General Mills ($GIS) announced a revision to its full-year earnings outlook as the company intensifies investments aimed at bolstering volume and enhancing market share trends, despite having reported fiscal second-quarter results that exceeded expectations. The company now predicts adjusted earnings to decrease by 1% to 3% in constant currency terms for fiscal 2025, a shift from its earlier forecast which suggested a potential decline of 1% or a modest rise of 1%.
It anticipates organic sales to fall within a flat to a 1% increase range, favoring the lower end of this spectrum. Following this announcement, shares dropped by 4.4% during premarket trading. "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," stated Chief Executive Jeff Harmening.
"To both achieve and build upon these enterprise-wide gains, we have made incremental investments to provide consumers with greater value." These investments, which have necessitated the adjustment of profit expectations, are designed to position the company for sustainable growth in fiscal 2026 and beyond, as emphasized by Harmening. For the three-month period ending November 24, General Mills recorded adjusted earnings of $1.40 per share, a notable increase from $1.25 the previous year, and exceeding Wall Street's expectation of $1.22.
Sales rose by 2% to $5.24 billion, surpassing analysts' projection of $5.14 billion. Organic sales saw a 1% increase. The favorable timing of various factors, including the Thanksgiving holiday and an uptick in retailer inventory, contributed positively to results. However, these conditions are expected to reverse in the latter half of the fiscal year, as indicated by the producer of Cheerios and Dunkaroos. North America retail sales experienced a slight increase, reaching $3.32 billion, up from $3.31 billion in the same quarter of 2023.
Higher prices have counterbalanced a decline in volume. The U.S. morning foods division achieved revenue growth in the mid-single digits, whereas U.S. snacks saw a slight decrease. Meanwhile, sales for U.S. meals and baking solutions fell by low-single digits, and Canadian sales declined in constant currency by mid-single digits. North American pet sales totaled $595.8 million compared to $569.3 million in the prior period, demonstrating growth with high-single-digit, mid-single-digit, and low-single-digit increases in dry pet food, wet pet food, and pet treats, respectively.
Additionally, North American foodservice sales rose by 8% to $630 million. International revenues also increased slightly to $690.6 million from $683.1 million last year, benefiting from a four-point boost attributed to the company’s acquisition of European pet food brand Edgard & Cooper in April..