General Mills has turned more pessimistic about its outlook for the rest of the fiscal year as the US food major reported a drop in third-quarter sales and volumes.
A “slowdown” in snacking in the US was one factor cited today (19 March) as General Mills forecast a decline in organic sales over the course of the full financial year, downgraded from its guidance for a flat-to-higher print confirmed at the second-quarter stage in December.
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“Third-quarter top-line results finished below expectations, driven by retailer inventory headwinds in North America retail and North America pet, a slowdown in US snacking categories, and softer demand in US away-from-home food channels,” the company reported.
General Mills organic sales fell 5% in the third quarter to 23 February, coming in at $4.8bn, and were down by the same magnitude in reported terms. Volumes dropped four percentage points with pricing a negative one percentage point.
“The company expects macroeconomic uncertainty to continue to impact consumers in the fourth quarter,” General Mills said today as the business now expects organic sales to be down by 1.5% to 2% in fiscal 2025.
Flat to up 1%, with guidance to the “lower end” of that range, was outlined in December.
In the final quarter of the year, the Blue Buffalo pet-food brand owner plans to invest in “consumer value, media support, and in-store visibility” and also bring forward brand support in “advance of significant fiscal 2026 new product launches”.
Reflecting the new outlook for sales, the Old El Paso brand maker has also downgraded its outlook for adjusted operating profit and adjusted diluted EPS. Both are expected to decline 7-8%.
General Mills envisaged at the second-quarter results stage in December that adjusted operating profit for the year would be down 2-4%, compared to a prior forecast of flat to down 2%.
Meanwhile, adjusted diluted EPS for fiscal 2025 had been estimated in December at likely to be down 1-3%, versus the previous outlook of down 1% to up 1%.
“Due to continued uncertainty regarding the implementation dates and scope of potential US import tariffs or retaliatory tariffs put in place by other countries, this guidance does not include any impact from new tariff actions in 2025,” General Mills explained today.
Jeff Harmening, company chairman and CEO, said: “Our third-quarter organic net sales finished below our expectations, driven largely by greater-than-expected retailer inventory headwinds and a slowdown in snacking categories.
“At the same time, we drove continued positive market share trends in pet, foodservice and international, as well as improvement in Pillsbury refrigerated dough and Totino’s hot snacks, two businesses where we made incremental investments last quarter and saw positive returns.”
In the year-to-date numbers issued today, organic and reported sales both decreased 1%, with volumes flat and pricing again a negative one percentage point.
Adjusted EPS in constant currency fell 1% to $3.47. The metric dropped 15% in the third quarter to $1.00.
