) fourth-quarter fiscal 2013 adjusted earnings declined 11.7%
year on year to 53 cents per share. The quarterly earnings lagged
the Zacks Consensus Estimate of 54 cents per share by 1.9%. The
year-over-year decline in earnings was due to higher input cost,
increased advertising cost, increased spending to support
in-store merchandising and a higher tax rate.
Revenues and Margins
Total revenue of the global consumer food company increased 8.5%
year over year to $4.41 billion. Revenues mostly benefited from
recent acquisitions including the purchase of Brazilian food
maker Yoki Alimentos and Yoplait International. Acquisitions
added 7 percentage points (pp) to top-line growth.
Price/mix pulled down revenues by 1 pp. Volume contributed 11% to
revenues. Most of the volume growth was driven by acquisitions.
Foreign exchange dragged revenues by 2 pp. Revenues beat the
Zacks Consensus Estimate of $4.33 billion. Sales were up 1%,
excluding the impact of acquisitions.
Adjusted gross margin for the maker of Cheerios cereals and Betty
Crocker dinner mixes declined 240 basis points (bps) to 34.8%
mainly due to changes in business mix and higher input costs.
Adjusted operating margin declined 240 bps to 13.8% in the
quarter due to increase in advertising costs. The decline in
gross margins and increased marketing spending to support
in-store merchandising affected operating margins in the quarter.
Revenues from the U.S. Retail segment improved 2.0% year over
year to $2.47 billion in the quarter driven by volume. Segment
operating profit declined 3.5% to $517.3 million due to higher
Revenues in the International segment grew 26.8% year over year
to $1.44 billion benefiting largely from acquisitions. Volume
added 35 pp, mostly from the acquisitions of Yoki and Yoplait
International, while price/mix took away 3 pp from net sales
growth. Foreign exchange had an unfavorable 5 pp impact on net
sales. Segment operating profit increased 8.1% to $129.1
Bakeries and Foodservice:
On a year-over-year basis, the Bakeries and Foodservice segment's
quarterly revenues declined 1.7% to $501.9 million due to weak
volumes. Volume declined 1% in the quarter. Segment operating
profit declined 7.0% year over year to $75.3 million due to
higher manufacturing costs.
The company reported adjusted earnings per share (EPS) of $2.69
in fiscal 2013, up 5.1% year over year and in line with Zacks
Consensus Estimate. Earnings were at the higher end of the
company guided range of $2.68-$2.69.
The company reported 7% increase in net sales to $17.8 billion in
fiscal 2013, driven by volume growth resulting from recent
Outlook for Fiscal 2014
In fiscal 2014, General Mills expects solid earnings growth. It
also expects to boost shareholder value. Growth is expected to be
in line with its long-term targets; high single-digit growth in
earnings and low single-digit growth in net sales.
The company expects net sales to grow at a low single digit rate
and to exceed $18 billion in fiscal 2014. Operating profit is
expected to grow at a mid-single digit rate. The adjusted EPS is
expected to grow at a high single digit rate to $2.87 to $2.90.
General Mills carries a Zacks Rank #3 (Hold).
Other food companies that have been doing well consistently are
Flower Foods Inc.
Omega Protein Corp
) both carrying a Zacks Rank #1 (Strong Buy) and
Campbell Soup Company
) carrying a Zacks Rank #2 (Buy).
CAMPBELL SOUP (CPB): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
GENL MILLS (GIS): Free Stock Analysis Report
OMEGA PROTEIN (OME): Free Stock Analysis
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