General Mills hopes restructuring leads to rebound

by World Grain Staff
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MINNEAPOLIS, MINNESOTA, U.S. — Executives at General Mills, Inc. hope that a restructuring program put in place in May will help the company rebound from a difficult fiscal 2012 in which higher input cost inflation contributed to a 13% decline in full-year earnings.

“The restructuring program we announced last month will better align and focus resources against our best opportunities for growth, accelerate our innovation efforts and make General Mills a more efficient organization,” Ken Powell, chairman and chief executive officer, said during a June 27 conference call with analysts to discuss fiscal 2012 results. “It will generate savings we will invest back in our businesses and enable us to deliver a balanced plan for growth across our global platforms.”

The restructuring effort, which included the elimination of 850 jobs globally, also features several changes to General Mills reporting segments. The U.S. Retail segment now consists of three divisions: meals, frozen foods and baking products.

“Our new meals division will be solely focused on our key center store meal items — Progresso soup, Helper dinner mixes, Old El Paso Mexican foods and Betty Crocker side dishes,” Powell said. “This alignment allows us to increase our emphasis on these important brands and to strengthen their growth.

“The new frozen foods division combines our frozen entrees, Totino’s pizza, Totino’s hot snacks, Pillsbury breakfast pastries and Green Giant items. This division focus will leverage our frozen food scale and consumer insights in order to increase our executional capability. And it will allow us to more effectively partner with our customers in this important and growing section of the grocery store.

“Finally, we’ve combined our baking expertise across Pillsbury refrigerated cookie dough and Betty Crocker dessert mixes to create a new baking products division. With many complementary products from shelf stable mixes to refrigerated ready-to-bake items, we will more efficiently serve the baking consumer moving forward.”

Product innovation will be a major focus for General Mills in the first half of fiscal 2013, with a number of entirely new and different products.

“We have high levels of innovation planned across our core product portfolio, and we’ll have good contributions from recently acquired businesses,” said Don Mulligan, chief financial officer.

For the year ended May 27, the company had earnings of $1.567 billion, equal to $2.42 per share on the common stock, compared with $1.798 billion, or $2.80 per share, during fiscal 2011. Sales for the year were $16.657 billion, up 12% from $14.880 billion during fiscal 2011.

For the fourth quarter ended May 27, earnings were up 2% at $325.4 million, or 50¢ per share, which compared with $320.2 million, or 50¢ per share, during the same quarter of the previous year. Sales for the quarter were $4.066 billion, up 12% from $3.634 billion during the same quarter of the previous year.

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