General Mills, the Minnesota-based packaged food giant, is continuing its streak of sluggish performance as consumers continue turning away from the prepackaged and processed foods the company is known for.
In the company's latest earnings report out Wednesday, CEO Ken Powell called General Mills' performance "mixed" in the fiscal year that ended May 31.
Net sales for the fourth quarter were $4.3 billion, about the same as a year ago, but short of analysts’ estimates of $4.5 billion.
Meanwhile, its profit was down 53 percent compared to a year ago, at $186.8 million. This is the seventh straight quarter the company has seen declining profits.
The dropoff was mainly in the U.S. retail market, and "reflected the impact of changing consumer food preferences," the company said, which means shoppers are buying foods with more natural ingredients and less processing.
The Golden Valley-based food giant is making changes in reaction to those consumer trends. Just a few weeks ago the company announced it would eliminate artificial colors and flavors from all its cereal brands.
It's also tweaking other products – adding protein to Cheerios, removing aspartame from Yoplait Light yogurt, making the cinnamon taste in Cinnamon Toast Crunch stronger and expanding its gluten-free offerings.
Part of the decline in profits came from a $260 million charge General Mills took to write down the value of its Green Giant vegetable business. That signals the company's intention to devote fewer resources to Green Giant going forward, according to the Associated Press.
Even though vegetables are healthy, consumers are moving away from canned and frozen veggies in favor of more fresh produce, the Star Tribune notes.
Rumors surfaced a few months ago that General Mills was seeking a buyer for Green Giant, which it has owned since 2001. But the company has not commented.
Besides changing its products, General Mills has eliminated some 2,000 jobs over the past two years, with the latest announcement of about 700 job cuts made just a week ago.
The company said it expects its cost-cutting efforts to save $$285 million to $310 million in the next fiscal year, according to Market Watch.
As for the future, General Mills said it plans to focus on its cereal and yogurt businesses, as well as its organic and natural foods segment. The company purchased the organic food company Annie's Inc., last year for $820 million.
General Mills shares have increased 4.5 percent since the beginning of the year. Its stock rose 2.5 percent to $56.25 Wednesday, according to the Associated Press.