General Mills sees Q2 profits sink after 'remarkability' drive

(Sharecast News) - Second-quarter profits at General Mills slumped by a third as the American foods manufacturer ramped up investments to appeal to more consumers, though the company still reaffirmed its outlook for the full year.

Operating profit totalled $728m in the three months to 23 November, down 32% on last year, while adjusted operating profit fell 20% at constant currency to $848m.

Earnings per share fell 45% year-on-year to 78cents, while adjusted EPS fell 21% to $1.10, though slightly ahead of the $1.03 expected by the market.

Results were impacted by significant investments to improve "brand remarkability" - focused on product, packaging, brand communication, omnichannel execution, and consumer value - in an effort to improve competitiveness.

The bottom line was also affected by the impact of North American yogurt divestitures and an unfavourable trade expense timing comparison from fiscal 2025.

Net sales totalled $4.9bn for the quarter, down 7% from the year before, including a 6 percentage point negative impact from divestitures and acquisitions, while organic net sales fell 1%.

"Our team continued to execute exceptionally well in a volatile operating environment, delivering results ahead of our expectations in the second quarter," said chair and chief executive Jeff Harmening.

"Our investments in remarkability are working, helping restore organic volume growth in North America Retail this quarter and driving strong competitiveness across each of our segments."

For the full year, General Mills continues to expect organic net sales to be between 1% lower to 1% higher, while adjusted operating profit is predicted to fall 10-15% in constant currency.

The stock was up 1.7% at $47.81 by 1451 GMT.