General Mills 2Q14 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.

Promotional spend less effective, input costs above expectations

“In the fourth quarter, promotional spending in developed markets was less effective than we planned and input cost inflation was a bit above our forecast.”

Revenue up slightly, operating profit down, EPS up

‘Net sales for 2014 grew 1% to reach $17.9 billion. On a constant currency basis, net sales increased 2%. Adjusted segment operating profit fell 2% to $3.2 billion. Net earnings attributable to General Mills, totaled more than $1.8 billion and diluted earnings per share were $2.83. Adjusted diluted EPS grew 4% to reach $2.82.”

More an more players competing for shelf space

“It really for us related to execution. We just see more and more of the players interested in getting merchandising. There are limited number of places in the store to get that high quality that we want, which is really good placement on end-aisle displays coupled with the feature support that we know drives efficient merchandising.”

Consumer definition of healthy cereals is changing…more focus on protein

“The consumer definition of health is changing in the cereal category. Clearly, they are interested in protein, clearly there are things that they – some consumers want to avoid like gluten, and so you’re going to see us build on those trends with new product offerings and continued renovation.”

More competitors

“Our view is just the sheer number of new items and number of new competitors certainly in a – for instance in yogurt space, just lots of people coming in with new items. And so the competition for a limited number of quality display options, I would say is increasing.”

Dairy inflation moderating

“We also of course are seeing some moderating dairy inflation; and it’s always hazardous to predict what commodity prices are going to do as well, as you know. But we’re encouraged by what we are seeing on that front.”

Modelling 3% inflation for 2015 FY

“Yes, we have 3% inflation as you know we have a fairly broad market basket”

Snacking is a trend

“clearly snacking is a trend, a positive trend, and so maybe that is a key factor of that and we’re very focused on the snacking trend, and it’s not just the snacks in our snack businesses, we see yogurt becoming more and more of a snack food and in fact one of the reasons for the resurgence of our core Yoplait businesses is that we’re seeing more snack usage and we’re actually talking about the product and its snack versatility in advertising.”

We are a marketing company, understanding the changing consumer is our job

“We are marketing company so our job is to understand the change and capitalize on it, find opportunity there, and so I think it’s more than one change, as I tried to say. But it’s more snacking, it’s changing definitions of health and wellness, but as we get clear, I think, understanding of those and better understanding of what exactly the consumer wants there, we will get better at giving them, giving those products to her and these again should become opportunities for us.”