General Mills (GIS) reported a profit for the second quarter that increased about 19 percent from last year, reflecting higher operating profit, lower net interest expense, and higher after-tax earnings from joint ventures.
Both adjusted earnings per share and quarterly revenues topped analysts’ expectations.
General Mills expects that the COVID-19 pandemic will drive continued elevated consumer demand for food at home, relative to pre-pandemic levels, through the remainder of fiscal 2021. Third-quarter demand trends are expected to be generally consistent with recent months, due to ongoing virus concerns in many markets around the world.
The company expects to generate continued strong top- and bottom-line growth in the third quarter of fiscal 2021, with organic net sales growth roughly similar to the second quarter’s growth rate and an adjusted operating profit margin in line with the year-ago period.
The company said it did not provide a full-year outlook for fiscal 2021 growth in organic net sales, adjusted operating profit, and adjusted earnings per share, due to the magnitude and duration of elevated at-home food demand remains highly uncertain.
The company now expects its full-year fiscal 2021 adjusted operating profit margin will be in line or better than the previous year. The company previously expected its full-year adjusted operating profit margin to be approximately in line with fiscal 2020 levels.
The company reported its second-quarter net earnings attributable to the company increased about 19 percent to $688.4 million from the prior year’s $580.8 million, with earnings per share improving to $1.11 from $0.95 in the previous year.
Adjusted earnings per share were $1.06, up 9 percent in constant currency, primarily driven by higher adjusted operating profit, lower net interest expense, and higher after-tax earnings from joint ventures. Analysts polled by Thomson Reuters expected the company to report earnings of $0.97 per share for the second-quarter. Analysts’ estimates typically exclude special items.
Operating profit was $917 million up 13 percent from the previous year, primarily driven by higher gross profit dollars and a net gain on investment activity, partially offset by higher selling, general, and administrative expenses, including higher media investment.
Net sales for the second-quarter increased 7 percent year-over-year to $4.72 billion and organic net sales were also up 7 percent, reflecting broad-based market share gains amid elevated at-home food demand resulting from the COVID-19 pandemic.
Analysts expected revenues of $4.65 billion for the second-quarter.
Second-quarter net sales for General Mills’ North America Retail segment increased 9 percent to $2.92 billion, reflecting positive competitive performance amid elevated demand for food at home due to the pandemic, including stable or growing market share in both the U.S. and Canada.
Second-quarter net sales for the Pet segment increased 18 percent to $460 million, including positive contributions from volume growth and favorable net price realization and mix.
Second-quarter net sales for the Convenience Stores & Foodservice segment declined 14 percent to $440 million, reflecting reduced away-from-home food demand related to the pandemic.
Second-quarter net sales for the Europe & Australia segment increased 8 percent to $467 million, primarily driven by 6 points of favorable foreign currency exchange and positive net price realization and mix.
Second-quarter net sales for the Asia & Latin America segment increased 5 percent to $430 million, driven by volume growth and favorable net price realization and mix, partially offset by 5 points of unfavorable foreign currency exchange.
In Thursday pre-market trade, GIS was trading at $59.00 up $0.08 or 0.14 percent.
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