General Mills, Inc. (NYSE:GIS) has reported its third-quarter fiscal 2024 results, with earnings exceeding the Consensus Estimate and showing an increase year over year. However, sales declined from the year-ago quarter’s level, although they surpassed the consensus mark. The company has reaffirmed its fiscal 2024 guidance.

Quarterly Performance

General Mills reported adjusted earnings of $1.17 per share, surpassing the Consensus Estimate of $1.04. The bottom line increased by 22% year over year on a constant-currency basis, driven by higher adjusted operating profit, reduced net shares outstanding, and lower taxes, partially offset by increased net interest expenses.

Net sales for the quarter were $5,099.2 million, exceeding the Consensus Estimate of $4,954.3 million. However, the top line decreased by 1% from the year-ago quarter due to lower pound volume, partially offset by positive net price realization and mix. Organic net sales also declined by 1%.

The adjusted gross margin expanded by 20 basis points to 34%, driven by cost savings from Holistic Margin Management (HMM) and positive net price realization and mix. However, this was partially offset by input cost inflation, increased other supply chain costs, and supply chain deleverage.

Segment Performance

North America Retail: Revenues were unchanged year over year at $3,242.1 million, with positive net price realization and mix offset by reduced pound volume. Organic net sales remained unchanged, while operating profit declined by 4% to $752.2 million.

International: Revenues decreased by 3% year over year to $680.1 million, driven by lower pound volume. Organic net sales also fell by 3% due to softness in China and Brazil. Operating profit slumped by 57% to $18.2 million.

Pet: Revenues were down 3% year over year to $624.5 million, primarily due to reduced pound volume. However, positive net price realization and mix provided some relief. Operating profit increased by 25% to $128.3 million.

North America Foodservice: Revenues increased by 1% year over year to $551.7 million, with organic net sales also improving by 1%. Operating profit decreased by 1% to $81.7 million, primarily due to increased other supply chain costs and SG&A expenses.

Other Financial Aspects

General Mills ended the quarter with cash and cash equivalents of $588.6 million, long-term debt of $11,015.1 million, and total shareholders’ equity of $9,691.3 million. The company generated $2,438.9 million in cash from operating activities in the nine months ended February 25, 2024. Capital investments amounted to $486 million during the same period.

Outlook

For fiscal 2024, General Mills expects organic net sales to be down 1% to flat year over year. Adjusted operating profit growth at constant currency is anticipated to be 4-5%, with adjusted earnings per share (EPS) growth expected to be between 4% and 5% at constant currency. The company envisions a free cash flow conversion of at least 95% of adjusted after-tax earnings.

The company’s shares have increased by 6.9% in the past three months compared with the industry’s 5% rise.

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