Vending

General Mills raises 2023 expectations on Q3 sales gain and earnings dip

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March 23, 2023

General Mills Inc. upgraded its 2023 expectations after posting a 13% Q3 2023 sales boost despite a 16% earnings dip, according to an earnings report. Highlights include:

• Net sales increased 13% from $4.54 billion in Q3 2022 to $5.13 billion for the quarter ending Feb. 26, 2023, including a 2-point headwind from net divestiture and acquisition activity and one point of unfavorable foreign currency exchange. Organic net sales increased 16%, driven by positive organic net price realization and mix, with organic pound volume essentially matching year-ago levels.
• Net earnings declined 16% from $660.3 million to $553 million in the comparative quarters.
• Diluted EPS fell 15% from $1.08 to 92 cents while basic earnings fell 14% from $1.09 to 94 cents in the comparative quarters, driven by lower operating profit, lower after-tax earnings from joint ventures, higher net interest expense and lower benefit plan non-service income, partially offset by lower net shares outstanding.
• Adjusted diluted EPS rose 17% to 97 cents, driven by higher adjusted operating profit and lower net shares outstanding, partially offset by lower after-tax earnings from joint ventures, higher net interest expense, a higher adjusted effective tax rate and lower benefit plan non-service income.
• North America retail sales increased 15% to $3.2 billion, driven by favorable net price realization and mix, partially offset by a 3-point headwind from divestitures and a 1-point headwind from unfavorable foreign currency exchange. Sales increased 22% for U.S. meals and baking solutions, 19% for U.S. snacks and 7% for U.S. morning foods.
• North America foodservice sales increased 25% to $548 million, driven primarily by favorable net price realization and mix, including a 1-point benefit from market index pricing on bakery flour. Net sales results also included a 6-point benefit from the TNT Crust acquisition.
• International sales fell 3% to $701 million, driven by lower pound volume, including a 6-point headwind from divestitures and a 4-point headwind from foreign currency exchange, partially offset by favorable net price realization and mix.

Shares traded today at $83.15 against a 52-week range of $64.42-$88.34.

The $5.13 billion in quarterly revenue beat analyst expectations by $160 million, while the non-GAAP EPS of 97 cents beat expectations by 5 cents, according to Seeking Alpha.

"Our team continues to manage well through ongoing supply chain disruptions and volatility in the operating environment," chairman and CEO Jeff Harmening said in the press release. "Our brands are winning with consumers, and we plan to sustain this momentum by continuing to invest in brand building, innovation and capabilities that will drive future growth. With strong year-to-date performance and good visibility to the fourth quarter, we are once again raising our fiscal 2023 outlook for our key financial measures."

With stronger and more broad-based business momentum, the company is raising its outlook for fiscal 2023.

Organic net sales are now expected to increase 10% to 11%, compared to the previous expectation of approximately 10%.

Adjusted diluted EPS is now expected to increase 8% to 9% in constant currency compared to the previous range of up 7% to 8%.