General Mills Inc. on Wednesday reported weaker-than-expected revenue in its May quarter, as the food maker continues to struggle with changing consumer tastes and a strong dollar.
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Profit excluding one-time items came in above Wall Street expectations for the fiscal fourth quarter, while the company also saw its volume improve.
In a news release, Chief Executive Ken Powell called the company's operating performance in its recently ended fiscal year "mixed." Though General Mills' convenience stores and food-services segment has logged sales growth, its largest segment, U.S. retail, has struggled.
The maker of Cheerios cereal and Hamburger Helper has been cutting jobs and closing plants as it struggles with Americans' growing aversion to packaged foods. General Mills said Wednesday that it expects its cost-cutting efforts to save $$285 million to $310 million in its new fiscal year.
The company forecast a mid- to single-digit increase in adjusted earnings next year, excluding currency fluctuations, and flat sales growth compared with the prior year.
The Minneapolis-based company isn't alone--established food-and-beverage industry peers such as Kellogg Co. and Coca-Cola Co. are also grappling with lagging demand for their shelf-stable foods and sugary drinks, as people favor healthier, fresher options.
In June, General Mills announced plans to strip artificial flavors and colors from the remaining 40% of its cereals that still contain them, including Trix and Reese's Puffs.
Meanwhile, the company continues to benefit from its acquisition of organic-food company Annie's Inc., which it bought last year for $820 million.
"Our actions to respond to evolving consumer food interests--including bolstering our natural and organic portfolio with the addition of Annie's--helped strengthen our business performance in the second half of the year," said Mr. Powell.
In the latest quarter, U.S. retail sales grew 4.6% to $2.55 billion, helped by higher volume and net-price realization.
In its international segment, sales fell 8.8% to $1.22 billion on currency effects, which brought down sales growth by 18 percentage points.
Convenience stores and food-service-segment sales grew 3.9% to $527.5 million.
In all, General Mills reported a profit of $186.8 million, or 30 cents a share, down from $404.6 million, or 65 cents a share, a year earlier.
Excluding restructuring-related charges, a tax item and other special costs, earnings were 75 cents a share.
Revenue ticked up 0.4% to $4.3 billion. Excluding currency fluctuations, sales would have increased 6%.
Analysts polled by Thomson Reuters expected a per-share profit of 71 cents and revenue of $4.53 billion.
Gross margin improved to 35.3% from 34.6% in the prior year.