March 18 (Reuters) – General Mills reaffirmed its annual sales and profit forecast on Wednesday after slashing it last month, as pressure on consumer spending and stiff competition muted demand for the Cheerios maker’s pantry staples and snacks.
Broad inflationary pressure and added uncertainty from the Iran war is also squeezing consumer spending, dragging sales of packaged food makers, who are already facing the brunt of change in dietary preferences toward healthier foods, accelerated by the fast adoption of GLP-1 weight‑loss drugs.
Last month, General Mills’ forecast cut sparked a selloff across consumer goods companies. Last week, peer Campbell’s also cut its annual forecasts.
Minneapolis-based General Mills said last month it was facing stiffer competition in protein-centric breakfast products as consumers shift toward higher‑protein options, prompting it to roll out new protein‑focused products expected to account for about 25% of annual net sales.
“We started the year expecting that our investments, divestitures, and unfavorable timing comparisons would drive declines in our sales and earnings results through our first three quarters… And that’s what we’ve seen play out,” CEO Jeff Harmening said.
“As we move to the fourth quarter, we expect to deliver a step up in organic sales trends and return to earnings growth.”
Shares of the company, which stuck to its annual targets of adjusted profit declining 16% to 20% and organic sales to fall 1.5% to 2%, were down 1% in early trading. They have fallen about 17% so far this year.
In the third quarter, the Pillsbury maker saw net sales for its North America retail segment – its biggest unit – fall 14 percentage points.
“A volatile Q3 does little to provide clarity,” Jefferies analysts noted.
Overall, the company posted third-quarter sales of $4.44 billion, compared with analysts’ estimates of $4.42 billion, as per data compiled by LSEG.
On adjusted basis, the company posted third-quarter profit of 64 cents, compared with estimate of 73 cents, as per data compiled by LSEG.
(Reporting by Koyena Das in Bengaluru; Editing by Krishna Chandra Eluri)
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