Net income in the fiscal year ended May 28 totaled $1,657.5 million, equal to $2.82 per share on the common stock, down 2 percent from $1,697.4 million, or $2.83 per share, in fiscal 2016. Net sales also were lower, falling nearly 6 percent to $15,619.8 million from $16,563.1 million.
|Jeff Harmening, CEO of General Mills|
“Fiscal ’17 was a year of significant change for General Mills,” Jeffrey L. Harmening, CEO of General Mills, said during a June 28 conference call with analysts. “We implemented a new global organizational structure (and) continued our journey to become a truly global food company. We also accelerated some important cost-savings efforts to improve our efficiency. These efforts went according to plan, and we’re happy with those results, but it’s clear some actions did not go according to plan.
“We’ve pulled back two foreign investments in some key categories, and our overall execution was not up to our normal standards. Our sales and profits suffered as a result.”
Looking forward to fiscal 2018, Harmening said General Mills’ top priority is to make significant strides toward returning the business to sustainable top-line growth.
Operating profit within the company’s North America Retail business fell 2 percent during fiscal 2017 to $2,303.6 million from $2,351.2 million, while sales in the unit declined nearly 7 percent to $10,196.9 million from $10,936.6 million.
In the company’s Convenience Stores & Foodservice business, operating profit totaled $401.2 million in fiscal 2017, up 6 percent from $378.9 million in the same period a year ago. Net sales, though, fell 3 percent to $1,870 million from $1,923.8 million.
First, the company plans to grow its global cereal platform, including Cereal Partners Worldwide, behind compelling product news, innovation and advertising investment.
“In fiscal ’18, we’re going to leverage our wellness advantage by investing behind the new campaign across the Big G franchise called ‘Good Starts with G,’” Harmening said. “We’re using TV and digital media to highlight our great taste from real ingredients, our whole grain, our fiber content and our large gluten-free portfolio. For the digital component, we’re using precision targeting to tailor our messages to individual consumers, with an emphasis on Hispanic families and empty-nesters.”
Second, General Mills expects to improve its US Yogurt performance through fundamental innovation. An example of the company’s efforts includes the launch of a new line of French-style yogurt called Oui by Yoplait. The recipe is inspired by Yoplait Saveur d’Autrefois, a yogurt General Mills has sold only in France for 20 years. Oui by Yoplait is made by pouring ingredients into individual glass pots that set after eight hours, producing a thick and creamy yogurt, the company said. The rigidity of the glass helps maintain the yogurt’s integrity, allowing it to stabilize without the use of added corn starch or gelatin.
“Oui by Yoplait will lead the development of an emerging yogurt segment, which we call ‘Simply Better,’” Harmening said. “This is an important step in improving our US yogurt performance, reshaping our portfolio and helping the category return to growth.”
Collectively, the platforms represent about $4 billion in net sales, and Harmening said the company expects “great prospects for growth” in fiscal 2018.
In the snack bar category, General Mills intends to increase its innovation levels on Nature Valley, with plans to launch more than 20 new items, Harmening said.
“We’re getting behind coconut, one of the fast-growing flavors in snack bars, with the launch of toasted coconut Sweet & Salty nut bars and coconut butter Nature Valley Biscuits sandwiches,” he said.
“We missed the mark last year on our promotional spending, on soup and refrigerated dough,” he said. “So in fiscal ’18 our goal is to be in the zone on pricing during the key season. We’re not looking to win on price, and we won’t go back to the levels of investment from two years ago, but we know we need to be more competitive this year.
“In addition, we’ll continue to invest in targeted consumer news where we see strong returns. This fall, we are launching a line of organic soups under the Progresso brand, combining our organic expertise with Progresso’s top soup flavors. And we’re taking refrigerated dough out of the can with two new varieties of Pillsbury pizza dough.”