General Mills (GIS) dipped slightly in pre-market trading after it wrapped up Fiscal 2024 with a mixed bag of results. Its recent Q4 earnings report highlights both the hurdles faced and the groundwork laid for potential growth. Here’s a breakdown of what you need to know.
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General Mills’ Net Sales Dip 1%
General Mills reported net sales of $19.9 billion for Fiscal 2024, down 1 percent from the previous year. Despite this slight drop, the company’s operating profit held steady at $3.4 billion, demonstrating its ability to maintain profitability even in tough times. The diluted EPS rose to $4.52, reflecting a 6 percent increase in constant currency—a bright spot amidst the slower sales growth. Jeff Harmening, General Mills’ CEO, commented, “We pivoted our plans and enhanced our efficiency to adapt to a more challenging environment,” highlighting the company’s strategic adjustments.
GIS Fourth Quarter Struggles with 6% Sales Decline
The fourth quarter was a tougher stretch, with net sales falling 6 percent to $4.7 billion, missing analysts’ consensus estimate of $4.8 billion. The operating profit of $779 million also took a hit, dropping 5 percent from last year. Diluted EPS slipped to $0.98, down 5 percent, falling short of analysts’ consensus estimate of $1.06. The decline was attributed to lower volume and unfavorable net price realization, alongside a tough comparison with favorable trade expenses from the prior year.
Despite these challenges, General Mills managed to lift its gross margin to 35.8 percent, thanks to savvy cost-saving measures and favorable market adjustments. As Harmening noted, “We generated industry-leading levels of Holistic Margin Management cost savings, allowing us to protect our brand investment.”
Share Repurchases and Dividend Boost Showcase Confidence
In a move that showcases its confidence in long-term growth, General Mills repurchased approximately 29 million shares for $2.0 billion over the Fiscal year. This is a significant increase from the previous year’s $1.4 billion in repurchases. The company also increased its quarterly dividend by 2 percent to $0.60 per share. This dividend hike highlights General Mills’ commitment to rewarding shareholders even as it navigates through economic headwinds.
GIS Is Cautiously Optimistic about Fiscal 2025
Looking ahead to Fiscal 2025, General Mills is cautiously optimistic. The company expects organic net sales to be flat to up 1 percent, reflecting a steady outlook. It plans to drive growth through product innovation and by delivering exceptional brand experiences. The company also anticipates generating HMM cost savings of 4 to 5 percent of the cost of goods sold, which should help counterbalance input cost inflation. Harmening emphasized the company’s focus on reinvesting potential margin flexibility back into the business to fuel growth, stating, “We’re ready to capitalize on new opportunities and advance our Accelerate strategy.”
Is GIS Stock a Good Buy?
Analysts remain sidelined about GIS stock, with a Hold consensus rating based on two Buys and 13 Holds. Over the past year, GIS has surged by more than 15%, and the average GIS price target of $70.50 implies a downside potential of 5.4% from current levels. These analyst forecasts are likely to change following the Q4 results today.
