General Mills(US:GIS)2025-12-17 20:06Financial Performance - In Q2 fiscal 2026, net sales decreased by 7% to $4,860.8 million, with organic net sales down by 1% compared to the same period last year [105]. - Operating profit fell by 32% to $728 million, with an operating profit margin of 15.0%, a decrease of 560 basis points [105]. - Adjusted diluted earnings per share decreased by 21% on a constant-currency basis to $1.10 [105]. - For the six-month period ended November 23, 2025, net sales decreased by 7% to $9,378.3 million, with organic net sales down by 2% [121]. - Operating profit for the six-month period increased by 29% to $2,453.8 million, with an operating profit margin of 26.2%, an increase of 730 basis points [121]. - The company reported an adjusted operating profit of $847.7 million for the quarter ended November 23, 2025, representing a 20% decrease compared to $1,064.0 million in the same quarter of the previous year [200]. - The diluted earnings per share (EPS) for the quarter was $0.78, a 45% decline from $1.42 in the prior year quarter [205]. - The adjusted diluted EPS for the six-month period was $1.96, a 21% decrease from $2.47 in the same period of the previous year [205]. Costs and Expenses - Restructuring, transformation, impairment, and other exit costs totaled $122 million in Q2 fiscal 2026, significantly higher than $1 million in the same period last year [112]. - SG&A expenses decreased by $20 million to $1,688 million, with SG&A as a percentage of net sales increasing by 110 basis points [128]. - Restructuring and transformation costs totaled $138 million, significantly up from $3 million in the same period last year [130]. - Unallocated corporate expense totaled $88 million in the second quarter of fiscal 2026, an increase from $65 million in the same period in fiscal 2025 [168]. - The company recorded a $53 million non-cash impairment charge related to the Uncle Toby's brand intangible asset due to lower future sales projections [179]. - The company undertook restructuring and transformation charges amounting to $90.5 million for the six-month period ended Nov. 23, 2025 [211]. Taxation - The effective tax rate for Q2 fiscal 2026 was 23.3%, up from 20.1% in the same period last year [114]. - The effective tax rate increased to 24.9% for the six-month period ended November 23, 2025, compared to 20.9% in the same period last year [132]. - Adjusted effective income tax rate for the quarter ended Nov. 23, 2025, was 23.3%, consistent with the previous year [211]. - Enhanced income tax disclosures will be required starting from fiscal 2026, which may affect the company's reporting practices [185]. Divestitures and Acquisitions - Divestitures gain totaled $1,054 million, mainly from the sale of the United States yogurt business [129]. - The company experienced a divestiture gain of $1,054.4 million in fiscal 2026 related to the sale of its United States yogurt business [189]. - The combination of growth investments and input cost inflation is expected to outpace anticipated cost savings from Holistic Margin Management [104]. Segment Performance - North America Retail net sales decreased by 13% to $2,883.3 million for the six-month period ended November 23, 2025, driven by lower volume growth [138]. - International net sales increased by 6% to $728.9 million for the quarter ended November 23, 2025, supported by volume growth and favorable foreign currency impacts [146]. - North America Pet net sales increased by 11% to $660.4 million for the quarter ended November 23, 2025, driven by favorable net price realization and volume growth [153]. - Segment operating profit for North America Retail decreased by 22% to $1,246 million for the six-month period ended November 23, 2025 [145]. - North America Pet net sales increased by 8% in the six-month period ended November 23, 2025, compared to the same period in fiscal 2025, driven by favorable net price realization and contributions from volume growth, including the impact of the Acquisition [155]. - North America Pet organic net sales decreased by 2% in the six-month period ended November 23, 2025, primarily due to a decrease in contributions from organic volume growth [158]. - Segment operating profit for North America Pet decreased by 12% to $123 million in the second quarter of fiscal 2026, impacted by higher input costs and SG&A expenses [159]. - North America Foodservice net sales decreased by 8% in the second quarter of fiscal 2026, driven by a decrease in contributions from volume growth and unfavorable net price realization [162]. - The North America Pet segment operating profit decreased by 12% for the quarter ended Nov. 23, 2025, with no impact from foreign currency exchange [209]. - The North America Foodservice segment operating profit also declined by 12% for the quarter ended Nov. 23, 2025, with no impact from foreign currency exchange [209]. - The International segment operating profit showed a remarkable growth of 111% for the six-month period ended Nov. 23, 2025, with a 3-point positive impact from foreign currency [209]. Cash Flow - Cash provided by operations was $1,216 million during the six-month period ended November 23, 2025, a decrease of $559 million compared to the same period last year [170]. - Cash provided by investing activities was $1,539 million during the six-month period ended November 23, 2025, primarily due to the sale of the United States yogurt business for $1,798 million [171]. - Cash used by financing activities was $2,434 million during the six-month period ended November 23, 2025, including $1,240 million of net debt payments [172]. Risk Management - The estimated maximum potential value-at-risk for interest rate instruments was $38 million as of Nov. 23, 2025, reflecting a decrease in interest rate volatility [233]. - The value-at-risk for foreign currency instruments was $50 million, showing an immaterial change of $1 million [233]. - The value-at-risk for commodity instruments was $2 million, with an immaterial decrease of $1 million [233]. - The value-at-risk for equity instruments was $3 million, with no significant change reported [233]. - The company identified risk factors in its Annual Report that could affect future results, with no obligation to revise forward-looking statements [232]. Internal Controls and Reporting - A new consolidation and financial reporting system was finalized, tested, and implemented during the second quarter of fiscal 2026 [235]. - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of November 23, 2025 [234]. - The company has made changes to its internal control over financial reporting that may materially affect its operations [235]. - The company is analyzing the impact of recently issued accounting standards updates on its financial position and results of operations [182].