Milling & Baking News - July 3, 2018 - 10

Financial Results

Another rebuilding year seen in
fiscal 2019 for General Mills
MINNEAPOLIS - Adjusted earnings
of General Mills, Inc. in the year ended
May 28 were on par with results from
a year earlier. In its initial forecasts for
fiscal 2019, the company said earnings
per share will be flat at best once again.
Jeffrey L. Harmening, chairman and
chief executive officer, said the company ended a difficult fiscal 2018 on a
strong note.
"While our full-year profit results
fell short of our initial plans, we finished the year delivering growth in
sales, margins, profit and e.p.s. in
the fourth quarter," he said. "And
I'm pleased with the continued
progress we've made in cash generation, with our free cash flow up
nearly 30% this year."
Net income of General Mills, Inc. in
the year ended May 28 was $2,131 million, or $3.69 per share on the common
stock, up 29% from $1,657.5 million,
or $2.82 per share, in fiscal 2017. Sales
were $15,740 million, up 0.8%. The
sales change represented an improvement from the year before when General Mills sales fell 6% from fiscal 2016.
The largest factor in the year-to-year
earnings change was a 91% reduction
in income tax charges to $57.3 million
from $655.2 million, driven by the benefits related to the Tax Cuts and Jobs
Act. Adjusted earnings per share in fiscal 2018 were $3.11, about unchanged
from fiscal 2017.
For fiscal 2019, General Mills projected organic net sales to be flat to up
1% and sales including the company's
Blue Buffalo pet food acquisition to be
up 9% to 10%. Operating profit was
projected to climb 6% to 9% from a
base of $2.7 billion in fiscal 2018, and
adjusted earnings per share were projected to be unchanged to down 3%
from $3.11 in fiscal 2018. The estimate
includes a 4c per share accounting expense in fiscal 2019 associated with the
Blue Buffalo acquisition.
"As we turn to fiscal 2019, we'll
continue to follow our Consumer
First strategy and execute against our
global growth priorities to further improve our top-line momentum," Mr.
Harmening said. "We are committed
to competing effectively across all our
brands and geographies, increasing
investments to accelerate our differential growth platforms, and maximizing the growth opportunities for Blue
Buffalo. We are also keenly focused
on maintaining our efficiency in this
10 / July 3, 2018

Milling & Baking News

more inflationary cost environment,
and we have initiatives underway to
help protect our profitability."
In the fourth quarter ended May 28,
General Mills net income was $354.4
million, equal to 59c per share, down
13% from $408.9 million, or 70c, in the
fourth quarter last year. Sales were
$3,890.2 million, up 2.2%.
Fourth-quarter results included

In snack bars, Mr. Harmening detailed areas of growth and challenge.
"New Layered (Granola Nut) Bars
and Soft-Baked Filled Squares generated growth for Nature Valley in the
U.S., and our businesses in Europe
and Mexico leverage our U.S. product
pipeline to accelerate Nature Valley
sales," he said.
By contrast, the Fiber One business has been a drag on results. Larabar sales enjoyed strong double-digit
growth.
Mr. Harmening said early results

'As we turn to fiscal 2019, we'll continue
to follow our Consumer First strategy and
execute against our global growth priorities to
further improve our top-line momentum.'
- Jeffrey L. Harmening,
General Mills, Inc.

$151.3 million in restructuring, impair- of the Blue Buffalo pet food business
ment and other exit costs, up from $17.1 have been positive.
Operating profit of the Convenience
million the year before. Income tax expenses of $86.4 million were down 40% Stores and Foodservice segment was
from $144.2 million. Adjusted earnings $392.6 million, down 2.1% from the
per share in the fourth quarter were year before. Net sales were $1,930.2
million, up 3.2%.
79c, up 8% from the year before.
Fourth-quarter operating profit
Operating profit of the North American Retail segment of General Mills in was $117 million, up 11%. Sales were
fiscal 2018 was $2,217.4 million, down $510.6 million, up 4.7%. Indexed high3.7% from the year before. Net sales er prices for bakery flour helped boost
sales for the year and in
were $10,115.4 million,
the fourth quarter.
down 0.8%.
For the year, segment
Fourth-quarter operatprofits were hurt by rising
ing profit of the segment
input costs, but results
was $543 million, up 7%.
improved in the fourth
Sales were $2,338 million,
quarter because of higher
down 0.2%.
prices and improved mix,
For the fiscal year,
together with the effects
higher input costs and
of costs savings.
merchandising expenses
After-tax earnings of
were the principal drag
General Mills' joint venon profits. Cost savings
tures - Cereal Partners
initiatives and lower
Worldwide and Häagensales, general and adminDazs Japan - were $85
istrative costs were a boost GENERAL MILLS, INC.
million, about unchanged
in the fourth quarter.
Cereal sales were flat for the year with the year before. Net sales for
as were meals and baking. Snack food C.P.W. were flat during the year.
In the fourth quarter, earnings were $21
sales rose 2% in fiscal 2018 while yogurt sales fell 12%. In the fourth quar- million, up from $20 million the year beter cereal was up 2%, as were snacks. fore. Earnings growth would have been
Yogurt was down 5%, and meals and greater but for a $2 million restructuring
charge at C.P.W. Sales were down 2%.
baking fell 2%.
Commenting on innovation plans
In the investor call, Mr. Harmening
said cereal trends turned positive in for fiscal 2019, Mr. Harmening said
Cheerios Oat Crunch was launched in
fiscal 2018.
"We grew retail sales and market June and that the company plans new
share in the U.S. behind strong market- product news for a range of brands,
ing campaigns like Good Goes Round including Totino's hot snacks, Proon Cheerios and unicorn marshmal- gresso soups, Betty Crocker desserts
low news on Lucky Charms," he said. and Wanchai Ferry dumplings. MBN
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Milling & Baking News - July 3, 2018

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