MINNEAPOLIS, Feb. 17, 2017 /PRNewswire/ -- General Mills
(NYSE: GIS) said today that in response to revised second-half
growth expectations driven largely by recent sales performance on
U.S. yogurt and soup, the company is reducing its sales and
earnings outlook for the fiscal year ending May 2017. The
company expects to deliver an adjusted operating profit margin of
at least 18 percent in fiscal 2017, which represents an increase of
at least 120 basis points over fiscal 2016 levels.
General Mills fiscal 2017 organic net sales are now expected to
decline approximately 4 percent. This represents the low end
of the previous range of a 3 to 4 percent decline, due primarily to
a widening gap between the company's level of promotional activity
and that of competitors in the U.S. yogurt and soup
categories.
Total segment operating profit growth in constant currency is
expected to range from down 1 percent to up 1 percent, largely
reflecting lower sales but also including incremental spending
planned for the fourth quarter to strengthen key business
lines. The company remains on track to deliver $380 million in cost-of-goods savings from
Holistic Margin Management and $500
million in savings from its incremental efficiency and cost
savings initiatives, including global supply chain and
organizational restructuring as well as the implementation of
zero-based budgeting.
Fiscal 2017 adjusted diluted earnings per share (EPS) are
expected to increase 5 to 7 percent in constant currency. The
adjusted effective tax rate is now expected to be 29 percent.
The company expects free cash flow to increase at a mid
single-digit rate.
Previously, General Mills had been targeting total segment
operating profit growth of 2 to 4 percent in constant currency, 150
basis points of improvement in adjusted operating profit margin,
adjusted diluted EPS growth of 6 to 8 percent in constant currency,
an adjusted effective tax rate of approximately 29.8 percent, and
high single-digit growth in free cash flow.
General Mills is committed to pursuing its Consumer First
strategy and leveraging its five global platforms – cereal, snacks,
yogurt, convenient meals, and super-premium ice cream – along with
its new global organizational structure to achieve its goal of
creating market-leading growth to deliver top-tier shareholder
returns. The company will discuss its priorities for
generating sustainable sales growth, as well as its progress
against the margin expansion, cash conversion, and cash return
components of its shareholder return model, during its presentation
at the Consumer Analyst Group of New
York conference on Tuesday, February
21st at 8:00 a.m. Eastern
Standard Time. The presentation will be webcast and
can be accessed on the Internet at
www.generalmills.com/investors.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are based on management's current expectations and
assumptions. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from the potential results discussed in the
forward-looking statements. In particular, our predictions about
future net sales and earnings could be affected by a variety of
factors, including: competitive dynamics in the consumer foods
industry and the markets for our products, including new product
introductions, advertising activities, pricing actions and
promotional activities of our competitors;
economic conditions, including changes in inflation rates,
interest rates, tax rates, or the availability of capital;
product development and innovation; consumer acceptance
of new products and product improvements; consumer reaction to
pricing actions and changes in promotion levels; acquisitions or
dispositions of businesses or assets; changes in capital structure;
changes in the legal and regulatory environment, including labeling
and advertising regulations and litigation; impairments in the
carrying value of goodwill, other intangible assets, or other
long-lived assets, or changes in the useful lives of other
intangible assets; changes in accounting standards and the impact
of significant accounting estimates; product quality and safety
issues, including recalls and product liability; changes in
consumer demand for our products; effectiveness of advertising,
marketing and promotional programs; changes in consumer behavior,
trends and preferences, including weight loss trends; consumer
perception of health-related issues, including obesity;
consolidation in the retail environment; changes in purchasing and
inventory levels of significant customers; fluctuations in the cost
and availability of supply chain resources, including raw
materials, packaging and energy; disruptions or inefficiencies in
the supply chain; effectiveness of restructuring and cost savings
initiatives; volatility in the market value of derivatives used to
manage price risk for certain commodities; benefit plan expenses
due to changes in plan asset values and discount rates used to
determine plan liabilities; failure or breach of our information
technology systems; foreign economic conditions, including currency
rate fluctuations; and political unrest in foreign markets and
economic uncertainty due to terrorism or war. The company
undertakes no obligation to publicly revise any forward-looking
statements to reflect any future events or circumstances.
We have included measures in this release that are not defined
by generally accepted accounting principles (GAAP). Total
organic net sales growth, constant-currency total segment operating
profit growth, adjusted operating profit margin, adjusted diluted
EPS, and adjusted effective tax rate are each reconciled in the
tables below to the relevant GAAP measure.
Our fiscal 2017 outlook for organic net sales growth,
constant-currency total segment operating profit and adjusted
diluted EPS, adjusted operating profit margin and adjusted
effective tax rate are non-GAAP financial measures that exclude, or
have otherwise been adjusted for, items impacting comparability,
including one or more of the following: the effect of foreign
currency exchange rate fluctuations, acquisitions and divestitures,
restructuring charges and project-related costs, and mark-to-market
effects. We are not able to reconcile these forward-looking
non-GAAP financial measures to their most directly comparable
forward-looking GAAP financial measures without unreasonable
efforts because we are unable to predict with a reasonable degree
of certainty the actual impact of changes in foreign currency
exchange rates and commodity prices or the timing of acquisitions,
divestitures and restructuring actions throughout fiscal 2017. The
unavailable information could have a significant impact on our
fiscal 2017 GAAP financial results.
For fiscal 2017, we currently expect: the impact of foreign
currency exchange rates (based on blend of forward and forecasted
rates and hedge positions), acquisitions, and divestitures to
decrease net sales growth by 100-200 basis points; foreign currency
exchange rates to have a negative $0.01 to
$0.02 impact on adjusted diluted EPS; and total
restructuring charges and project-related costs related to actions
previously announced to total $295
million.
Total Segment
Operating Profit
|
|
|
|
|
|
Fiscal
Year
|
|
|
2016
|
In
Millions
|
|
|
Total segment
operating profit
|
$
|
2,999.5
|
|
|
|
Unallocated corporate
items
|
|
288.9
|
Divestitures
(gain)
|
|
(148.2)
|
Restructuring,
impairment,
and other exit
costs
|
|
151.4
|
Operating
profit
|
$
|
2,707.4
|
Adjusted Operating
Profit as a Percent of Net Sales (Adjusted Operating Profit Margin)
Excluding
Certain Items Affecting Comparability
|
|
|
|
|
Fiscal
Year
|
|
|
In
Millions
|
2016
|
|
Percent of
Net Sales
|
|
|
Operating profit as
reported
|
$
|
2,707.4
|
|
16.3
|
%
|
|
|
Mark-to-market
effects
|
|
(62.8)
|
|
(0.4)
|
%
|
|
|
Divestitures
(gain)
|
|
(148.2)
|
|
(0.9)
|
%
|
|
|
Restructuring
costs
|
|
229.8
|
|
1.4
|
%
|
|
|
Project-related costs
|
|
57.5
|
|
0.4
|
%
|
|
|
Adjusted operating
profit
|
$
|
2,783.7
|
|
16.8
|
%
|
|
|
Diluted EPS
Excluding Certain Items Affecting Comparability
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
Per Share
Data
|
|
2016
|
|
Diluted earnings per
share, as reported
|
$
|
2.77
|
|
Mark-to-market
effects
|
|
(0.07)
|
|
Divestitures
gain, net
|
|
(0.10)
|
|
Restructuring
costs
|
|
0.26
|
|
Project-related costs
|
|
0.06
|
|
Diluted earnings per
share, excluding
certain
items affecting comparability
|
$
|
2.92
|
|
Income Taxes on
Adjusting Items
|
|
|
|
Fiscal Year
Ended
|
|
|
|
May 29,
2016
|
|
|
In
Millions
|
Pretax
Earnings (a)
|
Income
Taxes
|
|
|
As
reported
|
$2,403.6
|
$755.2
|
|
|
Mark-to-market effects
|
(62.8)
|
(23.2)
|
|
|
Divestitures (gain)
|
(148.2)
|
(82.2)
|
|
|
Restructuring costs
|
229.8
|
69.0
|
|
|
Project-related costs
|
57.5
|
20.7
|
|
|
As
adjusted
|
$2,479.9
|
$739.5
|
|
|
|
|
|
|
|
Sum of adjustments to
income taxes
|
|
$(15.7)
|
|
|
Average number of
common shares -
diluted EPS
|
|
611.9
|
|
|
Impact of income tax
adjustments on
diluted EPS excluding certain items
affecting comparability
|
|
$0.03
|
|
|
(a) Earnings
before income taxes and after-tax earnings from joint
ventures.
|
|
About General Mills
General Mills is a leading global food company that serves the
world by making food people love. Its brands include
Cheerios, Annie's, Yoplait, Nature Valley, Fiber One,
Häagen-Dazs, Betty Crocker,
Pillsbury, Old El Paso, Wanchai
Ferry, Yoki and more. Headquartered in
Minneapolis, Minnesota, USA,
General Mills generated fiscal 2016 consolidated net sales of US
$16.6 billion, as well as another US
$1.0 billion from its proportionate
share of joint-venture net sales.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/general-mills-updates-key-financial-targets-for-fiscal-2017-300409443.html
SOURCE General Mills