General Mills FY 4Q13 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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“productivity, we continue to see our productivity grow. We are still very much online to meet or exceed our commitment to get $4 billion of COGS productivity in this decade. So that will be a contributing factor, certainly.

The other two are more in the mix bucket. We continue to see strong performance out of our bakeries and food service business as we continue to even heighten our focus on the key product platforms and customer channels where, with our branded products and our direct sales force, we can make a difference, both in terms of volume and importantly mix benefit.

And then the other mix, and we actually saw that as we came out of ’13, is stronger baselines in our U.S. retail business, which will contribute to better gross margins as well. As a matter of fact, that was probably the key reason that we were able to beat our previous guidance for F13, is that our baseline volume in U.S. retail was better than we had originally participated at the beginning of the quarter. It allowed us to exceed our original guidance by $0.01, and it will help to contribute to some margin expansion in F14 as well.”

“prices are stable. Inflation is moderate, and we think will be quite manageable for us”

“Where we see baselines that are a little bit weaker or declining, it always has something to do with what we’re doing or not doing, and fundamentally would come back to not the right kind of innovation.

And so as I mentioned earlier, take yellow box Cheerios as an example. As we’ve shifted and refreshed our advertising, particularly in the second half of this year, we’ve seen that brand first stabilize in Q3 – I think share was down just a couple of basis points – and then continue to strengthen in Q4. This is yellow box Cheerios.

And this is all behind better messaging and around the health benefits of that product. So we look at it as down to us. It’s about the quality of our messaging and our innovation, and we’re encouraged by what we’re beginning to see in the Cheerios franchise as an example.”

“the way we look at it, we see plenty of evidence that when we get the message right, when we get the innovation right, these brands respond. We’re seeing that in Chex, we’re beginning to see that in Cheerios, and we have a very strong program of innovation and marketing and consumer promotion next year. So we think we’ll continue to see those franchises strengthen.”

” we’re not victims here. If we get the innovation right, we’ll do just fine. It’s on us”

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