Companies and Brands
Cost-Cutting Is How Food Processors Aim to Grow
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In its outlook for the 2015 fiscal year, General Mills is looking to “accelerate topline growth” by introducing new products and increasing its supply-chain cost saving efforts by reducing expenses by more than $400 million to offset cost inflation the company estimates at 3%.
The packaged foods maker reported fourth quarter adjusted diluted earnings per share (EPS) of $0.67 on revenues of $4.28 billion which were well below consensus estimates for EPS of $0.72 and $4.4 billion in revenue. For the full year the company reported EPS of $2.82 on revenues of $17.91 billion compared with the consensus estimates for EPS of $2.87 on revenues of $18.08 billion.
Other packaged foods makers are also struggling with slowing U.S. sales. Mondelez International Inc. (NASDAQ: MDLZ), the maker of Oreo cookies among other products, is merging its coffee business with European giant D.E. Master Blenders 1753. Mondelez also gets a larger share of its revenue from outside the U.S.
ConAgra Foods Inc. (NYSE: CAG) is combining the two approaches. The company will close two plants in New York by early 2015, cutting more than 400 employees. ConAgra has also taken a 44% stake in Ardent Mills which will be the largest milling operation in the U.S. with total sales of $4.3 billion. Privately held Cargill and CHS Inc. (NASDAQ: CHSCP) hold 44% and 12%, respectively, of Ardent Mills.
General Mills stock was down more than 4% in premarket trading Wednesday morning, but the stock bounced back to trade lower by about 3.5% late in the afternoon. The stock’s 52-week range is $46.70 to $55.64.
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