General Mills Q4 Results Top Expectations, Provides Upbeat Outlook For 2017

General Mills, Inc. GIS announced its GAAP net earnings doubled in the fourth quarter despite 8.6 percent drop in net sales. The results came in above the Street analysts' expectations. The company also offered an upbeat earnings forecast for the fiscal year 2017.

General Mills reported net earnings of $379.6 million or $0.62 a share, sharply higher than $186.8 million or $0.30 a share in the year-ago quarter. On an adjusted basis, earnings fell 12 percent to $0.66 a share from $0.75 a share in the comparable period. Street analysts estimated the company to deliver EPS of $0.60.

For the fourth quarter, the company's net sales slipped 8.6 percent to $3.93 billion from $4.3 billion in the previous year quarter. Analysts predicted $3.86 billion revenue. The company said that net sales decreased two percent on a constant currency basis.

The company's chairman and CEO, Ken Powell, commented, "We made important progress strengthening our business model and bringing our Consumer First strategy to life in our brands in fiscal 2016. Most importantly, we returned the business to organic sales and operating profit growth, while continuing to drive improvement in free cash flow."

He continued, "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."

The CEO concluded, "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."

Going forward, General Mills expects to deliver adjusted earnings to grow 6–8 percent for the fiscal year 201. Similarly, the company is looking to achieve organic net sales growth of flat to down 2 percent. Analysts expect EPS of $3.04, which is 4.11 percent higher than the fiscal year 2016 achievement while expecting ten basis points growth in net sales.