General Mills(US:GIS)2025-12-17 12:00Financial Data and Key Metrics Changes - Reported net sales for Q2 were $4.9 billion, down 7%, with a 6-point headwind from divestitures and acquisitions [23] - Organic net sales decreased by 1%, while organic volume was flat, showing sequential improvement from Q1 [25] - Adjusted operating profit was $848 million, down 20% in constant currency, primarily due to lower volume and higher input costs [24][30] - Adjusted diluted earnings per share totaled $1.10, down 21% in constant currency [24] Business Line Data and Key Metrics Changes - North America Retail organic net sales were down 3%, driven by unfavorable price mix, but organic volume growth modestly outpaced Nielsen measured retail volume growth [25] - North America Pet segment saw a net sales increase of 11%, with organic net sales up 1%, driven by favorable price mix [26] - North America Foodservice organic net sales were flat, with growth in frozen baked goods and cereal offset by a decline in bakery flour [27] - International segment organic net sales increased by 4%, led by growth in Brazil, China, India, and North Asia [28] Market Data and Key Metrics Changes - In North America Retail, the company held or grew pound share in eight of its top 10 U.S. categories [8][25] - The North America Pet segment experienced mid-single-digit growth in cat feeding, while dog feeding results were mixed [16] - The international segment held or grew dollar share in 54% of priority businesses, with strong performance from Häagen-Dazs and Nature Valley [28] Company Strategy and Development Direction - The company is focused on enhancing the "Remarkability" of its brands to restore organic sales growth [3] - Key priorities include returning North America retail to volume growth, accelerating North America pet growth, and driving efficiencies to fund investments [5][6] - The Remarkable Experience Framework guides brand investment decisions, focusing on product, packaging, brand communications, omnichannel execution, and value [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a change in consumer behavior, with lower and middle-income consumers increasingly making food purchases on promotion [9] - The company remains confident in its strategy to deliver more value to consumers amid economic pressures [10] - Fiscal 2026 guidance was reaffirmed, with expectations for improved organic net sales in the second half [32][33] Other Important Information - The adjusted gross margin was 34.8% of net sales, down 150 basis points due to higher input costs [29] - Capital investments in the first half totaled $253 million, with $659 million paid in dividends [31] Q&A Session Summary Question: What are the expectations for organic net sales in the second half of fiscal 2026? - The company expects improved organic net sales driven by the expanded impact of remarkability investments and favorable trade timing benefits in Q4 [32] Question: How is the company addressing the challenges in the North America Pet segment? - The company is focusing on strengthening the core Blue Buffalo business and driving growth through new product launches like Love Made Fresh [18] Question: What are the anticipated impacts of divestitures on future performance? - The divestitures are expected to continue to pose headwinds, but the company is managing these impacts through strategic investments and operational efficiencies [24][30]