General Mills Reports Solid Growth Amid COVID-19 Turmoil

In advance of investor discussions, General Mills recently provided an update on its performance and outlook for the fiscal year ending May 31, 2020. To date, all General Mills manufacturing and distribution facilities have continued to operate without significant disruption related to COVID-19. In March, the company experienced an unprecedented increase in consumer demand for food at home, particularly impacting its North America Retail and Europe & Australia segments, as consumers stocked up in response to local shelter-in-place restrictions. While the magnitude of increased at-home food demand moderated in April, it remained significantly elevated compared to pre-COVID-19 levels.

In contrast, the company has seen a substantial decline in away-from-home food demand since the onset of the pandemic. These trends are expected to be a significant headwind on business results in its Convenience Stores & Foodservice segment, driven primarily by the restaurant and education channels, and, to a lesser extent, in its Asia & Latin America segment. Globally, at-home food represents approximately 85% of General Mills’ net sales and away-from-home food represents the remaining 15%.

General Mills has raised its financial expectations for the fourth quarter of fiscal 2020 to reflect stronger than anticipated at-home food demand in March and April, with an expectation that trends will moderate in May but remain significantly ahead of pre-COVID-19 levels.

The company expects fourth-quarter organic net sales to increase double digits versus the prior year, led by strong growth in North America Retail and Pet. Fourth-quarter constant-currency adjusted operating profit is expected to grow faster than organic net sales, reflecting benefits from operating leverage, partially offset by increased costs related to COVID-19. As a result, the company now expects to exceed each of its previous full-year fiscal 2020 guidance ranges of 1 to 2% organic net sales growth, 4 to 6% growth in constant-currency adjusted operating profit, and 6 to 8% growth in constant-currency adjusted diluted earnings per share.

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