to 7 percent growth.
• Adjusted operating profit is now expected to increase 3 to 5 percent in constant currency, compared to the previous range of between flat and up 3 percent in constant currency. Both the current and previous ranges include a 3-point net headwind from divestitures and acquisitions and an estimated 1-point headwind from the ice cream recall.
• Adjusted diluted EPS is now expected to increase 4 to 6 percent in constant currency, compared to the previous range of up 2 to 5 percent in constant currency. The updated outlook reflects stronger adjusted operating profit growth and higher net interest expense due to increasing rates. Both the current and previous ranges include a 3-point net headwind from divestitures and acquisitions and an estimated 1-point headwind from the ice cream recall.
• Free cash flow conversion is still expected to be at least 90 percent of adjusted after-tax earnings.
• The net impact of divestitures, acquisitions, and foreign currency exchange is now expected to reduce full-year reported net sales growth by approximately 4.5 percent, and foreign currency exchange is still expected to reduce adjusted operating profit and adjusted diluted EPS growth by approximately 1 percent.

For earnings history and earnings-related data on General Mills (GIS) click here.

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