Global consumer foods manufacturer General Mills (GIS 0.30%)posted fiscal 2025 second-quarter results on Wednesday, Dec. 18, that topped analyst consensus estimates. The report highlighted significant improvements in operating profits and margins. Revenue for the quarter of $5.24 billion rose 2% year over year and beat market expectations of $5.14 billion. Adjusted EPS jumped 12% to $1.40.
While the quarter showed growth, favorable timing benefits such as increased retailer inventory contributed to the analyst beats. What raised concerns in the report was a lowered outlook for the full fiscal year.
| Metric | Q2 2025 | Analysts' Estimate | Q2 2024 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.40 | $1.22 | $1.25 | 12% |
| Revenue | $5.24 billion | $5.14 billion | $5.14 billion | 2% |
| Operating profit | $1.08 billion | -- | $812 million | 33% |
| Gross margin | 36.9% | -- | 34.4% | 2.5 pps |
Source: General Mills. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. pps = percentage points.
An Overview of General Mills
General Mills is a prominent name in the food industry, known for its diverse brand portfolio that includes Cheerios, Haagen-Dazs, and Betty Crocker. Operating in over 100 countries, it maintains a strong market position through its extensive brand reach and innovative products. Recent focuses have been on increasing volumes and market share, which are key to its success.
Strategic investments are focused on fostering sustainable growth. This approach emphasizes refining consumer insights and developing new products to maintain competitiveness. Supply chain efficiency and brand strength remain pivotal to General Mills' ongoing plans.
Quarterly Highlights
General Mills saw a boost in its operating profit in the second quarter, driven largely by the absence of previous goodwill impairment charges and enhanced gross profit margins. Its North America Pet segment delivered a robust 36% operating profit increase thanks to a 5% year-over-year jump in sales fueled by higher pound volume (the actual weight of goods sold). The International segment struggled with a 31% decline in operating profit. This was attributed to unfavorable pricing and increased selling, general, and administrative (SG&A) costs.
The company noted positive developments in the North America Foodservice segment, which saw 8% revenue growth. This increase was supported by advantageous price mix and product diversity, resulting in a 24% boost in operating profit for the segment. Despite these gains, other factors, such as the shift in Thanksgiving sales, added temporary benefits representing approximately 1.5 percentage points to net sales growth this quarter. General Mills' efforts in enhancing cash flow, where it reported $1.8 billion from operations, highlighted its ability to manage working capital efficiently.
Looking Ahead
For the remainder of fiscal 2025, General Mills adjusted its expectations, forecasting that organic net sales growth will be at the lower end of the anticipated range, with adjusted operating profits expected to decrease by 2% to 4% in constant currency. This change considers the need for increased promotional investments to drive volume growth and captures anticipated headwinds from previously favorable timing benefits.
Investors should closely monitor how General Mills navigates these challenges while maintaining its strategic focus. The continuation of market share expansion amidst a dynamic macroeconomic environment remains a critical factor in its financial health and long-term success.
