General Mills Q3 profits jump 27% buoyed by elevated at-home food demand

US – American multinational food company General Mills has posted a 27% rise in third-quarter operating profit, as it continues to benefit from elevated at-home food demand driven by the pandemic.

For the three months ending 28th February 2021, the company recorded an operating profit of US$827 million while sales increased 8% to US$4.5 billion.

The company’s biggest unit – North American retail – recorded a 9% increase in net sales to US$2.37 billion while the unit’s meals and baking segment rose 15% and US cereal went up by 9%.

Canada posted 13% net sales growth and yogurt rose by 3%. The company’s snack unit was not as successful during the period with sales declining by 3%.

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In Europe and Australia, General Mills recorded a 15% growth, led by strong performance by its Old El Paso Mexican food and Häagen-Dazs ice cream.

The company witnessed net sales go up by 12% in Asia and Latin America, driven by strong growth for Yoki meals and snacks, Kitano seasonings in Brazil, and Betty Crocker dessert mixes in the Middle East.

However, reduced away-from-home food demand meant the company’s convenience stores and foodservice unit fell by 10%.

“We’ve made good progress on our fiscal 2021 priorities, including competing effectively, fuelling investment in our brands and capabilities, and reducing our leverage,” said General Mills chairman and CEO, Jeff Harmening.

Third quarter earning comes at a time when the owner of Cheerios continues to advance its Accelerate strategy aimed at driving long-term profitable growth and shareholder value.

 The company aims to prioritise its core markets and reshape its portfolio, focusing on local brands that have the best prospects for profitable growth.

Yesterday, General Mills entered into a memorandum of understanding to offload its 51% controlling stake in its European Yoplait operations to Sodiaal, in exchange for full ownership of the Canadian Yoplait business.

The company expects at-home food consumption after the pandemic is over to continue to be elevated compared with pre-pandemic levels.

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Consequently, the company has decided to resume its share buyback program and  is guiding for full fiscal year organic net sales growth of 3.5%.

”Looking ahead, we remain focused on strengthening our momentum and emerging from the pandemic a stronger company, even better positioned to drive long-term shareholder value.”

General Mills plans to continue capitalising on the ongoing elevated consumer demand for food at home, as well as the rise in cooking and baking.

Meanwhile, General Mills CEO Jeff Harmening said that the company takes food safety very seriously after a customer’s claim that he found shrimp tails in his Cinnamon Toast Crunch cereal went viral.

Harmening told CNBC that General Mills is looking into what happened between the cereal leaving the company’s facility and Karp opening it.

The company however that the unfortunate incident did not occur at their facility and that after further investigation on the image, the purpoted shrimp legs “appears to be an accumulation of the cinnamon sugar that sometimes can occur when ingredients aren’t thoroughly blended.”

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