Summary

General Mills will announce its fourth quarter results for fiscal 25 before the market opens on June 25. The market is particularly concerned about whether the company can improve its revenue and profitability in the context of a weak consumer environment.

Review of last quarter

In the third quarter of fiscal year 25, General Mills achieved revenue of US$4.842 billion, a year-on-year decrease of 5%; operating profit of US$891 million, a year-on-year decrease of 2%; net profit of US$626 million, a year-on-year decrease of nearly 7%; basic earnings per share of US$1.15, a year-on-year increase of 1.38%. In this quarter, there was a more significant destocking phenomenon in the American market, and with the increase in product investment, the overall growth momentum was relatively weakened. In this quarter, the revenue of the North American retail sector fell by about 7% year-on-year, but pet food still maintained a relatively stable growth rate, becoming an important fulcrum for the internal business layout.

Forecast for this quarter: Overall growth slows down, pet food business is expected to grow

According to Bloomberg data, the market's average expectation for General Mills' fourth quarter revenue in fiscal year 25 is US$4.594 billion, compared with US$4.714 billion in the same period last year; adjusted comparable earnings per share is US$0.71; endogenous growth rate is -2.45%.

Although the core food segment accounts for a high proportion of revenue, there is a certain pressure in pricing and demand matching, and the overall growth rate is inevitable. The pet food business has maintained a stable growth trend under mergers and acquisitions and multi-brand synergy, and has achieved a more obvious expansion in the last quarter, and revenue still has a certain year-on-year increase.

Focus

Pricing and demand strategy for the new fiscal quarter

The company expects to make more prudent fine-tuning of product pricing to cope with changes in cost and demand. The management team clearly mentioned in previous exchanges that the core consumer market has not yet returned to the booming range. If the terminal price continues to increase, the sales volume may face a greater risk of loss. At the same time, the company seems to prefer to maintain product exposure through more market promotions and channel activities, especially in the daily fast-moving consumer goods and baking retail sectors, using relatively flexible pricing discounts to attract consumers who remain on the sidelines.

Multi-segment synergy and cost optimization

In the context of the simultaneous operation of multiple product lines, General Mills will continue the integrated supply chain plan and strive to explore synergy benefits in the connection between the core food sector and other regions or categories. In the past few quarters, the company has continuously emphasized the implementation of "redundant department streamlining" and "global transformation plan" in order to achieve more efficient unified scheduling from human resource allocation to logistics network management. Management hopes that systematic improvements at this level can gradually emerge in the future, thereby stabilizing or improving profit margins over a longer period of time and reducing cost pressures caused by fluctuations in raw material prices.

Pet food business development momentum

Pet food is regarded as the key focus of the company's growth, and the large-scale mergers and acquisitions in the past period of time have initially formed a brand matrix. Data from external institutions show that pet food has relatively high customer stickiness in multi-channel retail. Unlike daily consumer goods, the rigid characteristics of pet-raising needs can bring the company a more stable repurchase rate. If the company wants to continue the upward momentum of this sector in the new quarter, it needs to increase the differentiated promotion of its product portfolio and the awareness of its core brands, so that a wider range of retail links can be replenished and promoted in a timely manner.

Analyst views

Many institutions generally hold a cautious attitude towards General Mills' latest quarter, believing that in addition to pet food, the company's core businesses are still facing the reality of insufficient market demand recovery. Some analysts also pointed out that although the company's destocking pressure on the food retail side has emerged, if the subsequent pricing strategy is appropriate and the internal management optimization is gradually implemented, the revenue performance may be relatively flexible.

Some investment banks emphasized in their research reports that if the company cannot stabilize the sales base of the North American retail food sector as soon as possible, it must rely on more flexible discounts and marketing activities, and raising market expenses in the short term may bring a new round of challenges to profit margins.

Overall, the company's main business is in a rest and consolidation stage. Whether it can seize the growth opportunities of pet food and flexibly manage the traditional food business will affect future performance to a certain extent.