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Old El Paso drove growth in Europe higher in the third quarter

Revenues at General Mills have continued to be driven higher as consumers work from home and lockdown restrictions persist in different parts of the world.

The US-headquartered group, which owns brands such as Cheerios, Nature Valley, Häagen-Dazs, Betty Crocker and Old El Paso, reported an 8% jump in net sales to $4.5bn in the third quarter to 28 February 2021, including organic growth of 7%.

Operating profits increased 27% to $827m as a result of the continued growth.

The business announced yesterday it had agreed to sell the European side of Yoplait to French dairy co-operative Sodiaal in return for full ownership of the yoghurt brand in Canada. It said the sale was part of its ongoing ‘Accelerate’ strategy to drive sustainable, profitable growth and shareholder returns over the long term.

“We continued to execute well and delivered profitable growth in the third quarter,” CEO Jeff Harmening said.

“We’ve made good progress on our fiscal 2021 priorities, including competing effectively, fueling investment in our brands and capabilities, and reducing our leverage.

“We’re continuing to advance our ’Accelerate’ strategy, including yesterday’s announcement of our proposed divestiture of our European Yoplait business. Looking ahead, we remain focused on strengthening our momentum and emerging from the pandemic a stronger company, even better positioned to drive long-term shareholder value.”

Net sales acorss Europe and Australia jumped 15% to $484m in the third quarter, led by growth for Old El Paso Mexican food and Häagen-Dazs ice cream.

Elevated demand for food in supermarkets across the world during the Covid pandemic has helped General Mills raise revenues by 8% to $13.6bn in the first nine months of the current financial year.

The group said today it expected the changes in consumer behaviour driven by Covid-19 to continue as the world emerges from the pandemic, with more working from home and new habits for cooking and baking to stick in the longer term.

General Mills forecast full-year organic growth of 3.5% on the back of the strong growth so far in 2020/21, but it faced tougher comparisons in the fourth quarter as it goes up against the period last year when panic buying was at its highest during the initial stages of the outbreak.