General Mills Inc.
), a global consumer food company, recently raised its earnings
per share (EPS) guidance for fiscal 2013. The company expects to
deliver adjusted earnings per share of $2.68-$2.69 in fiscal
2013, higher than the prior expectation of $2.66-$2.68. General
Mills however maintained its fiscal 2014 EPS guidance of high
single-digit growth and higher cash return to shareholders. The
company will present the issue in a conference scheduled on
Wednesday, Jun 12.
A few days back General Mills had reaffirmed its previously
provided outlook for fiscal 2013 and 2014 at the Citibank Global
Consumer Conference held in New York.
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Both sales and operating profit are expected to increase in the
mid single-digit range. Acquisitions are expected to contribute
significantly to top-line growth. However, excluding the impact
from new businesses and currency effects, organic sales are
expected to grow at low single-digit rates.
The U.S. retail business is expected to deliver low single-digit
sales growth while operating profit is expected to grow faster
than sales. Gross margins are expected to decline 60 to 80 basis
points (bps) in fiscal 2013.
Growth is expected to be in line with its long-term targets; high
single-digit growth in earnings, low single-digit growth in net
sales and mid single-digit growth in segment operating profit.
Acquisitions are expected to add 15 cents to earnings in fiscal
2014. We believe growth in fiscal 2014 will be driven by new
products, increased brand support and cost savings from the
Holistic Margin Management (HMM) program.
Moreover, the company plans to increase dividends and share
buybacks in the year, thus offering greater shareholder value.
The increased buybacks are expected to lower the average number
of shares outstanding by 2% in fiscal 2014. The company also
plans to increase its dividend by 15% in the year.
The U.S retail business is expected to benefit from new product
launches and increased innovation, while the international
business will gain largely from the newly-acquired businesses.
In 2014 and beyond, in order to drive sales growth, General Mills
will focus on five global categories, which account for over 60%
of worldwide sales and deliver foods that are convenient,
nutritious and provide good taste at a good value. Moreover,
these categories are highly responsive to innovation and capable
of meeting evolving consumer needs. These categories include
ready-to-eat cereals, super-premium ice creams, convenient meals,
wholesome snack bars and yogurt. General Mills' retail sales in
the five global categories are growing at attractive rates and
all of these have promising long-term growth potential.
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
) which carries a Zacks Rank #2 (Buy).