Financial Performance

General Mills Sales Rise on At-Home Food Demand

The cereal maker's Q1 results were "highlighted by broad-based market share gains amid elevated at-home food demand due to the COVID-19 pandemic."
Matthew HellerSeptember 23, 2020
General Mills Sales Rise on At-Home Food Demand

General Mills’ quarterly results beat analysts’ estimates as the cereal maker benefitted from increased demand for food consumed at home amid the coronavirus pandemic.

For the first quarter, General Mills reported Wednesday that net sales rose 9% to $4.4 billion, led by a 14% increase for the company’s North America retail segment. Adjusted earnings increased 27% to $1.00 per share.

Analysts had expected earnings of 87 cents per share on revenue of $4.2 billion.

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Growth for products consumed at home, including refrigerated baked goods, dessert mixes and soup, helped lift General Mill’s sales.

“We continued to drive exceptional results this quarter, highlighted by broad-based market share gains amid elevated at-home food demand due to the COVID-19 pandemic,” CEO Jeff Harmening said in a news release.

General Mills also boosted its quarterly dividend by 4% to 51 cents per share and said it expects second-quarter at-home food demand to remain elevated compared to pre-pandemic levels, including high single-digit aggregate retail sales growth in North America retail categories.

The company’s shares have gained about 18% during the pandemic. In trading Wednesday, they were up 0.5% at $57.69.

“I’m more confident than ever that General Mills is poised to emerge from the pandemic a stronger company and in a position to generate consistent, profitable growth and top-tier returns for our shareholders,” Harmening said.

General Mills posted first-quarter sales gains across several food categories in the U.S., with meals and baking up 31%, cereal up 10%, and yogurt up 5%. Snack sales declined 2%.

Gross margin increased 170 basis points to 36.4% of net sales while operating profit margin rose 310 basis points to 19.6%.

According to the company, at-home food “moderated from the fourth quarter of fiscal 2020, as expected, driven by the easing of pandemic-related restrictions and increased restaurant re-openings.”

“The magnitude and duration of elevated at-home food demand remains highly uncertain, and as a result, the company is not currently providing a full-year outlook for fiscal 2021 growth in organic net sales, adjusted operating profit, and adjusted diluted EPS,” it said.

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