General Mills profit ticks up amid cost cuts — but earnings miss analyst expectations
- General Mills reported a profit increase in its latest quarter amid a bevy of cost cuts that helped alleviate slipping sales, though earnings — $529.5 million — didn't meet analysts' estimates.
- The company increased its cost-savings goal to $500 million by 2018 but lowered its 2016 outlook as the result of its Green Giant divestiture, which will lead to weaker profit and sales than originally anticipated, according to the company.
- Net sales fell 6% to $4.42 billion, not making analysts' estimates of $4.61 billion, per Thomson Reuters.
The company has been busy changing ingredients, cutting jobs, setting a deadline for its cage-free egg policy, reducing sodium, and making e-commerce a priority. The shift away from breakfast cereal continues to weigh on General Mills, and also competitor Kellogg, which is looking beyond breakfast to promote its cereals (though the company last quarter saw stagnant cold cereal sales).
General Mills is also looking toward its venture capital sector for new ideas. "We have found that more and more innovation was coming from small companies," John Haugen, vice president and general manager of 301 Inc., told Fortune.
Based on last quarter's earnings, the company beat Kellogg in our "Food fight" series. Despite its cost-cutting strategies, the dip in confidence for next year doesn't bode well for the company.
In pre-market trading Thursday, shares fell 1.8%.
- The Wall Street Journal General Mills Profit Rises, Helped by Cost Cuts
- General Mills General Mills Reports Fiscal 2016 Second-Quarter Results