General Mills reports third-quarter results, updates full-year outlook due to COVID-19

General Mills has reported results for its fiscal third quarter, which ended Feb. 23, 2020, right before the coronavirus pandemic escalated in the United States.

“We began fiscal 2020 with three key priorities: accelerate our organic sales growth, maintain our strong margins, and reduce our leverage,” said Jeff Harmening, General Mills chairman and CEO, in a company press release. “Our focus and execution in a dynamic environment this year have kept us on track to achieve those goals. Our third-quarter results were broadly in line with our expectations, except for the negative impact in Asia of the COVID-19 virus outbreak.”

The company reported net sales of $4.2 billion for the third quarter, which were flat compared to the same period last year. Organic net sales were also flat to last year, with strong growth for the pet segment largely offset by declines in North American retail and convenience stores and foodservice. Third-quarter net sales results versus the prior year included a 50 basis-point headwind from lower Häagen-Dazs net sales in Asia in February, driven by the impact of the COVID-19 virus outbreak on consumer traffic in Häagen-Dazs shops and foodservice outlets.

For the fiscal year thus far, General Mills reported that net sales declined 1% to $12.6 billion. The impact of the recent COVID-19 virus outbreak on the company’s full-year fiscal 2020 results is still uncertain. The company’s current outlook incorporates increased orders from retail customers in North America and Europe after the end of the third quarter in response to increased consumer demand for food at home, as well as headwinds in Häagen-Dazs shops and other foodservice channels resulting from lower consumer traffic. The most significant element of uncertainty in the company’s full-year outlook is the intensity and duration of increased demand for food at home across all its major markets. Additionally, the company’s outlook assumes its supply chain continues to operate with minimal disruption for the remainder of fiscal 2020.

“During the rapidly evolving situation related to COVID-19, our number one objective continues to be the health and safety of our consumers, employees, and other stakeholders,” said Harmening in the press release. “General Mills plays a critical role in making food to meet the needs of our consumers, and I’m proud of the way we’ve partnered with our retail customers in recent weeks to service consumers’ increased demand for food at home during this unique time. Looking forward, we’ll remain agile to adapt to changing demand patterns around the world as circumstances with COVID-19 continue to develop.”

Based on its year-to-date performance and fourth-quarter expectations, General Mills expects that its organic net sales will increase by 1%–2%. The combination of currency translation, the impact of divestitures executed in fiscal 2019, and contributions from the 53rd week in fiscal 2020 are expected to increase reported net sales by approximately one percentage point.