Company executives present growth plans for fiscal 2014 at NYSE
NEW YORK - Addressing investors and analysts this morning at the New York Stock Exchange, GeneralMills executives detailed the company’s growth and innovation plans for fiscal 2014.
“We’ll be building on a strong track record of annual growth,” said Ken Powell, chairman and CEO of General Mills. “Just five years ago only a quarter of our total sales, including our share of joint ventures, came from markets outside the U.S. Today, it’s more than one-third. Our global business portfolio gives us confidence that we can keep growing at an attractive rate.”
Today’s investor presentation expanded on the fiscal 2014 guidance provided by General Mills on June 26. The company said it expects net sales to grow at a low single-digit rate in 2014 to exceed $18 billion, with mid single-digit growth in segment operating profit and fiscal 2014 adjusted diluted earnings per share in a range of $2.87 to $2.90 per share.
Innovation to fuel growth in fiscal 2014
The company said it will launch more than 200 new products worldwide in the first half of the fiscal year, with more to come later in the year.
General Mills competes in five global product categories where sales are growing at mid-to high-single digit annual rates: cereal, yogurt, snacks, convenient meals, and ice cream. General Mills will focus its 2014 growth efforts on these five global categories.
A $4 billion global cereal business
General Mills will launch new cereal innovation and brand building in the U.S. cereal market in 2014. Hershey’s Cookies & Creme cereal will launch this summer, along with two varieties of Nature Valley granola cereal with 10 grams of protein per serving. The company also plans to expand the distribution of BFast, a convenient breakfast shake with the nutrition of a bowl of cereal and milk.
“We’re excited about our new product line-up,” said Ian Friendly, executive vice president, chief operating officer, U.S. Retail. “We expect our cereal business to get off to a strong start this year.”
Outside the U.S., General Mills’ joint venture with Nestle, Cereal Partners Worldwide (CPW), is building the cereal market in more than 130 countries.
“We expect continued sales growth for CPW in 2014 as we bring product innovation to both developed and emerging markets, like Nesquik Pillows in Russia, Fitness Fibre in Mexico, and Plus cereal fortified with calcium in Australia,” said Chris O’Leary, executive vice president, chief operating officer, International. “We believe in the growth potential of cereal.”
The world’s second-largest yogurt company
With $3 billion in yogurt sales, General Mills is focused on global innovation in this growing category. Following the successful 2013 U.S. launch of Yoplait Greek 100 – with expected first-year retail sales of more than $140 million - General Mills is launching a new line of blended Yoplait Greek strained yogurt with taste appeal as the major point of difference. With this innovation and more, along with increased advertising across the portfolio, the company expects its U.S. yogurt business to return to growth in fiscal 2014, Friendly told investors today.
General Mills is leading the emergence of the Greek yogurt segment in Canada, the U.K., and France with brands including Liberté, Yoplait Yopa! and Yoplait Source. The Cal-in, Perle de Lait and Yop yogurt drink brands also have new innovation planned in Europe. The company is developing the reduced-calorie yogurt segment in the U.K. with Weight Watchers-endorsed product lines.
And in Foodservice, General Mills is expanding its Greek yogurt assortment in healthcare, convenience stores, and colleges and universities to include Yoplait Greek 100.
A fast-growing global snacks business
Snacks also represents a $3 billion global business for General Mills, and the company has a strong new product lineup for the U.S. market, including new Nature Valley and Fiber One products, as well as new natural and organic snack offerings. In the growing Convenience Store channel, General Mills is introducing Chex snack chips, Betty Crocker caramel brownies, and Nature Valley soft-baked oatmeal squares.
“In 2014, we are leveraging our best-in-class category management capabilities to drive snacks aisle growth for our convenience store customers,” said Dave Dudick, senior vice president, Convenience Stores and Foodservice.
In Europe, Nature Valley is launching new flavors of Sweet and Nutty bars in 2014. In Brazil, new Yoki snack items and increased distribution will contribute to the expected $1 billion net sales for General Mills’ Latin America business next year.
Serving up convenient meals around the globe
With in-home consumption of Mexican meals on the rise, Old El Paso frozen entrees will be a new Mexican offering in the U.S. freezer case this summer.
General Mills also plans to contemporize the Helpers brand and introduce it to the next generation of consumers in 2014. This plan is just entering the market now, including new and improved products, new packaging, and new advertising, said Juliana Chugg, president, Meals division.
In China, sales for Wanchai Ferry frozen foods grew at a double-digit pace in 2013. In 2014, the company is introducing new regional flavors, as well as a tangyuan variety with a colorful filling and translucent wrapper - expected to be popular for the Chinese New Year this fall.
General Mills is also innovating on Yoki’s broad portfolio in Brazil with the launch of Kit Fácil dinner kits, combining Yoki seasonings and side dishes into a convenient kit.
A world leader in premium ice cream
Häagen-Dazs’ new global advertising campaign - its biggest ever - began airing in the past month. The new multi-channel campaign features Academy-Award nominee Bradley Cooper.
Häagen-Dazs is expanding on its success of Secret Sensations with new product offerings this year in Europe. And ice cream is one of General Mills’ key growth platforms in China, with 68 new Häagen-Dazs cafes opened in 2013 and more than 70 new shops planned in 2014 as the cafes expand into 13 more cities in China.
HMM - the gift that keeps on giving
While General Mills expects input cost inflation to be 3 percent in 2014, the company said today it estimates this year’s Holistic Margin Management, or HMM, savings to reach a record annual level, driving margin expansion for the business overall. General Mills has set a $4 billion target for HMM savings this decade worldwide, and said today it is solidly on track, with savings of $1.4 billion since 2010. The cost savings is used to offset higher input prices and invest in topline growth, including R&D and brand building.
Healthy growth in 2014
“We’ve planned a year with healthy levels of sales and earnings growth,” Don Mulligan, executive vice president and chief financial officer, told investors in closing. “We see margins expanding a bit, and we see advertising support for our brands growing in line with sales. We expect to generate strong cash flows from operations again in 2014, with much of that cash returning to shareholders through dividends and share repurchase.”
General Mills’ plans for 2014 include a 15 percent increase in dividends paid, along with share repurchases designed to reduce average diluted shares by 2 percent.
General Mills has established a strong track record of consistently delivering returns above the overall equity market’s performance. In the most recent fiscal year, General Mills’ return to shareholders was a strong 29 percent.
The full webcast of General Mills’ investor day can be found here.
About General Mills
General Mills is one of the world’s leading food companies, operating in more than 100 countries around the world. Its brands include Cheerios, Fiber One, Häagen-Dazs, Nature Valley, Yoplait, Betty Crocker, Pillsbury, Green Giant, Old El Paso, Wanchai Ferry, Yoki, and more. Headquartered in Minneapolis, Minn., USA, General Mills had fiscal 2013 worldwide sales of US $17.8 billion.