General Mills Updates 2018 Targets

22-Feb-2018 - USA

Packaged food company General Mills' (GIS) Chairman and CEO Jeff Harmening reiterated the company's strategy for delivering value in the face of shifting consumer food values, changing competition across categories, and disruption within retail channels. The company provided an update on the company's full-year fiscal 2018 targets

At the Consumer Analyst Group of New York conference today, Harmening said that the company is investing to drive differential growth on four key platforms - snack bars, Häagen-Dazs ice cream, Old El Paso Mexican food, and its portfolio of natural and organic food brands - that play in faster-growing categories where General Mills has leading positions. These platforms represented approximately $4 billion in net sales in fiscal 2017, or 25 percent of General Mills worldwide net sales, and Harmening said he expects them to grow at a mid single-digit rate or better over the next three years.

Harmening noted that competing effectively and growing in line with category growth would translate to a 1 to 2 percent organic sales growth opportunity, based on the company's current mix of categories and geographies.

Harmening said attractive acquisition targets fall into one of three areas: bolt-on plays in existing categories in North America and Europe; businesses that enhance scale in emerging markets such as China, Brazil, or India; and new growth platforms where the company can leverage existing capabilities and create value. Harmening also said the scope of possible divestiture candidates totals roughly 5 percent of company sales.

Don Mulligan, Chief Financial Officer provided an update on the company's full-year fiscal 2018 targets. Organic net sales are now expected to be in line with last year, at the high end of the previous range of flat to down 1 percent. The company continues to see broad-based improvement in topline momentum, including in the U.S., where it grew Nielsen-measured retail sales 1 percent and gained market share in 6 of its top 9 categories in the latest three months through January.

Constant-currency total segment operating profit for fiscal 2018 is now expected to be in a range between down 1 percent and flat, below the prior range of flat to up 1 percent, driven by increased input cost pressure, including freight and logistics costs in North America, and slower-than-expected performance improvement in Brazil. Currency translation is expected to round up to a 1 percent benefit to full-year total segment operating profit.

The full-year fiscal 2018 adjusted effective tax rate is now expected to be approximately 27 percent. This is 2 percentage points lower than prior guidance, driven by the impact of the U.S. Tax Cuts and Jobs Act.

Including the benefit of the lower tax rate, constant-currency adjusted earnings per share are now expected to increase 3 to 4 percent, up from previous guidance of a 1 to 2 percent increase. The company now estimates currency translation will be a 2 cent benefit to fiscal 2018 adjusted earnings per share.

For 2018, the company introduced guidance for free cash flow, which is expected to increase at least 15 percent from the prior year, driven by strong discipline on core working capital. (dpa)

Other news from the department business & finance

More news from our other portals

AI is changing the food & beverage industry