General Mills 3Q15 Earnings Call Notes

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Sales down 1% but up 3% ex currency

“Net sales totaled $4.4 billion, down 1% due to foreign currency effects. On a constant-currency basis, we posted 3% growth in net sales.”

Constant currency adjusted diluted EPS

“Excluding these items affecting comparability, adjusted diluted EPS was $0.70, up 13% from $0.62 a year ago. Constant currency adjusted diluted EPS increased 15%.”

Returned more than 100% of our free cash flow

“Slide 15 shows that we returned almost $10 billion to shareholders in the last 5 years, which represents more than 100% of our free cash flow during that time.”

Americans are eating away from home more again

“In recent years, as unemployment has moderated and consumer confidence has slowly improved, food-away-from-home has captured an increasing share of food spending. ‘”

Losing share in frozen veggies, but gaining share in priority categories

“dessert mixes and frozen vegetables are 2 categories where we’re seeing more significant share declines this year, and we have work to do to fix these businesses. But we are gaining share in our priority categories of Snacks, Yogurt and Cereal, and our year-to-date share is up in categories representing over 2/3 of our measured sales.”

Annies is benefitting from GIS’ manufacturing capabilities

“one of the many benefits of the combination that we’re seeing as we move to the integration is to see how General Mills’ innovation and formulation and manufacturing capability complements so well the desires of the Annie’s team to extend the brand into new areas.’

We have learned a lot from the small entrepreneurs that we compete with about being close the the consumer

“over the last half dozen years, we have been looking very closely at the entrepreneurs that we compete with, the smaller companies that we compete with, and we have studied in detail how those kinds of small companies develop and bring their products to markets. And we’ve learned a lot from doing that. And I would say a couple of the key lessons that we’ve learned is that the entrepreneurs who develop those products are very, very, very close to the ultimate consumer who will buy the product. Sometimes, the consumer is themselves or family members. And so that learning has really underscored our desire to put our marketeers and our consumer research specialists in the homes of the people who will be buying our products. This is so-called consumer empathy. We think it’s really, really important. And in many ways, it’s replacing big and broad-scale tests that we used to do, which, in a way, moves our marketeers out of the process and distances the consumer from them. So we’ve got a very high premium on getting our folks right next to the consumers who were going to buy these new products. The other area where we’ve really focused is rapid prototyping of the idea so that we can get a tangible representation of a new product in front of consumers very early in the process and learn directly from the consumer very rapidly. And these are lessons that we’re learning from these small companies. And when you do them the right way, the result is you go fast, you make decisions rapidly. You’re very connected to the consumer, and so you’re more on target more often. So I could go on for another 20 minutes. I won’t, but we have changed quite a bit the approach that we take to new product development, very much learning from small companies and entrepreneurs.”