General Mills Cuts Fiscal 2025 Guidance Despite Q3 Earnings Beat

Core Insights - General Mills, Inc. reported mixed third-quarter fiscal 2025 results, with earnings surpassing estimates but net sales missing expectations, leading to a decline in both metrics year over year [1][2] Financial Performance - Adjusted earnings were $1 per share, beating the Zacks Consensus Estimate of 95 cents, but reflecting a 15% decline year over year on a constant-currency basis due to reduced operating profit, increased tax rates, and higher interest expenses [2] - Net sales fell 5% to $4,842.2 million, missing the Zacks Consensus Estimate of $4,955 million, driven by reduced pound volume and unfavorable foreign currency exchange rates [3] - Organic net sales also declined by 5%, with retail sales in measured markets down 1% during the quarter [3] Margin Analysis - Adjusted gross margin decreased by 60 basis points to 33.4% of net sales, primarily due to input cost inflation and unfavorable pricing [5] - Operating profit dropped 2% to $891 million, although the operating profit margin improved by 50 basis points to 18.4% [6] Segment Performance - North America Retail revenues decreased by 7% to $3,009.1 million, with organic net sales down 6% [7] - International segment revenues fell 4% to $651.3 million, with organic net sales down 3% [8] - North America Pet revenues remained flat at $623.7 million, while organic net sales declined by 5% [9] - North America Foodservice revenues increased by 1% to $555.3 million, with organic net sales also up 1% [10] Financial Health - General Mills ended the quarter with cash and cash equivalents of $521.3 million and long-term debt of $11,839.6 million [11] - The company generated $2,306.6 million in cash from operating activities in the nine months ended February 23, 2025, with capital investments of $405 million [12] Future Outlook - The company has lowered its fiscal 2025 guidance, now expecting organic net sales to decline between 2% and 1.5%, and adjusted operating profit and EPS to decline between 8% and 7% [14] - General Mills anticipates continued macroeconomic uncertainty affecting consumer behavior and plans to invest in consumer value and product launches [13]