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General Mills has raised full-year forecasts for its top and bottom lines after beating expectations in the group’s second quarter.
However, shares in the US multinational still came under pressure as investors worried about declining volumes and the effects of inflation and falling consumer confidence.
Organic sales jumped 11% to $5.2bn in the three months 27 November thanks to higher prices, while operating profits remained steady at $800m.
Volumes were lower in the quarter and costs were higher, but the Cheerios, Old El Paso and Häagen-Dazs maker benefitted from its strategy to streamline its portfolio, including a number of sell-offs in the past year.
For the first half, organic revenues were also 11% up on a year ago to $9.9bn and operating profits were 15% higher at $1.9bn, driven by gains from selling its international dough business and European yoghurt business.
The international divsion reported a 27% fall in second-quarter revenues to $672m as a result of lower volumes, the sales of the dough and yoghurt businesses and a recall of some Häagen-Dazs ice cream products, as well as currency headwinds.
CEO Jeff Harmening said: “We continued to execute well and delivered strong top and bottom-line growth in the second quarter.
“Amid ongoing volatility in the operating environment, we remain focused on driving our ‘Accelerate’ strategy by investing in brand building and innovation, strengthening our capabilities, and continuing to reshape our portfolio. With strong first-half results and positive momentum on our business, we are increasing our full-year outlook for organic net sales, adjusted operating profit, and adjusted diluted EPS growth.”
General Mills now expected organic net sales growth of 8% to 9%, up from 6% to 7%, thanks to a better volume performance, higher prices and an improved product mix.
Adjusted operating profit is now expected to increase 3% to 5% in constant currency, compared to the previous range of between flat and up 3%.
The group added it expected input cost inflation of 14% to 15% of total cost of goods sold.
“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,” the group said.
Despite the upgrade to sales and profits, shares in the company fell about 4%.
Morning update
Pets at Home brings in Roger Burnley
Pets at Home has appointed Roger Burnley as an independent non-executive director with effect from 14 February 2023.
Burnley will also be a member of the audit and risk committee, remuneration committee, nomination and corporate governance committee and the ESG committee.
Burnley spent ten years as an executive director of Sainsbury’s before joining Asda as its chief operating officer in 2016, becoming its CEO in 2017. He left Asda in August 2021 after four years as CEO and was awarded a CBE in the 2022 New Year Honours list for services to the food supply chain.
Earlier this year. he also took on the position of non-executive chairman of Irish food manufacturer Finnbrogue Artisan.
Pets at Home chairman Ian Burke said: “On behalf of the board, I am delighted to welcome Roger Burnley CBE to Pets at Home Group plc. Roger has deep knowledge of the retail sector and food supply chains and his experience will be of great value to Pets at Home as it embarks on the next stage of its ambitious strategic plan.
“The directors and I look forward to working with Roger next year.”
Treatt makes board appointment
Ingredients supplier Treatt has appointed Bronagh Kennedy as an independent non-executive director. She will join the board on 27 January 2023, following the conclusion of the company’s AGM.
Kennedy has a wealth of experience across a number of sectors, most recently retiring as company secretary and general counsel and sustainability lead at utilities firm Severn Trent.
She is also a non-executive director at the Canal and River Trust, an advisor to European Metal Recycling and was previously remuneration committee chair at Wolseley UK and at British Canoeing.
Treatt chairman said: “I am delighted to welcome Bronagh to Treatt. Her extensive experience and knowledge will further strengthen our board and equip the group to deliver its strategy for growth.”
Morning share movements
The FTSE 100 is up 0.2% to 7,388.07pts this morning.
Early risers include Ocado, up 3.5% to 643.2p, Delivery Hero, up 3.2% to €44.56, and HelloFresh, up 2.5% to €21.22.
AG Barr is down 2.5% to 503p so far, while Kerry Group is down 1% to €85.02 and Wynnstay Group is down 0.7% to 606p.
Yesterday in the City
The FTSE 100 got its head back above water by the end of trading yesterday to close 0.1% higher at 7,370.62pts.
Hilton Food Group led the risers after unveiling a new collaboration with Singapore’s Country Foods. The agreement sent the stock 3.3% higher to 538p.
Other risers included Delivery Hero and Hotel Chocolat Group, up 1.2% to €43.14 and 1.8% to 145p respectively.
Over in the US General Mills and Hain Celestial dropped more than 4% after the former’s Q2 results and a warning of a tough consumer environment.
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