General Mills Inc. (NYSE: GIS) reported second-quarter fiscal 2016 results before markets opened Thursday. The food processing and packaged foods maker posted quarterly adjusted diluted earnings per share (EPS) of $0.82 on revenues of $4.42 billion. In the same period a year ago, General Mills reported EPS of $0.80 on revenue of $4.71 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.83 and $4.61 billion in revenue.
The company said that foreign currency exchange reduced net sales growth by four percentage points, pound volume reduced net sales growth by 3% and net price realization and mix contributed one point of net sales growth. The divestiture of the Green Giant business in November 2015 and the acquisition of the Annie’s business in October 2014 combined to reduce net sales by 1%.
Adjusted earnings excluded a $0.14 per share gain on the sale of Green Giant and a one-cent gain on mark-to-market valuations of certain commodities. Restructuring costs of $0.08 per share and $0.02 for project-related expenses were also excluded. On a GAAP basis, General Mills posted diluted EPS of $0.87, compared with $0.56 in the year-ago quarter.
The company revised its guidance for the full 2016 fiscal year. General Mills now expects net sales to decline at a low single-digit rate from the 2015 levels that included a 53rd week. Total segment operating profit is expected to essentially match last year’s levels in constant currency. Constant-currency adjusted diluted EPS is expected to grow at a low single-digit rate from the base of $2.86 earned in fiscal 2015. At current exchange rates, the company estimates a nine-cent headwind from currency translation in 2016.
Consensus estimates for the third quarter call for $0.65 EPS on revenues of $4.23 billion. For the full year, analysts are looking for EPS of $2.94 on revenues of $17 billion. In fiscal 2015, General Mills posted EPS of $2.86 on sales of $17.63 billion.
The company’s CEO said:
Our first-half results keep us on track to deliver the targets we outlined at the beginning of the year, adjusting for the Green Giant sale. Our emphasis on Consumer First drove positive results in a number of categories and markets, and we plan to expand the impact more broadly in the second half in order to strengthen our retail sales performance. At the same time, we are committed to driving efficiency in our businesses and expanding our margins. The incremental actions we took in the first half of the year have enabled us to increase our overall cost savings target to $500 million by 2018.
Shares traded down about 1.8% in premarket trading Thursday, at $58.12 in a 52-week range of $47.50 to $59.87. Thomson Reuters had a consensus analyst price target of around $58.50 before the results were announced.