MINNEAPOLIS — General Mills Inc. aims to ramp up brand and value marketing in its new fiscal year to reignite sales growth after posting lackluster results for the fiscal 2024 fourth quarter and full year.

A slack fourth-quarter performance contributed to year-end decreases in net sales and earnings, though operating profit essentially matched the prior-year level and edged up on an adjusted basis, according to General Mills’ quarterly report issued on June 26. Adjusted earnings per share (EPS) for both periods topped Wall Street’s consensus estimate even as sales fell short of the low end of analysts’ forecast.

“As we look to the year ahead, our top priority is to accelerate our organic net sales growth, and specifically our volume growth, by delivering remarkable experiences across our portfolio of leading brands,” said Jeffrey Harmening, chairman and chief executive officer.

He noted that further cost savings through General Mills’ Holistic Margin Management (HMM) program in fiscal 2025 will enable the company “to reinvest in exciting growth ideas that meet consumer needs, which we expect to result in improved market share performance.”

For the 2024 fiscal year ended May 26, Minneapolis-based General Mills posted earnings of almost $2.5 billion, equal to $4.34 per share on the common stock, down 4% from $2.59 billion, or $4.36 per share, in fiscal 2023. On an adjusted basis, net EPS was $4.52 per share versus $4.30 per share in the previous year, the company said. Analysts, on average, had projected adjusted EPS of $4.50, with estimates ranging from $4.44 to $4.53, according to LSEG Data & Analytics (formerly Refinitiv).

General Mills saw net sales dip 1% to $19.86 billion from $20.09 billion a year earlier, when the top line rose 6%. Operating income came in flat at $3.43 billion versus a 1% decline to $3.43 billion in fiscal 2023.

Net income in the fourth quarter was $557.5 million, or 98¢ per share, down 9% from $614.9 million, or $1.04 per share, in the same period a year ago. Adjusted EPS for the quarter was $1.01 versus $1.12 in the prior-year period.

Fourth-quarter net sales fell 6% to $4.71 billion, with a decline also recorded for operating profit, down 5% to $779.2 million.

“Relative to our third-quarter trend, our organic net sales growth was about 5 points lower in Q4, driven by three main elements: 3 points from the trade expense timing comparison, 1 point from lower retailer inventory and 1 point from slower net sales trends in International,” said Kofi Bruce, chief financial officer. “As we move into fiscal ’25, nearly all those headwinds will be behind us, leaving us with better underlying momentum as we look to drive improved net sales performance in the new year.”

Business segments turn in mixed performance

General Mills’ core North America Retail business totaled fiscal 2024 net sales of $12.47 billion, down 1% after a year-ago gain of 9% to $12.66 billion. The company said net sales decreased by low single digits for the US Meals & Baking Solutions, US Snacks and US Morning Foods operating units but rose by mid-single digits for Canada. Segment operating profit of $3.08 billion marked a 3% decline as reported and in constant currency, which General Mills said reflected higher input costs, lower volume and higher SG&A expenses, partially offset by favorable net price realization and mix.

Net sales ticked down 1% to $2.75 billion in the International segment but improved from a 16% drop in the prior year. Operating profit fell 23% to $125.2 million (down 20% in constant currency), impacted by an ice cream recall, higher input costs and lower volume, offset in part by positive net price realization and mix, according to the company.

Sales also declined in the Pet division, which posted a 4% decrease to nearly $2.38 billion following a 9% uptick a year earlier. Segment operating income increased 9% to $485.9 million, fueled mainly by HMM cost savings and favorable net price realization and mix but partially offset by lower volume as well as higher supply chain costs and SG&A expenses, General Mills said.

North America Foodservice sales climbed 3% to $2.26 billion for the year — including a 1-point benefit from the acquisition of frozen pizza crust maker TNT Crust in June 2022 — but were well short of the 19% jump a year ago. The company said operating profit was up 9% to $315.5 million, reflecting positive net price realization and mix and higher input costs.

“Following a year of double-digit growth in organic net sales and adjusted diluted earnings per share in fiscal ’23, our results moderated in fiscal ’24, though still met or exceeded our most recent guidance,” Harmening said. “Organic net sales were down 1%. Adjusted operating profit increased 4% and adjusted diluted earnings per share were up 6%, each in constant currency.

“When looking at our performance on a two-year compound growth basis, our results were in line or ahead of our long-term targets, with organic net sales and constant-currency adjusted operating profit up mid-single digits and constant-currency adjusted diluted EPS up high single digits.”

Turning up the competitive heat in fiscal 2025

Harmening told analysts General Mills’ “overall competitiveness fell short of our expectations in fiscal ’24,” which he attributed to a “more challenging” consumer sentiment across core markets. Still, efforts to boost brand-building, innovation and in-store execution paid off with improved volume and market share trends in the second half.

“We increased our media investment at a low-single-digit rate in fiscal ’24, with a focus on strong campaigns that resonate with today’s consumers,” Harmening explained. “We rolled out new ingredient-superiority advertising on Life Protection Formula, helping return the largest Blue Buffalo product line to growth. And we invested in relevant messaging on Nature Valley, which helped return that brand to market share growth in the US and contributed to Nature Valley becoming the No. 1 brand in the bars category in France for the first time in its history.”

The introduction of about 40% more “big bet” market launches “increased our innovation pressure in fiscal 2024,” Harmening said. “This included a strong innovation year for cereal, with General Mills launching each of the five-largest new products in the US cereal category. And we continued our strong in-store execution, including driving a 3% increase in our US retail distribution, which outpaced our competition.”

In fiscal 2025, Harmening said, General Mills plans to “significantly increase” brand investment to ensure its brands are “front-and-center for consumers.” That includes campaigns for Big G cereals with National Football League players Travis and Jason Kelce, for Totino’s with comedian Pete Davidson, for Pillsbury with the Pillsbury Doughboy, and for Blue Buffalo and Häagen-Dazs to highlight premium positioning. The company also is sponsoring Olympian athletes and Olympic committees in Canada, Great Britain and Australia for this summer’s Olympic Games in Paris.

“These modern and relevant brand messages, supported with increased brand-building investment, will enable us to continue building distinct, enduring brands that deliver superior experiences relative to the competition,” Harmening said.

Thirty percent of General Mills’ North America Retail business also will have “taste news” in fiscal 2025, double the level of a year ago and including taste improvements “on some of our biggest brands and product lines — Pillsbury biscuits will be flakier, Annie’s mac and cheese will be cheesier, and Betty Crocker fudge brownies will be fudgier,” Harmening said. “And our new Fruity Cheerios and limited-edition Häagen-Dazs stick bar offerings deliver on consumers’ desire for their beloved favorites in new, great-tasting flavors and formats.”

To capitalize on the consumer health-and-wellness trend, General Mills plans more better-for-you items, including Old El Paso’s new Carb Advantage Taco Shells, Mott’s new Apple Streusel Soft-Baked Bars, and broader distribution of reduced-sugar varieties of Parfait-Pro yogurt and Big G cereal brands in school foodservice. In addition, new convenience-focused offerings will center on breakfast, such as Totino’s Breakfast Snack Bites and Nature Valley’s Soft-Baked Breakfast Bar.

Food shoppers, too, will be looking for General Mills to deliver “compelling value,” which Harmening pointed out involves not just price but a combination of affordability and other benefits, such as taste.

“We’re reinforcing that message in fiscal ’25 through more value-oriented brand communication across our portfolio,” he said. “We’re also leveraging our Strategic Revenue Management toolkit to ensure we have the right pack at the right price in the right place. For consumers looking for value, we have larger packs of our Betty Crocker fruit snacks as well as variety packs of our Pillsbury cookies and Minis cereal treat bars. And we’re expanding distribution of smaller sizes of our Wilderness dry dog food in select retail channels.”

Coupons will be key to the value strategy as well.

“We plan to increase our coupon spend by more than 20% in the first half of fiscal ’25,” Harmening said. “Through use of our first-party data, we can target specific consumers with digital coupon offerings, allowing us to deliver highly efficient, targeted value.”

Tough going expected

Progress on the sales front stands to be challenging in fiscal 2025, however. General Mills projects organic net sales to range between flat and up 1%, with adjusted operating profit coming in between down 2% and flat in constant currency. Adjusted EPS (diluted) may be down 1% to up 1% in constant currency from the base of $4.52 in fiscal 2024.

“On the top line, we anticipate continued gradual improvement in category volume trends, though we expect full-year category dollar growth will be somewhat below our long-term 2% to 3% growth expectations as price/mix remains somewhat muted,” Bruce said. “With strong plans focused on delivering remarkable experiences, we expect to drive improved in-market competitiveness across our portfolio. We anticipate this translating to roughly balanced contributions from volume and price/mix in fiscal ’25.”

Before General Mills’ Q1 report, Wall Street’s consensus estimate was for fiscal 2025 adjusted EPS of $4.67, with projections running from $4.50 to $4.75, according to LSEG. Analysts, on average, forecast the food company’s year-end revenue at $20.25 billion, with estimates of $19.93 billion to $20.61 billion. For the fiscal 2025 first quarter, adjusted EPS is expected to range from $1.09 to $1.20 and revenue from $4.85 billion to $4.93 billion.

“We expect our results in Q1 will be below our full-year growth expectations, reflecting a meaningful increase in brand-building investment as well as the comparison against strong organic net-sales growth and adjusted gross-margin performance in Q1 of last year,” Bruce said.