General Mills (NYSE:GIS) reported flat U.S. sales and said it has launched a “formal review” of its North American manufacturing and distribution network to streamline and reduce costs.
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The maker of Cheerios, Green Giant vegetables and Betty Crocker baking goods reported net earnings of $405 million, or 65 cents a share, up about 10% from a year-earlier profit of $366 million, or 55 cents.
Excluding one-time items such as the sale of several Idaho grain elevators, General Mills said it earned 67 cents, below average analyst estimates of 72 cents, according to a Thomson Reuters poll.
Revenue for the three months ended May 25 fell 3% year-over-year to $4.3 billion from $4.41 billion a year ago amid lower sales volumes, flat retail sales in the U.S. and a 7% decline to $1.3 billion in international segment sales.
The results topped the Street’s view of $4.42 billion, a reflection of slightly higher prices.
“Our sales and operating profit results were disappointing,” General Mills CEO Ken Powell said in a statement. “In the fourth quarter, promotional spending in developed markets was less effective than we planned and input cost inflation was a bit above our forecast.”
In fiscal 2015, he says the company is focused on accelerating top-line growth with new products and enhanced marketing efforts.
Supply chain cost savings are expected to exceed $400 million this year, and Powell said he expects that to offset input cost inflation.
For the full year, sales are forecast by General Mills to grow in the mid-single-digit range. Adjusted earnings per share are expected to grow in the high-single digits.
Shares of General Mills fell 3.2% to $51.99 in recent trade.