July 1 (Reuters) - General Mills posted better-than-expected fourth-quarter results on Wednesday, helped by higher prices and resilient demand for pantry staples, sending its shares up about 5% in premarket trading.
Budget-conscious consumers, pressured by still-high inflation and the rising cost of living, are increasingly eating at home rather than dining out.
Packaged food makers like General Mills, meanwhile, have pushed through price increases to protect margins from higher input costs.
The company's
adjusted gross margin increased 150 basis points to 34.2% in the three months ended May 31.
Net sales in General Mills' North America Retail segment, its largest business that includes brands such as Cheerios, Pillsbury and Betty Crocker, declined 4% — an improvement from the 10% decline a year earlier amid promotions to draw stretched consumers.
The company expects the consumer environment in fiscal 2027 to be like the previous year, CEO Jeff Harmening said. "Rather than hope for the consumer to improve, we are moving with even greater urgency to meet consumers where they are."
General Mills forecast full-year adjusted diluted earnings per share of $3.00 to $3.20. Analysts on average were expecting $3.13 per share, in constant currency, according to data compiled by LSEG.
It expects organic net sales to be in the range of a 1.5% drop to a 0.5% rise, compared to a 2% drop in fiscal 2026.
The company also expects to cut costs by $3 billion over four years through several plans, including redesigning its supply chain and streamlining business processes.
General Mills, which sold its subsidiary Haagen-Dazs ice cream shops in mainland China last month, swung to a quarterly net loss of $87.6 million from a $2.23 billion profit a year ago due to non-cash goodwill and brand intangible asset charges.
On an adjusted basis, the company posted a quarterly profit of 95 cents per share, beating estimates of 80 cents per share. It posted sales of $4.61 billion for the quarter ended May 31, compared with an estimated $4.60 billion.
(Reporting by Koyena Das in Bengaluru; Editing by Joyjeet Das)
