Global food group General Mills has reported a 4 per cent increase in net sales, reaching $4.7 billion (£4.13bn), in the 2023 fiscal’s first quarter, ended on August 28, 2022.
The company added that the organic net sales were up 10 percent in the quarter, driven by positive organic net price realisation and mix, partially offset by lower organic pound volume, including the impact of a voluntary recall on certain international Häagen-Dazs ice cream products.
The maker of Yoplait and Nature Valley has raised its full-year outlook despite several constraining factors as it expects volumes to increase in the remaining quarters.
In the first quarter, operating profit increased 29 per cent to $1.1bn and adjusted operating profit was up 8 per cent in constant currency. Diluted earnings per share (EPS) of $1.35 increased 32 per cent from the prior year and adjusted diluted EPS of $1.11 was up 13 per cent in constant currency.
“We continue to deliver strong performance in a highly volatile operating environment,” said General Mills chairman and chief executive Jeff Harmening.
“Given the strength of our first-quarter results and confidence in our ability to adapt to continued volatility ahead, we are increasing our full-year outlook for net sales, operating profit, and EPS growth.”
Though the gross margin was down 450 basis points to 30.7 percent of net sales, driven by higher input costs and unfavorable mark-to-market effects, adjusted gross margin was up 20 basis points to 34.9 percent, as a result of the favorable net price realisation and mix and cost savings.
The company noted that the economic health of consumers, the inflationary cost environment and the frequency and severity of disruptions in the supply chain will be the largest factors impacting its performance in fiscal 2023.
However, relative to its initial full-year expectations, the company now expects lower volume elasticities and better volume performance, increased input cost inflation to 14 to 15 per cent of total cost of goods sold, and increased investment in brand building and other growth-driving activities.
As a result, the company expects its organic net sales to increase 6 to 7 per cent, compared to the previous expectation of 4 to 5 per cent growth and constant-currency adjusted operating profit is now expected to range between flat and up 3 percent. Adjusted operating profit was previously expected to range between down 2 per cent and up 1 per cent in constant currency.
Constant-currency adjusted diluted EPS is now expected to increase 2 to 5 per cent, from the previous range between flat and up 3 per cent.