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National & World Ag News Headlines |
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General Mills Reports Fiscal 2016 Operating Profit Up 30 Percent
USAgNet - 06/30/2016
General Mills, Minneapolis, Wednesday reported results for the fourth quarter and full fiscal year ended May 29, 2016. These results reflect the impact of foreign exchange headwinds, the sale of the North American Green Giant business, and one less week
compared to fiscal 2015.
-- Net sales declined 6 percent to $16.6 billion. On a constant-currency basis, net sales decreased 2 percent.
-- Operating profit totaled $2.7 billion, up 30 percent compared to the prior year. Operating profit margin increased 450 basis points to 16.3 percent of net sales. Adjusted operating profit margin increased 90 basis points to 16.8 percent of net sales.
-- Total segment operating profit declined 1 percent to $3.0 billion. In constant currency, total segment operating profit increased 1 percent.
-- Diluted earnings per share (EPS) were $2.77, up 41 percent from $1.97 a year ago.
-- Adjusted diluted EPS, which excludes certain items affecting comparability of results, totaled $2.92 in fiscal 2016, up 2 percent from $2.86 a year ago. On a constant-currency basis, adjusted diluted EPS increased 5 percent.
-- Net cash returned to shareholders in fiscal 2016 totaled $1.5 billion, including a 7 percent increase in dividends paid per share and share repurchases that reduced average diluted shares outstanding by 1 percent.
"We made important progress strengthening our business model and bringing our Consumer First strategy to life in our brands in fiscal 2016," said General Mills Chairman and Chief Executive Officer Ken Powell. "Most importantly, we returned the business to
organic sales and operating profit growth, while continuing to drive improvement in free cash flow. Our renovation and innovation efforts helped improve topline momentum on many businesses, and our productivity and cost-savings initiatives drove strong margin
expansion, delivering profit and EPS ahead of our expectations. We also took important strategic actions to reshape our portfolio for growth, including the divestiture of the Green Giant vegetable business in North America, the expansion of our recently
acquired Annie's brand into new categories, the launch of Yoplait yogurt in China, and the acquisitions of EPIC Provisions meat snacks in the U.S. and Carolina yogurt in Brazil.
"We're now going to build on our 2016 successes by investing to grow where we have positive net sales momentum, taking clear Consumer First actions to establish a solid base for long-term growth on certain other businesses, accelerating our margin
expansion efforts already in progress, and taking additional actions to optimize spending, reduce complexity, and prioritize profitable volume."
With strong savings in fiscal 2016, and visibility to further savings over the next two years, General Mills now expects its previously announced cost-reduction and organizational efficiency initiatives -- including Projects Century, Catalyst, and Compass, as well
as administrative cost reductions delivered through zero-based budgeting -- to generate total annual savings of $600 million by fiscal 2018, up from the previous target of $500 million (please see Note 4 below for more information on our restructuring actions).
The company also announced it is undertaking further efforts to prioritize investments, reduce complexity, and streamline its operations to drive profitable sales growth. As a result, General Mills is increasing and accelerating its previous margin expansion target.
The company now expects to achieve an adjusted operating profit margin of 20 percent by fiscal 2018, an increase of 400 basis points over fiscal 2015 levels.
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