General Mills sales drop, but profits up in Q2 FY24

Net sales for General Mills’ pet segment, which includes Blue Buffalo, were down 4% to US$569 million, in the second quarter of fiscal year 2024. This decline was driven by lower pound volume.

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Adapted from a press release:

Net sales for General Mills’ pet segment, which includes Blue Buffalo, were down 4% to US$569 million, in the second quarter of fiscal year 2024. This decline was driven by lower pound volume but was partially offset by favorable net price realization and mix. Organic net sales for General Mill’s pet segment also dropped 4%. Net sales in the quarter were down mid-single digits for dry pet food, down double digits for wet pet food, and up double digits for pet treats compared to the prior year.

However, segment operating profit of US$102 million was up 18%, driven primarily by favorable net price realization and mix and cost savings, partially offset by lower volume, higher other supply chain costs and higher expenses.

General Mills’ pet division’s net sales performance lagged all-channel retail sales results by roughly 2 points, despite the comparison to the year-ago quarter that included a significant retailer inventory reduction. Relative to fiscal 2022, second-quarter net sales were down mid-single digits and all-channel retail sales were up mid-single digits.

“In the second quarter of fiscal 2024, we approved a restructuring action to enhance the go-to-market commercial strategy and associated organizational structure of our pet segment,” General Mills executives wrote in their Q2 FY24 earnings statement press release. “We expect to incur approximately US$22 million of restructuring charges and project-related expenses related to this action, of which approximately US$4 million will be cash.”

Through six months ending Nov. 26, General Mills’ pet segment net sales were down 2% to US$1.1 billion. Organic net sales were also down 2%. Segment operating profit was up 2% to US$214 million, driven primarily by favorable net price realization and mix and cost savings, partially offset by higher other supply chain costs, lower volume, input cost inflation, higher expenses and supply chain deleverage.

General Mills entered pet supplement space with Fera Pets acquisition

In November, General Mills acquired Fera Pets, Inc., a vet-founded pet supplement company, bringing new health-focused offerings to General Mills’ pet portfolio. This pet product company acquisition represents General Mills’ first step into the pet supplement category and first acquisition by its newly launched growth equity fund.

General Mills closed plant acquired from Tyson Foods

In May, General Mills announced plans to shutter a Blue Buffalo production facility in Independence, Iowa, USA by the end of 2023, Manufacturing Dive reported. The plant produces Top Chews and Nudges treats. General Mills acquired those brands from Tyson Foods in 2021. The closure will affect 250 employees, and a General Mills spokesperson said the company would provide career services and benefits support for these individuals. The spokesperson said the closure would not affect pet food and treat plants in Joplin, Missouri and Richmond, Indiana.

General Mills history and performance

In 2018, General Mills acquired Blue Buffalo for approximately US$8 billion, or US$40 per share in cash. During the first quarter of fiscal year 2022, General Mills acquired Tyson Foods’ pet treats business for US$1.2 billion in cash. The deal included the Nudges, Top Chews and True Chews brands. Net sales in Q4 FY22 included a benefit from the Tyson Foods’ pet treats acquisition. Organic net sales were up 22%. Pet food and treat segment operating profit increased 10% to US$113 million. For the full fiscal year, General Mills pet segment net sales increased 30% to US$2.3 billion. Net price realization and mix added to net sales growth, including a favorable mix from the pet treats acquisition and the impact of SRM actions put in place in response to input cost inflation. Organic net sales were up 18%. General Mills pet segment’s annual revenue reached US$1,732,000 in 2021, according to Petfood Industry’s Top Companies Current Data.

General Mills pet food and treat segment net sales

  • FY2022 - US$2,259.4 million, up 30% from FY2021 (US$1,732.4 million), a 2% change over FY2020 (US$1,694.6 million)

General Mills pet food and treat segment operating profit

  • FY2022 - US$470.6 million, up 13% from FY2021 (US$415 million), up 6% from FY20 (US$390)
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