General Mills’ pet food and treat sales, including Blue Buffalo, totaled US$335 million in the second quarter of fiscal year 2019. Compared to the same period in last fiscal year, that figure represents a net sales decrease of 7 percent, according to pro forma financial calculations released by the company on December 19. However, this decline reflected a comparison to the prior-year period when Blue Buffalo first launched into the U.S. Food, Drug and Mass (FDM) channels and generated 25 percent pro forma net sales growth. In-market results continued to show solid growth, according to the company, with retail sales up high-single digits.
General Mills’ pet segment operating profit was US$18 million below the prior year, reaching US$71 million was on a pro forma basis, driven by lower volume, significant input cost inflation, and plant start-up costs.
Through six months, pet net sales of US$678 million increased 2 percent on a pro forma basis. Segment operating profit totaled US$85 million, down US$80 million on a pro forma basis, driven by the impact of purchase accounting, including a US$53 million one-time inventory adjustment and US$7 million of intangible asset amortization, as well as significant input cost inflation and plant start-up costs.
General Mills plans for Blue Buffalo expansion
General Mills is planning significant expansion of Blue Buffalo in the second half of fiscal year 2019, including doubling distribution and increasing the Blue product assortment in FDM channels. In addition, second-half operating profit margins will benefit from accelerated synergies, cost savings initiatives, and the impact of actions taken in the first half to improve net price realization and mix. The company expects these actions will result in double-digit pro forma growth in net sales and segment operating profit for the full year, excluding acquisition-related charges.