General Mills, Inc. (NYSE:GIS) Q4 2023 Earnings Call Transcript

General Mills, Inc. (NYSE:GIS) Q4 2023 Earnings Call Transcript June 28, 2023

General Mills, Inc. beats earnings expectations. Reported EPS is $1.12, expectations were $1.06.

Operator: Greetings, and welcome to the General Mills Fourth Quarter and Full Year Fiscal ’23 Earnings Q&A Webcast. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, June 28, 2023. I would now like to turn the conference over to Jeff Siemon, Vice President, Investor Relations. Please go ahead.

Jeff Siemon: Thank you, Malika, and good morning, everyone. Thank you so much for joining us today for our Q&A session on our fourth quarter and full year fiscal ’23 results. I hope everyone had time this morning to review our press release, listen to our prepared remarks and view our presentation materials, which were made available on our Investor Relations site. It’s important to note that in our Q&A session, we may make forward-looking statements that are based on management’s current views and assumptions. Please refer to this morning’s press release for factors that could impact forward-looking statements and for reconciliation of non-GAAP information which may be discussed on today’s call. I’m here with Jeff Harmening, Chairman and CEO; Kofi Bruce, our CFO; and Jon Nudi, Group President for our North America Retail Segment. So let’s go ahead and get to the first question. Malika, can you please get us started?

Operator: [Operator Instructions] Our first one question is from the line of John Baumgartner with Mizuho Securities. Please go ahead. Your line is now open.

John Baumgartner: Good morning, thanks for the question.

Jeff Harmening: Good morning, John.

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Q&A Session

John Baumgartner: Maybe just to start off, just big picture Jeff. I wanted to come back to this transition you’re speaking about in the environment in this new fiscal year. Last year, you made some pretty material investments back into the business. And with those now in the base and conditions getting back to normalizing, how are you sort of adapting and evolving those resources? I know there’s a lot there. There’s innovation, quality, promo, productivity. But how do we think about the next steps for growth and what a more offensive strategy looks like for mills going forward?

Jeff Harmening: Yes, John, thanks for the question. And I’m glad to take a half a step back. I mean, if you look at our last year, I mean, I think it’s important to remember that, we grew sales at 10%, operating profit at 8% and EPS at 10% while investing in the business, double-digit growth in marketing and double-digit growth in capabilities. And so the — as we look ahead, and our guidance also reflects our continued investment in growth. If you look ahead, we’re going to be on track of our metrics on sales and operating profit and EPS and ahead of our long-term algorithm for dividend growth, which reflects the strong year we just had as well a confidence in the year ahead. So as we — you’re right, we’ve been investing for growth.

We’ll continue to invest for growth while we continue to drive higher levels of productivity, which you saw in our release and while supply chain disruptions get less, which, again, allow us to drive gross margin, which creates a really good flywheel for growth. And so as you take a step back from last week’s Nielsen data, what happened this last quarter, we feel great about the year and we feel confident about the year that’s going to come up. And I think that confidence stems from the fact that we have been agile in the last few years. And it’s not an accident, we’ve grown share in the majority of our categories each of the last five years, and it’s been hard work and good marketing. And as we look at the growth ahead, one of the things we’re excited about is that the freeing up of supply chain and the normalization of supply chain gets us back to the kind of productivity we’ve been looking for and gets us back to getting rid of some of the pandemic era costs.

But more importantly, freeze the rest of the organization up to get distribution to drive the innovation. We’ve got a really good new product innovation this coming year. And then finally, that’s our marketers market, and we’ve got really good ideas. And so we feel good, and I appreciate the step back.

John Baumgartner: Great. Thanks Jeff.

Operator: Thank you. Our next question is from the line of Ken Goldman with JPMorgan. Please go ahead. Your line is open now.

Ken Goldman: Thank you. Good morning. I just wanted to ask a little bit about the decline in retail inventory. I’m just curious we get a little bit of color on which of the categories that maybe felt the biggest impact this particular quarter. And I guess also, it’s certainly encouraging to hear that the worst is over, as you see it when it comes to this particular temporary headwind. But I think for some of us on the outside or at least me, it does feel like a little bit of a red flag, right, that maybe end user demand isn’t quite as strong as what you had hoped. So I appreciate that your customers are trying to get their inventories into a better place. And we’re just not necessarily hearing that from many of your packaged food peers. So I’m just curious what gives you the confidence that it’s not necessarily a General Mills specific dynamic that’s happening there? Thank you.