General Mills FY 1Q15 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Foreign exchange lowered sales by 1% point

“net sales declined 2% due to lower pound volume, mix and net price realization added 1 point of sales growth. That was offset by foreign exchange which reduced sales growth by 1 percentage point.”

Merchandising programs are less effective

“We are experiencing less effectiveness for merchandising programs. This is an issue we and others in the industry have noted previously. And we had a difficult comparison.”

International growing, US retail just not doing well

“The total operating profit decline was driven by U.S. retails results. International profit was 16% above year ago levels and up 17% on a constant currency basis. In Convenience Stores and Foodservice, profit increased a robust 18%.”

tough operating environment

“the operating environment in several of our markets has grown more challenging…U.S. Retail industry trends are a bit weaker. ..International developed markets were a bit softer too…In emerging markets, we’re still seeing sales growth for our businesses, but the pace of growth in China did slow a bit this quarter.”

Consumers trust Annies

“Consumers know and trust Annie’s purpose-driven culture and authentic brand. We believe that combining the Annie’s product portfolio and go-to-market capabilities with General Mills supply chain, sales and marketing resources will accelerate the growth of our organic and natural food business.”

Attractive position within organic space

“I’d love to, obviously, we think it’s a terrific equity. It’s a very, it’s a unique equity in that organic space sort of it’s an all family equity. Its mom’s buying organic products for herself and for her family and the kids, which is a very attractive positioning within the organic space.”

Supply chain possibilities

“There are numerous margin expansion opportunities for — with Annie’s, everything, can from the sourcing and how ingredients are brought in to the logistics and how we reach customers, all of the other internal supply chain, HMM things. We think there are many opportunities here and we have actually jointly discussed these opportunities with Annie’s management and they are quite excited by those opportunities. ”

Do our best to leave them alone

“we learned a tremendous amount from these various natural and organic companies that we’ve acquired over the years. We’ve been very good. I think about leaving them alone. Let them do that thing. We will retain Annie’s headquarters in Berkeley. These are very talented people. They build a — built a really good brand. And key is just to figure out where we have capabilities that can really help them and bring them those capabilities which they are actually eager to — eager to have to accelerate the growth of this thing.”