Branded food company General Mills, Inc. (GIS) reported Tuesday a profit for the second quarter that edged up 1 percent from last year, driven by improved gross margins and 4 percent net sales growth.
Both adjusted earnings per share and net sales topped analysts' estimates. The company also raised its adjusted earnings and organic net sales growth guidance for the full-year 2023, based on strong first-half results and positive momentum on its business.
"Amid ongoing volatility in the operating environment, we remain focused on driving our Accelerate strategy by investing in brand building and innovation, strengthening our capabilities, and continuing to reshape our portfolio," said Jeff Harmening, Chairman and CEO.
For the second quarter, net earnings attributable to General Mills increased to $605.9 million or $1.01 per share from $597.2 million or $0.97 per share in the prior-year quarter.
Excluding items, adjusted earnings for the quarter were $1.10 per share, compared to $0.99 per share in the year-ago quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $1.06 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 4 percent to $5.22 billion from $5.02 billion in the same quarter last year. Analysts expected revenues of $5.19 billion for the quarter.
Organic net sales increased 11 percent, driven by positive organic net price realization and mix, partially offset by lower organic pound volume.
Net sales for the North America Retail segment were up 11 percent to $3.37 billion, net sales for the Pet segment were flat at $592.9 million and net sales for the North America Foodservice segment increased 24 percent to $583.0 million, while International net sales declined 27 percent to $671.7 million from last year.
Gross margin was up 20 basis points to 32.7 percent of net sales, driven by favorable net price realization and mix, partially offset by higher input costs and unfavorable mark-to-market effects.
Looking ahead to fiscal 2022, the company now projects constant-currency adjusted earnings per share to grow 4 to 6 percent, compared to the previous range of up 2 to 5 percent and organic net sales growth of 8 to 9 percent, , compared to the previous expectation of 6 to 7 percent growth.
The Street is currently looking for earnings of $4.11 per share on revenues of $19.58 billion for the full-year 2022.
Further, the company said the net impact of divestitures, acquisitions, and foreign currency exchange is now expected to reduce full-year reported net sales growth by approximately 4.5 percent, and foreign currency exchange is still expected to reduce adjusted earnings per share growth by approximately 1 percent.
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