General Mills (NYSE:GIS) released its fiscal fourth-quarter 2020 results before the market opened on July 1. The maker of Cheerios and other cereal products posted strong results, with earnings and revenue surpassing analysts' projections.
Performance at a glance
The Minneapolis-based company posted fourth quarter adjusted earnings per share of $1.10, which was more than the $0.94 reported in the prior-year quarter. Revenue of $5.02 billion was up 21% on a year-over-year basis. Analysts had predicted EPS of $1.06 on $4.98 billion in revenue.
Shelf-stable, prepare-at-home food accelerated the company's sales during the quarter, making up roughly 85% of its global net sales. Other products accounted for only 15%.
Organic sales rose 16% in the reported quarter as weakness in the Convenience Stores and Foodservice segment was offset by solid growth in the North America Retail, Pet and Europe and Australia segments.
Chairman and CEO Jeff Harmening commented the following:
"Amid significant challenge and change in the world around us, General Mills adapted and executed in fiscal 2020 to deliver outstanding financial results while fulfilling our purpose of making food the world loves. We've demonstrated extraordinary agility to meet the unprecedented increase in demand for food at home and to win across our categories."
In the North America Retail segment, net sales surged 36% to $3.2 billion, largely due to robust demand for at-home food during the pandemic. In addition, the result reflected the positive impact of a 53rd week. Sales increased 75% for U.S. Meals and Baking, 26% for U.S. cereal, 12% for Canada, 10% for U.S. Snacks and 10% for U.S. Yogurt. Segment operating profit totalled $893 million, reflecting a growth of 69% year-over-year.
The pet segment recorded $555 million in revenue, up 37% year-over-year. General Mills cited robust volume growth, which was partly negated by unfavourable net price realization and mix. Operating profit in the division rose 23% to $135 million.
Sales in the Convenience Stores and Foodservice business plunged 24% to $393 million, driven primarily by reduction in the away-from-home food demand resulting from the pandemic. The operating profit was $39 million, down 67% from the prior-year quarter.
Net sales in the Europe and Australia segment climbed 6% to $530 million owing to strong demand for at-home food. An extra week in the fourth quarter also helped. Organic sales soared 4%. Operating profit of $33 million dipped 22% as sales decline in away-from-home channels was only partly offset by growth in Old EI Paso Mexican food and Betty Crocker dessert mixes.
In Asia and Latin America, net sales of $349 million were down 12% due to lower away-from-home food demand and adverse foreign currency exchange rates. Organic net sales plummeted 7% as compared with the year-ago results as growth in Latin America could not offset declines in Asia. The company reported an operating loss of $24 million in the segment.
General Mills pulled its financial forecast for fiscal 2021, citing the global uncertainty caused by the coronavirus pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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