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MarketScreener Homepage  >  Equities  >  Nyse  >  General Mills, Inc.    GIS

GENERAL MILLS, INC.

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General Mills to Cut Jobs as Demand Lags -- WSJ

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07/22/2016 | 02:49am EDT
By Annie Gasparro 

General Mills Inc. said it is shedding an additional 1,400 jobs, citing lagging demand for some products including Progresso soup that have fallen out of favor with consumers seeking more natural ingredients.

The latest job cuts are part of a yearslong effort to slash expenses, and they mark a more than 10% reduction in its workforce since spring 2014.

Several packaged-food companies have been retrenching. Kellogg Co., Mondelez International Inc. and Campbell Soup. Co. have reduced their factory capacity for foods like cookies, cereal or soup in recent years.

"Consumers are increasingly seeking products that match their personal definition of real food, and that can mean foods that are less processed and have simple labels with recognizable ingredients," or it can mean more protein, whole grains or gluten-free, said General Mills Chief Executive Ken Powell said at an investor conference last week.

Since 2014, General Mills has revealed plans to cut some 3,500 jobs at factories and its headquarters, not including Thursday's announcement.

The maker of Cheerios cereal, Häagen-Dazs ice cream and Annie's Homegrown macaroni and cheese has grown over the past 150 years to $16.6 billion in annual sales, making it one of the nation's biggest food manufacturers. General Mills' operating profit margin, when adjusted for items affecting comparability, is the highest it has been in years, thanks to its various cost-cutting initiatives.

But in fiscal 2016, General Mills' sales fell for the second year in a row, down 6%. And some of General Mills' biggest brands, especially cereal and Yoplait yogurt, are facing stubborn sales declines, despite the company's efforts to revive the businesses.

For investors, General Mills' latest move could increase confidence that it will continue to improve its profitability. But some analysts caution that cost-cutting can only get a company so far.

"This is a reflection of the pressure they've been under. It gives a one-time cost-savings lift, but it doesn't really solve anything looking ahead," said Michael Lavery, food analyst at investment group CLSA. "It doesn't give them the top-line growth they need."

Thursday's job cuts will involve closing General Mills' Vineland, N.J., facility that makes Progresso soup -- and was featured in a soup commercial last fall -- potentially affecting 370 jobs.

A spokeswoman said the soup aisle has been challenged for years, but Progresso remains relevant to General Mills.

The company also said it reached a deal to sell its 180-person plant in Martel, Ohio, which produces dry mixes for the company's convenience stores and food-service segment, for about $18 million in cash.

Overseas, General Mills will close its snacks-manufacturing facility in Marília, Brazil, and will stop producing meals and snacks at its facility in São Bernardo do Campo, Brazil, affecting 420 jobs. In China, it will stop production of fruit snacks, eliminating 440 positions.

"Our snacks business in greater China has been underperforming for some time. Market conditions, brand position and the relatively low priority of snacks in our China portfolio have all played a role," the spokeswoman said.

The Minneapolis-based food maker had 39,000 full- and part-time employees at the end of May.

--Austen Hufford contributed to this article.

Write to Annie Gasparro at annie.gasparro@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CHEESE FUTURES (CSC) - CMG (ELECTRONIC)/C1 0.00% 2.107 End-of-day quote.2.93%
EURO / BRAZILIAN REAL (EUR/BRL) -0.97% 6.3419 Delayed Quote.40.50%
GENERAL MILLS, INC. -0.14% 62.97 Delayed Quote.17.57%
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Financials (USD)
Sales 2021 17 161 M - -
Net income 2021 2 131 M - -
Net Debt 2021 11 185 M - -
P/E ratio 2021 18,0x
Yield 2021 3,18%
Capitalization 38 470 M 38 470 M -
EV / Sales 2021 2,89x
EV / Sales 2022 2,82x
Nbr of Employees 35 000
Free-Float 80,7%
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Mean consensus HOLD
Number of Analysts 20
Average target price 63,33 $
Last Close Price 62,97 $
Spread / Highest target 12,8%
Spread / Average Target 0,57%
Spread / Lowest Target -19,0%
EPS Revisions
Managers
NameTitle
Jeffrey L. Harmening Chairman & Chief Executive Officer
Kofi A. Bruce Chief Financial Officer
Jodi J. Benson Chief Innovation, Technology & Quality Officer
Jaime Montemayor Chief Technology & Digital Officer
Stephen A. Odland Independent Director
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