General Mills slashed its annual profit forecast as the Cheerios maker ramped up investments in promotions to attract cost-conscious consumers.
While the company was able to revive its volumes by lowering prices across its products, from snacks to pet food, it said higher targeted promotional investment has weighed on its annual profit forecast.
General Mills now expects annual adjusted profit to fall in the range of 1% to 3%, compared with the prior range of down 1% to up 1%.
With more consumers opting to eat at home, the demand for pantry staples and groceries has boosted demand, aiding sales at companies such as General Mills and WK Kellogg.
The Bugles corn chip snacks maker beat second-quarter results as price investments propped up demand.
Second-Quarter Highlights
It posted sales of $5.24 billion (€5 billion) for the quarter ended 24 November, surpassing analysts' estimates of $5.14 billion (€4.9 billion), according to data compiled by LSEG.
Adjusted profit came in at $1.40 per share, above estimates of $1.22 per share.
The Minnesota-based company's quarterly volumes rose 3 percentage points, reversing a 4 percentage point decline from the previous year.
Prices decreased by 1 percentage point in the quarter, compared with a 3 percentage point rise a year earlier.
“We made important progress accelerating our volume growth and market share trends in the first half of the year, including returning our North America Pet business to growth,” said General Mills chair and chief executive officer, Jeff Harmening.
Harmening added, “To achieve and build on these enterprise-wide gains, we’ve made incremental investments to bring consumers greater value. [...] Amidst a dynamic external environment, I’m not only confident in our plans, but especially our teams, who are operating with agility and doing what’s right for our consumers.”
News by Reuters, additional reporting by ESM.
