General Mills(US:GIS)2024-12-18 21:09Financial Performance - In the second quarter of fiscal 2025, net sales increased by 2% to $5,240.1 million, while organic net sales grew by 1% compared to the same period last year [100]. - Operating profit for the second quarter rose by 33% to $1,078 million, with an operating profit margin of 20.6%, an increase of 480 basis points [100]. - Diluted earnings per share increased by 39% to $1.42, while adjusted diluted earnings per share rose by 12% on a constant-currency basis to $1.40 [100]. - For the six-month period ended November 24, 2024, net sales were flat at $10,088.2 million, with organic net sales growth also flat [114]. - Segment operating profit decreased by 3% to $1,608 million for the six-month period ended November 24, 2024, compared to $1,658 million in the same period in fiscal 2024 [132]. - The operating profit as reported for the quarter ended November 24, 2024, was $1,077.9 million, representing a 20.6% margin compared to $811.8 million and 15.8% margin for the same quarter in 2023 [187]. - Adjusted operating profit for the six-month period ended November 24, 2024, was $1,929.3 million, or 19.1% of net sales, compared to $1,888.4 million and 18.8% for the same period in 2023 [187]. - Adjusted operating profit for the same quarter was $1,064.0 million, reflecting an 8% growth compared to $989.4 million in the prior year [190]. - After-tax earnings from joint ventures increased to $30 million, a 25% rise compared to $24 million in the same period last year [111]. - After-tax earnings from joint ventures increased to $49 million for the six-month period ended November 24, 2024, compared to $48 million in the same period in fiscal 2024, reflecting a 5% increase on a constant-currency basis [124]. Expenses and Costs - SG&A expenses increased by $22 million to $852 million, primarily due to higher compensation and benefits expenses and the addition of a pet food business in Europe [106]. - Cost of sales decreased by $64 million to $3,309 million, driven by a reduction in product rate and mix [105]. - SG&A expenses increased by $37 million to $1,707 million for the six-month period ended November 24, 2024, primarily due to higher compensation and benefits expenses [119]. - Cost of sales decreased by $39 million to $6,468 million for the six-month period ended November 24, 2024, compared to the same period in fiscal 2024 [118]. - Restructuring, impairment, and other exit costs totaled $3 million for the six-month period ended November 24, 2024, a significant decrease from $125 million in the same period last year [120]. Tax and Earnings - The effective tax rate for the second quarter of fiscal 2025 was 20.1%, up from 19.0% in the same period last year [109]. - The effective tax rate for the six-month period ended November 24, 2024, was 20.9%, an increase from 20.0% in the same period last year [122]. - The effective tax rate as reported was 20.1% for the quarter, compared to 19.0% in the same quarter last year [203]. Cash Flow and Debt - Cash provided by operations was $1,775 million for the six-month period ended November 24, 2024, compared to $1,496 million in the same period last year, reflecting a $279 million increase [158]. - Cash used by investing activities was $306 million for the six-month period ended November 24, 2024, compared to $316 million in the same period last year [159]. - As of November 24, 2024, the company had $442 million of cash and cash equivalents in foreign jurisdictions [161]. - The company had $1,822 million of long-term debt maturing in the next 12 months, including $800 million of fixed-rate notes due April 17, 2025 [164]. - Total committed and uncommitted credit facilities available as of November 24, 2024, amounted to $3.4 billion [162]. Market Performance - North America Retail net sales decreased by 1% in the six-month period ended November 24, 2024, driven by a decrease in contributions from volume growth [127]. - International net sales increased by 1% in the six-month period ended November 24, 2024, driven by an increase in contributions from volume growth [135]. - North America Pet net sales increased 5% to $595.8 million in Q2 fiscal 2025 compared to $569.3 million in Q2 fiscal 2024, driven by volume growth [141]. - North America Foodservice net sales rose 8% to $630.0 million in Q2 fiscal 2025, compared to $582.0 million in Q2 fiscal 2024, driven by volume growth and favorable net price realization [148]. Strategic Focus - The company plans to focus on product innovation and brand-building investments in fiscal 2025 to drive volume performance [99]. - The company expects to generate higher levels of Holistic Margin Management (HMM) cost savings to offset input cost inflation in fiscal 2025 [99]. - The company is committed to strategic revenue management to enhance net price realization and optimize product mix [224]. - The company is actively engaged in product development and innovation to meet changing consumer demands [231]. - Future results may be influenced by supply chain disruptions, competitive dynamics, and consumer acceptance of new products [231]. Risk Management - The company emphasizes the importance of managing risks related to interest rates, foreign exchange, commodities, and equity markets [233]. - The estimated maximum potential value-at-risk for interest rate instruments is $47 million, reflecting a decrease of $6 million due to lower interest rates [234]. - The foreign currency instruments show a potential loss of $37 million, with an increase of $7 million attributed to a rise in portfolio basis [234]. - Commodity instruments have a potential loss of $4 million, with a minor change of $1 million [234]. - Equity instruments indicate a potential loss of $2 million, with no significant change reported [234].