General Mills(GIS) - 2025 Q2 - Quarterly Results

Financial Performance - Net sales for the second quarter were $5.2 billion, an increase of 2 percent, with organic net sales up 1 percent[2]. - Operating profit reached $1.1 billion, up 33 percent, while adjusted operating profit increased 7 percent in constant currency[2]. - Diluted earnings per share (EPS) rose to $1.42, a 39 percent increase, with adjusted diluted EPS at $1.40, up 12 percent in constant currency[2]. - Gross margin improved by 250 basis points to 36.9 percent of net sales, driven by Holistic Margin Management (HMM) cost savings[7]. - Cash provided by operating activities totaled $1.8 billion through six months, up 19 percent from the previous year[27]. - Net earnings attributable to General Mills rose by 34% to $795.7 million in Q1 FY2025 compared to $595.5 million in Q2 FY2024[37]. - Basic earnings per share (EPS) for the quarter ended November 24, 2024, increased to $1.43 from $1.03 in the prior year, reflecting a growth of 38.83%[50]. - Diluted EPS for the same quarter rose to $1.42 from $1.02, marking an increase of 39.22%[50]. - Net earnings for the six-month period ended November 24, 2024, increased to $1,385.9 million from $1,282.6 million in the prior year, representing an 8.06% growth[47]. Segment Performance - North America Pet segment net sales increased 5 percent to $596 million, with segment operating profit up 36 percent to $139 million[17]. - North America Foodservice segment net sales grew 8 percent to $630 million, with operating profit increasing 24 percent to $118 million[19]. - International segment net sales rose 1 percent to $691 million, including a 4-point benefit from the Edgard & Cooper acquisition[21]. - North America Pet segment saw a 5% increase in net sales, reaching $595.8 million compared to $569.3 million in the prior year[41]. - Operating profit for the North America Pet segment increased by 36% to $139.3 million, up from $102.5 million year-over-year[41]. - North America Foodservice segment net sales increased by 8% to $630.0 million from $582.0 million year-over-year[41]. Outlook and Projections - The company updated its full-year fiscal 2025 outlook to reflect increased investment for improved volume and market share trends[2]. - For fiscal 2025, organic net sales are expected to range between flat and up 1%, with a focus on the lower end of the range due to increased promotional investment[29]. - Adjusted operating profit is now projected to decline between 4% and 2% in constant currency, a revision from the previous range of down 2% to flat[29]. - Adjusted diluted EPS is expected to decline between 3% and 1% in constant currency, compared to the prior range of down 1% to up 1%[29]. - Free cash flow conversion is anticipated to be at least 95% of adjusted after-tax earnings[29]. Cash Flow and Investments - Cash and cash equivalents increased significantly to $2,292.8 million from $593.8 million year-over-year[44]. - The company reported a net cash used by investing activities of $305.9 million, a slight improvement from $316.2 million in the prior year[47]. - The company entered into a definitive agreement to acquire NX Pet Holding, Inc. for approximately $1 billion, expected to close in the third quarter of fiscal 2025[49]. - The company plans to divest its North American yogurt businesses for approximately $2 billion, with expected closure in calendar year 2025[49]. Tax and Expenses - The effective tax rate for Q2 fiscal 2025 was 20.1%, up from 19.0% in Q2 fiscal 2024, primarily due to nonrecurring tax benefits in the prior year[6]. - The effective tax rate for the six-month period ended November 24, 2024, was 20.9%, compared to 20.0% for the same period in the previous year, reflecting a 0.9 percentage point increase[6]. - Unallocated corporate expenses decreased to $65 million in the second quarter of fiscal 2025 from $157 million in the same period last year, a reduction of 58.54%[50]. Adjusted Metrics - Adjusted operating profit growth on a constant-currency basis for the six-month period ended November 24, 2024, was $1,909.4 million, a 10% increase from $1,741.8 million in the same period last year[64]. - Adjusted diluted EPS for Q2 fiscal 2025 was $1.40, a 12% increase from $1.25 in Q2 fiscal 2024[66]. - The adjusted effective income tax rate was impacted by various items affecting comparability, with reconciliations provided for transparency[67]. - The company emphasizes the importance of adjusted earnings comparisons as a percent of net sales for assessing performance on a year-to-year basis[68].