General Mills Q4 Conference Call Summary
General Mills (NYSE: GIS) hosted its Q4 conference call Wednesday morning.
The call was filled with positive sales domestically and internationally and innovations to come in the next year. General Mills missed consensus expectations for EPS and sales for the quarter.
The company reported a Q4 EPS of $0.67, compared to expectations of $0.72 and Q4 revenue were $4.28 billion, compared to consensus of $4.43 billion.
Following the call, shares of General Mills traded down by 3.61 percent Wednesday.
Highlights from the Call
- Input cost inflation above expected in previous quarter. General Mills faces a total inflation of three percent. Input cost inflation four percent higher than anticipated due to dairy.
- Net sales for convenience stores grew by one percent. Snacks and cereals category grew five percent for Q4.
- Adjusted operating income fell two percent, while free cash Flows of $2.5 billion for the quarter.
- US retail sales $10.6 billion for 2014, lower than last year. International sales of $5.4 billion for 2014, up four percent and up eight percent for adjusted currency. US cereal sales decline in 2014.
- Returned $2.7 billion for share buybacks. Dividends per share increase 13 percent compound rate. Fiscal 2014 share price and dividend increase 13 percent.
- General Mills meets its previous goal of double digit growth. Tax rate consistent with last year 32.2 percent.
- Big G net sales grew slightly, Old El Paso leading Mexican category increasing sales four percent.
- Emerging markets where consumers are improving spending. After the US, the Middle East is the largest consumer of Betty Crocker goods.
- Management reminded listeners of General Mills investor event July 8, 2014.
- Fiscal 2015 target $400 million in COGS alone for media and ads for 2016 product launches. Innovation efforts to further reduce overhead costs.
- Goal to reduce 2015 pension plan expense. Adjusted gross margin projected to improve. Operating growth projected to be between mid to single digit. Plans $40 million pre-tax savings in 2015.
- General Mills 2015 plans for faster top line growth, renovations, innovations.
- New flavors of Greek 100 and Yoplait Yogurt. Plans of following protein breakfast trend with the launches a lot of peanut butter products and gluten free, with gluten free Chex cereal and hot oatmeal. Growth plan for Big G starts with product launch, new cereals and innovations on current cereal. New flavors of Greek 100 and Yo play Yogurt. Launching Haagen Dazs triple flavor sensation in 2015.
- McDonald's will begin to offer Yoplait yogurt in happy meals, later in 2014.
- M&A is a part of the company's strategy but no plans in regards acquisition at the time.
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