General Mills Inc
) has discussed its plans and growth strategies for fiscal 2013 in
a meeting with its investors. The company plans to take the
following steps for growth in fiscal 2013.
In order to drive sales growth, General Mills is looking forward to
expand in five global categories, namely ready-to-eat cereal,
super-premium ice cream, convenient meals, wholesome snack bars and
yogurt. The company particularly intends to focus on its
Haagen-Dazs and Yogurt businesses in Europe and plans to launch
about 70 new products in the first half of fiscal 2013.
Through an innovative approach to new and established brands, the
company wants to cater to the increasing global demand for packaged
food. Some of these innovations add more nutritional value to the
packaged food with more fruits, vegetables and fiber and less fat
content. The idea is to appeal to the growing numbers of health
conscious customers that prefer the convenience of packaged food in
a healthier way.
Global Expansion in developed and emerging markets
The U.S. market is mostly saturated, and to counter this, the
company intends to expand in the emerging markets of China, Brazil,
India, and Russia. The company plans to focus on its Haagen-Dazs
and Nature Valley business in Brazil.
The acquisition of Yoki Alimentos, one of the leading food
companies in Latin America, is expected to generate significant
sales growth in the region, while strengthening the company's
position in Brazil.
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The number of middle class consumers with positive consumer
spending is growing in these emerging markets and a majority of
them are shifting to urban living. As a result, the demand for
convenient and branded packaged food is on the rise, presenting
good growth opportunity for the company.
Special Focus on China
China has one of the largest consumer bases with its growing number
of middle class and affluent households. The company's growth in
China is driven by four leading brands, Haagen-Dazs super-premium
ice cream, Wanchai Ferry frozen convenience meals, Bugles and Trix
wholesome snack products.
In fiscal 2013, the company plans to launch 50 Haagen-Dazs shops in
China. It plans to operate more than 250 shops by the end of fiscal
2013. The company plans to achieve $900 million in sales from its
wholly owned businesses in China by 2015.
The company expects fiscal 2013 adjusted earnings to be
approximately $2.65 a share, below the Zacks Consensus Estimate of
$2.75. The guidance includes headwinds of 2-3 cents from the Yoki
Alimentos acquisition, which is expected to close in the first half
of the fiscal year. Increased pension expenses and a higher tax
rate are likely to temper earnings growth by 8 cents.
The company expects sales and profits to increase due to the recent
acquisitions of Yoplait International, Parampara in India and Food
Should Taste Good in the United States. It also mentioned that the
supply chain projects under its Holistic Margin Management (HMM)
have generated $1 billion of cost savings over the last three
years. Savings from HMM are expected to go up to $3 billion by the
General Mills' effort to grow through new products and brand
building is encouraging. However, we prefer to remain on the
sidelines, as the margin remains affected by inflationary input
costs. Also, the U.S. market is mostly saturated and the company
may require time before it can accrue its profits from the rest of
the global market.
General Mills Inc. carries a Zacks #4 Rank in the near term (Sell
rating). One of its peers,
), currently has a Zacks #3 Rank in the near term (Hold rating).
Based in Minneapolis, General Mills Inc. is a producer of packaged
consumer food and operates exclusively in the consumer food
industry. Some of the well known brands of the company are
Pillsbury, Cheerios, Chex, Total, Kix, Wheaties, Golden Grahams,
Trix and Lucky Charms.