General Mills Inc.
), a global consumer food company, recently discussed its outlook
and growth strategies for fiscal 2014 at the New York Stock
Growth in fiscal 2014 is expected to be in line with its
long-term targets and driven by new products, increased brand
support and cost savings from the Holistic Margin Management
(HMM) program. The company maintained its prior guidance for
fiscal 2014. Earnings per share are expected to grow at a high
single-digit rate in a range of $2.87 to $2.90.
The company continues to expect net sales to grow at a low
single-digit rate and exceed $18 billion in fiscal 2014 on the
back of new product innovation and contribution from new
businesses such as Yoplait Canada and Yoki. 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.
Segment operating profit is expected to grow in mid-single
digits. The company expects margin to expand in fiscal 2014 on
the back of cost savings from the HMM program. Capital spending
is expected to be around $700 million.
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% effective from the
quarterly payment due on Aug, 01.
The company intends to launch more than 200 new products in the
first half of fiscal 2014. More products are expected to be
introduced later in the year.
In 2014 and beyond, in order to drive sales growth, General
Mills will focus on five global categories. These categories
include ready-to-eat cereals, super-premium ice creams,
convenient meals, wholesome snack bars and yogurt. These
categories are highly responsive to innovation and are capable of
meeting evolving consumer needs. General Mills' retail sales in
the five global categories are growing at attractive rates and
all of these have promising long-term growth potential.
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Focus on Cereals
General Mills operates a $4 billion cereal segment. The company
intends to offer new cereal options and brand building in the U.S
cereal market in 2014. Some of the new products are Hershey's
cookies & Creme cereal and two varieties of Nature valley
granola cereal. The company intends to expand the distribution of
BFast, a breakfast shake.
Focus on Yogurt Business
General Mills generates $3 billion of sales from yogurt segment.
The company intends to launch a new line of Yoplait Greek
strained yogurt. The company also plans to increase its
advertising expenditure and focus on product innovation, in order
to drive sales.
The U.S. yogurt business has been challenging as increased sales
prices in response to dairy cost inflation is reducing the
competitiveness of its products. With the latest brand building
and product innovation, the company expects its U.S. yogurt
business to return to growth in fiscal 2014. The company has
several products planned for its yogurt business in Europe and
Focus on Snacks
General Mills' snacks segment is a $3 billion business. The
company plans to introduce products like Nature Valley soft baked
oatmeal squares, Fiber One, Ckex snack chips and Betty Crocker
caramel Brownies in the U.S. It has products lined up for
Europe and Brazil as well.
Focus on Meals
The company has planned several innovations for the meal segment
also, which includes brands like Old el Paso and Helpers. The
company will also launch several new products in China and
The company has initiated a global advertising campaign on
Haagen- Dazs. The company intends to open more than 70 new
Haagen- Dazs cafes in 13 cities in China in fiscal 2014.
Focus on International market
General Mills also discussed its plans to shift the geographic
mix of its business towards the international markets with
particular focus on the emerging markets. Currently more than
1/3rd of its sales are generated from the international markets
including about $2 billion in sales from the emerging markets.
General Mills carries a Zacks Rank #3 (Hold).
Other food companies that have been doing well consistently are
Flower Foods Inc.
B&G Foods Inc.
) both carrying a Zacks Rank #1 (Strong Buy) and
Campbell Soup Company
) carrying a Zacks Rank #2 (Buy).