Shares of General Mills, Inc. (NYSE: GIS) slump 5.24% in the pre-market trading Wednesday after the company projected lower-than-expected profits for the full year. This announcement followed a mixed fourth-quarter earnings report. The report highlighted ongoing challenges in passing on higher prices to customers dealing with inflation.
During the fiscal fourth quarter, which ended in May, General Mills reported adjusted earnings of $1.12 per share. This figure represents a 1% increase compared to the same period last year and exceeded the Street’s consensus forecast by 5 cents. The company’s group revenues also saw growth, rising by 3% to reach $5.03 billion. However, this fell just short of analysts’ projections, which had anticipated a $5.18 billion tally.
However, General Mills faced a decline in gross margins, which narrowed by 1.8% to 34.4%. The company attributed this to a significant increase of around 9% in input costs, which were not offset by higher prices for consumers.
Looking ahead to the next financial year, General Mills anticipates adjusted earnings to grow between 4% and 6% from the 2023 base of $4.30 per share. However, the company expects input cost inflation to remain a challenge, with an estimated 5% increase, primarily due to higher wages.
“As we turn to fiscal 2024, we’ll lean on these same traits to continue to succeed in an evolving business landscape. We’ll focus on continuing to compete effectively, driving efficiency in our operations, and maintaining our disciplined approach to capital allocation, which we expect to result in financial performance that meets or exceeds each of our key long-term goals,” said CEO Jeff Harmening.
“To underscore our commitment to driving strong returns to General Mills shareholders, our Board approved a nine percent dividend increase effective with the August 2023 payment,” he added.
