General Mills, the owner of brands such as Cheerios, Nature Valley, and Old El Paso, has today raised its full-year sales and profit forecast after benefitting from higher prices and strong demand for key lines.
The company prospered during the pandemic as consumers ate at home more. This uptick in grocery demand has held strong despite the reopening of the hospitality sector, with the group’s organic sales growing 4% to $4.5bn in its third quarter ended 27 February.
The sustained demand, coupled with price hikes across the board, means General Mills now expects sales to rise by about 5% over the full year. It had earlier forecast an increase of 4% to 5%.
Operating profit in the last quarter was down 1% to $815m, driven primarily by lower gross profit dollars and less favourable investment activity, partially offset by a gain on divestitures. Adjusted operating profit was down 6% on a constant currency basis.
However, General Mills said that adjusted operating profit is now expected to range between down 2% and flat, reflecting the increased guidance on organic net sales. For the full year, the company continues to expect input cost inflation of 8% to 9% and “significant costs” related to supply chain disruptions. Adjusted operating profit was previously expected to decline 4% to 1%.
“Our solid execution in a highly volatile environment enabled us to close the third quarter with improved momentum,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
“Demand for our brands remains robust, and our team has shown great agility to overcome disruptions throughout the supply chain and deliver for our customers and consumers. We expect to drive strong growth in the fourth quarter, fuelled by accelerating net price realization. With confidence in our plans and positive momentum on our business, we’re raising our guidance for fiscal 2022.”
