Four takeaways from General Mills' latest quarter, including more inflation effects
Published in Business News
Inflation is proving stickier than a Pillsbury cinnamon roll for General Mills.
Still, the Minnesota-based food maker has again increased its short-term financial outlook and beat analyst expectations for its most recent quarter, even as profits dropped 16%.
"The consumer seems to be reasonably robust, and at the same time they're eating at home more than they were pre-pandemic," CEO Jeff Harmening told analysts Thursday morning. "We plan to sustain this momentum by investing further in brand building, innovation and capabilities that will drive future growth."
Here are four takeaways from Thursday's earnings report from the maker of Cheerios, Blue Buffalo and Yoplait:
'Mid-single-digit inflation' for fiscal 2024
General Mills expects input costs will end up rising 15% in the current fiscal year, which ends in May. Inflation over the next year will be much improved and should be in the mid-single-digit range, company leaders said.
But Harmening cautioned a "normal" inflationary environment is at least 12 months away.
Higher wages and higher costs from suppliers are expected to drive continued cost increases. That could keep sales volumes down and potentially lead to more price increases to keep revenue rising and profit margins intact.
Chief Financial Officer Kofi Bruce said in an interview the company focuses first on efficiency and cutting costs and keeps a close eye on consumer value when considering changes in prices, promotions and package sizes.
"We didn't pick these operating conditions — who would — but the key is how do you rise to the moment and what do you show up prepared to do," he said. "We have not been operating perfectly, but we have been operating competitively better than our peers."
©2023 StarTribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.