General Mills hopes restructuring leads to rebound
MINNEAPOLIS — Executives at General Mills, Inc. hope that a restructuring program put in place in May will help the company rebound from a difficult fiscal 2012 in which higher input cost inflation contributed to a 13% decline in full-year earnings.
“The restructuring program we announced last month will better align and focus resources against our best opportunities for growth, accelerate our innovation efforts and make General Mills a more efficient organization,” Ken Powell, chairman and chief executive officer, said during a June 27 conference call with analysts to discuss fiscal 2012 results. “It will generate savings we will invest back in our businesses and enable us to deliver a balanced plan for growth across our global platforms.”
The restructuring effort, which included the elimination of 850 jobs globally, also features several changes to General Mills reporting segments. The U.S. Retail segment now consists of three divisions: meals, frozen foods and baking products.
“Our new meals division will be solely focused on our key center store meal items — Progresso soup, Helper dinner mixes, Old El Paso Mexican foods and Betty Crocker side dishes,” Mr. Powell said. “This alignment allows us to increase our emphasis on these important brands and to strengthen their growth.
“The new frozen foods division combines our frozen entrees, Totino’s pizza, Totino’s hot snacks, Pillsbury breakfast pastries and Green Giant items. This division focus will leverage our frozen food scale and consumer insights in order to increase our executional capability. And it will allow us to more effectively partner with our customers in this important and growing section of the grocery store.
“Finally, we’ve combined our baking expertise across Pillsbury refrigerated cookie dough and Betty Crocker dessert mixes to create a new baking products division. With many complementary products from shelf stable mixes to refrigerated ready-to-bake items, we will more efficiently serve the baking consumer moving forward.”
Mr. Powell said the company’s Big G cereals and snacks, Yoplait and Small Planet Foods divisions already have “good category focus,” and will remain unchanged. He did note that Jim Murphy has assumed leadership of Big G, with Jeff Harmening taking over as c.e.o. of Cereal Partners Worldwide while Christi Strauss, who has led C.P.W. for the past six years, is on sabbatical.
Product innovation will be a major focus for General Mills in the first half of fiscal 2013, with a number of entirely new and different products.
“We have high levels of innovation planned across our core product portfolio, and we’ll have good contributions from recently acquired businesses,” said Don Mulligan, chief financial officer.
General Mills will launch 35 new items in its U.S. yogurt business in the first half of fiscal 2013, including Yoplait Greek 100. The 100-calorie yogurt will be available in six flavors — strawberry, black cherry, mixed berry, peach, key lime and vanilla — and will be the only Greek yogurt endorsed by Weight Watchers with a PointsPlus value of 2 per serving.
Other new products on tap include: Progresso Recipe Starters, a line of cooking sauces that may be used to create home-cooked meals; Apple Cinnamon Chex; Fiber One Chewy Bars; Gardetto’s Sandwich Crackers; Green Giant Seasoned Steamers; Shake-n-Pour Desserts, Yoplait Simplait; Yoplait Fruplait and Liberte Greek yogurt.
“We enter 2013 confident that we are positioned for another year of balanced growth at General Mills,” Mr. Powell said. “We are investing to keep our established brands healthy and to launch new products in both developed and emerging markets. We will make investments to ensure our products are competitive and investments to fuel our global growth. We believe our 2013 targets strike the right balance between sales and profit growth in the current year and reinvestment to support our longer term progress.”
For the year ended May 27, the company had earnings of $1,567.3 million, equal to $2.42 per share on the common stock, compared with $1,798.3 million, or $2.80 per share, during fiscal 2011. Sales for the year were $16,657.9 million, up 12% from $14,880.2 million during fiscal 2011.
For the fourth quarter ended May 27, earnings were up 2% at $325.4 million, or 50c per share, which compared with $320.2 million, or 50c per share, during the same quarter of the previous year. Sales for the quarter were $4,066.4 million, up 12% from $3,634.3 million during the same quarter of the previous year.