General Mills Slumps After Q4 Earnings, Softer Profit Outlook As Inflation Bites Margins

General Mills  (GIS) - Get Free Report shares moved firmly lower Wednesday after it forecast softer-than-expected full year profits following a mixed fourth quarter earnings report that indicated ongoing pressures in passing on higher prices to inflation-strapped customers. 

General Mills said adjusted earnings for the three months ending in May, the company's fiscal fourth quarter, were pegged at $1.12 per share, 1% increase from the same period last year and 5 cents ahead of the Street consensus forecast. Group revenues, General Mills said, rose 3% to $5.03 billion, just shy of analysts' forecast of a $5.18 billion tally.

Gross margins narrowed by 1.8% to 34.4%, the company said, thanks in part to input cost inflation of around 9% that wasn't offset by higher end consumer prices. 

Looking into the coming financial year, the Cheerios cereal and Betty Crocker brand owner said it sees adjusted earnings growing between 4% and 6% from the 2023 base of $4.30 per share, with input cost inflation expected at around 5%, linked largely to higher wages.

"As we turn to fiscal 2024, we’ll lean on these same traits to continue to succeed in an evolving business landscape. We’ll focus on continuing to compete effectively, driving efficiency in our operations, and maintaining our disciplined approach to capital allocation, which we expect to result in financial performance that meets or exceeds each of our key long-term goals," said CEO Jeff Harmening. 

"To underscore our commitment to driving strong returns to General Mills shareholders, our Board approved a nine percent dividend increase effective with the August 2023 payment,” he added.

General Mills shares were marked 3.9% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $77.75 each.