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General Mills (GIS) Misses Q1 EPS by 8c; Plans Further Consolidation of Yoplait, Operational Activities

September 17, 2014 6:55 AM EDT

General Mills (NYSE: GIS) reported Q1 EPS of $0.61, $0.08 worse than the analyst estimate of $0.69. Revenue for the quarter came in at $4.27 billion versus the consensus estimate of $4.38 billion.

General Mills reaffirmed FY2015 guidance.

New Cost-Reduction Initiatives

In June of this year, General Mills announced it had initiated several new cost-reduction projects designed to boost organizational efficiency and sharpen business focus behind the company's key growth strategies. These initiatives are incremental to the company's ongoing Holistic Margin Management (HMM) program, under which the company expects to generate supply chain cost savings exceeding $400 million in fiscal 2015.

Project Century is a formal review of General Mills' North American manufacturing and distribution network, with the goals of streamlining operations and identifying potential capacity reductions. Today, General Mills said that this initiative is expected to generate $100 million in annualized savings by fiscal 2017. Actions associated with this project are expected to commence in the second quarter of fiscal 2015. General Mills also has initiated efforts to further reduce overhead costs. These efforts are targeted to generate savings of $40 million pre-tax in fiscal 2015, with additional savings expected in 2016. Charges associated with the North American supply chain review and overhead reduction projects (primarily asset write-downs and severance costs) will be excluded from General Mills adjusted diluted EPS.

In addition, General Mills recently announced a restructuring plan to combine certain Yoplait and General Mills operational facilities in our International segment. Restructuring expense of $14 million associated with this project was recorded in the first quarter of fiscal 2015 and is being excluded from adjusted diluted EPS. The project is expected to generate cost savings of approximately $3 million in fiscal 2015 and a cumulative $12 million by fiscal 2017.

For earnings history and earnings-related data on General Mills (GIS) click here.



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