Lower sales in the U.S. and the sale of Green Giant saw General Mills fall short of profit expectations in its 2nd Quarter results.
The Golden Valley-based company announced a 2 percent adjusted rise in net earnings to $530 million – 82 cents a share – for the quarter, but stock analysts had been expecting profits amounting to 83 cents a share, according to the Star Tribune.
Overall sales declined 2 percent over a year ago to $4.42 billion, which according to the Wall Street Journal was 4 percent below Wall Street projections, and much of the blame for the fall was placed at the feet of the company's U.S. division.
The company said sales of its snacks and baking products – which includes brands Betty Crocker, Pillsbury, Bugles, Nature Valley and Chex – declined by 1 percent, while all its other product categories (cereals, pizzas, etc.) declined "mid single-digits."
Also factored into the domestic figures was the business lost following the sale of its Green Giant and Le Sueur canned vegetable brands for $765 million and the acquisition last year of Annie's Homegrown, which resulted in a 1 percent drop in net sales.
Profits have managed to rise in spite of this thanks to a cost-cutting initiative which will continue into next year, with the company targeting $450 million in savings by 2017 and $500 million by 2018.
Some General Mills products have been performing well also.
The company highlighted Cinnamon Toast Crunch, Lucky Charms, Yoplait Greek yogurt, Nature Valley grain snacks, Progresso Soup, Bugles and Chex Mix as products that made "particularly strong contributions" to sales in its first half.
General Mills has been re-aligning its business strategy in the past year, with the sale of Green Giant and acquisition of Annie's part of that as it moves towards more fresh and organic products in response to changing consumer tastes.