General Mills updates target for fiscal 2015 growth
General Mills, Minneapolis, recently announced that it’s reducing its sales and earnings expectations for the fiscal year ending in May 2015 in response to continued weak U.S. food-industry trends and slowing growth in key emerging markets.
General Mills’ fiscal 2015 net sales in constant currency are now expected to grow at a low single-digit rate from the 2014 base of $17.9 billion. This includes an estimated 2 points of sales growth from the 53rd week in fiscal 2015 and approximately $120 million of incremental sales from the Annie’s organic and natural food businesses acquired Oct. 21. Annie's will be consolidated into General Mills' 2015 results on a one-month lag basis.
Total segment operating profit in constant currency is expected to decline at a low single-digit rate from prior-year results of $3.15 billion. This includes more than $400 million in cost of goods savings from holistic margin management (HMM), along with $40 million in savings from projects initiated this year to streamline the company's North American supply chain and further reduce overhead costs.
General Mills says its International and Convenience Stores & Foodservice operating segments remain on track to achieve their full-year operating profit growth targets for fiscal 2015. The company's U.S. Retail operating segment is now expected to show an operating profit decline for fiscal 2015. In Nielsen-measured U.S. retail outlets, General Mills’ fiscal 2015 year-to-date (YTD) sales are growing in key categories such as yogurt, grain snacks, fruit snacks and frozen pizza. The company's YTD market shares are flat or up in categories representing 75 percent of its sales volume in measured outlets. Businesses posting market share increases include cereal, yogurt, grain and fruit snacks, ready-to-serve soup, frozen pizza and hot snacks.
General Mills' YTD composite dollar share in measured outlets is 15 basis points below the prior year, led by market share declines in frozen vegetables and dessert mixes. The company is making tactical adjustments in its marketing plans for these categories in response to competitive activity.
In June 2014, General Mills announced the initiation of projects designed to generate cost savings and fuel accelerated topline growth for the company. These projects focus on streamlining the company's North American supply chain network and reducing overhead costs. Together, these initiatives are expected to generate $40 million in cost savings in fiscal 2015. The company said today that by fiscal 2016, cumulative annual savings from these efforts are expected to total between $260 and $280 million. Cumulative annual savings in fiscal 2017 are expected to exceed 2016 levels.
Source: PR Newswire