General Mills (GIS) Q1 2025 (Q&A) earnings summary

Executive summary

• Net sales for Q1 FY2025 declined 1% year-over-year to $4.85 billion, with organic net sales also down 1%; sequential improvement in volume, net sales, and market share trends was achieved.

• Operating profit fell 11% to $832 million, primarily due to unfavorable mark-to-market impacts, higher SG&A, and lower net price realization; adjusted operating profit was $865 million, down 4% in constant currency.

• Diluted EPS decreased 10% to $1.03; adjusted diluted EPS was $1.07, down 2% in constant currency.

• Company reaffirmed its full-year fiscal 2025 outlook despite challenging comparisons and ongoing inflation and supply chain pressures.

• Announced definitive agreements to sell North American Yogurt business for $2.1 billion, expected to close in 2025.

Financial highlights

• Net sales: $4.85 billion, down 1% year-over-year; organic net sales also down 1%.

• Adjusted operating profit: $865 million, down 4% in constant currency; operating profit margin: 17.2%, down 180 basis points; adjusted operating profit margin: 17.8%, down 50 basis points.

• Adjusted gross margin held steady at 35.4%; gross margin declined 130 basis points to 34.8%.

• Net earnings attributable to shareholders: $580 million, down 14% year-over-year.

• Cash provided by operations: $624 million, up from $378 million in the prior year.

Outlook and guidance

• Fiscal 2025 outlook reaffirmed: organic net sales growth flat to +1%, adjusted operating profit growth -2% to flat, adjusted diluted EPS growth -1% to +1%, and free cash flow conversion above 95%.

• Guidance excludes impact from proposed yogurt divestitures; estimated 3% adjusted diluted EPS dilution in the first 12 months post-close.

• Gradual improvement in top line expected through Q2 and into the back half of the year, with profit more back-half weighted.

• Management expects gradual improvement in volume trends, but category dollar growth projected below long-term targets.

• No reliance on improvement in China for guidance; international outlook is positive except for China shop traffic.