By Jordan Tyler and Josh Sosland | From Pet Food Processing
MINNEAPOLIS — General Mills has reported strong growth for its pet segment so far in its fiscal year 2022. Jeff Harmening, chairman and chief executive officer of General Mills, shared the company has faced not only supply chain challenges but also “historic levels of input cost inflation,” and has leveraged cost savings and pricing actions to stay competitive in this volatile operating environment.
In the third quarter, ended Feb. 27, net sales for the pet segment grew 30% to $568 million, supported by its recent acquisition of pet treat brands formerly owned by Tyson Pet Products. Nine-month net sales were up 28% to $1.65 billion.
Organic net sales for the pet segment were up 16% for both the third quarter and the first nine months of fiscal 2022, according to General Mills. Segment operating profit over the third quarter was up 8% to $111 million, and segment operating profit grew 15% to $357 million in the first nine-months of the year.
This growth was attributed to favorable net price realization and mix and strong volume growth, the company stated, and nine-month sales were partially offset by higher input costs and SG&A expenses.
“General Mills brands are winning in the marketplace,” Harmening said in the company’s third quarter earnings call on March 23. “We’re competing effectively in fiscal 2022, holding or growing market share in 66% of our priority businesses year-to-date. This includes important global platforms such as Cereal, Pet Food, Ice Cream, and Mexican Food… We are winning in an operating environment that remains highly volatile. The whole industry continues to face transportation challenges and labor shortages. Our suppliers are facing these same constraints, leading to significant disruptions for our business.”
The Blue Buffalo brand has continued upward momentum in terms of market share and retail sales growth, the company reported. Following General Mills’ acquisition of Tyson Foods’ pet treat businessin July 2021, the company has stoked 21% year-to-date retail sales growth for the Nudges, True Chews and Top Chews brands.
General Mills’ pet business accounts for roughly 19.5% of the company’s net sales, representing the company’s largest business aside from North America Retail at 21.7% of net sales.
Overall, General Mills reported net income of $660.3 million in the third quarter, equal to $1.09 per share on the common stock, up 11% from $595.7 million, or 97¢ per share, in the third quarter of fiscal 2021. Net sales were $4.54 billion, versus $4.52 billion a year earlier. Adjusted earnings per share were up 2%. Unadjusted results were boosted by a pre-tax gain of $149 million from the sale of numerous businesses.
Through the first three quarters of fiscal 2022, General Mills net income was $1.909 billion, down 2% from $1.946 billion. Sales were $14.10 billion, up 4%.
“Our solid execution in a highly volatile environment enabled us to close the third quarter with improved momentum,” Harmening stated. “Demand for our brands remains robust, and our team has shown great agility to overcome disruptions throughout the supply chain and deliver for our customers and consumers. We expect to drive strong growth in the fourth quarter, fueled by accelerating net price realization. With confidence in our plans and positive momentum on our business, we’re raising our guidance for fiscal 2022.”
The company updated its guidance for fiscal 2022 to reflect strong top- and bottom-line growth expected in the fourth quarter. Organic net sales are now expected to be up 5%, adjusted operating profit is projected to be down 2% or flat, and adjusted diluted earnings per share is expected to be flat or up by 2% for the full fiscal year.