For the full year, the company reported EPS of $2.82 on revenues of $17.91 billion, compared with EPS of $2.72 on revenues of $17.77 billion a year ago. The consensus estimates called for EPS of $2.87 on revenues of $18.08 billion.
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 more than $400 million to offset cost inflation the company estimates at 3%.
General Mills said it has begun a formal review of its North American manufacturing and distribution network with an eye toward “streamlining operations and identifying potential capacity reductions.” This almost certainly translates to closing plants and firing workers. The company said it will announce details in the coming months as it determines what actions it will take.
The company expects net sales in 2015 to rise at a mid-single digit rate and adjusted EPS is expected to grow at high single-digit rates. Currency translation effects are expected to cost three cents per share in earnings next year. The consensus estimates called for EPS growth of around 4% to $3.10 and revenue growth of 10% to $18.65, based on better results than General Mills reported.
The company’s CEO said:
Our plans for 2014 called for sales and earnings growth consistent with our long-term business model, along with increased cash returns to shareholders. We made good progress building our worldwide food businesses, and we returned more than $2.7 billion in cash to shareholders through a 17 percent dividend increase and significant share repurchase activity. But our sales and operating profit results were disappointing.
Shares were down about 4.2% in premarket trading, at $52.00 in a 52-week range of $46.70 to $55.64. Thomson Reuters had a consensus analyst price target of around $53.30 before the results were announced.
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