Fiscal year 2016 is off to an excellent start for General Mills. Its U.S. Retail segment had experienced a 4 percent increase in net sales in the first quarter, reflecting sales increases for the company’s cereal, yogurt, snacks and meals businesses. Meanwhile, the company’s international segment also reported an increase in sales by 5 percent, particularly due to a strong performance in the Canada and European markets. Due to foreign currency exchange, however, General Mills’ net sales actually declined slightly by 1 percent to $4.21 billion. Meanwhile, the company’s stock price went up by 0.60% or $0.34 to $57.13 following the earnings release.
General Mills Chairman and Chief Executive Officer Ken Powell admits that the company’s strong performance during the first quarter of fiscal year 2016 was actually expected. This is due to their expanded Consumer First Initiatives as well as a range of cost-savings projects the company had previously undertaken. This included closing some plants, laying off some workers and combining the operational facilities of some of the company’s brands.
Aside from enjoying growth in the retail and international markets, General Mills also reported a net sales increase of 1 percent in its convenience stores and foodservice segment, bringing the net sales of the said business to $478 million. This was due to a strong sales performance of the company’s snacks, mixes, cereal and frozen meals.
At the same time, General Mills expects to complete the divestiture of its Green Giant and Le Sueur businesses by the end of 2015. A proposed sale of the said businesses to B&G Foods, Inc. was recently announced. It is worth $765 million in cash. General Mills plans to use the net proceeds from the sale for debt reduction and share repurchases.
For 2016, General Mills expects its net sales in constant currency is expected to match its 2015 levels.