General Mills (GIS) Tops Q3 EPS by 1c
General Mills (NYSE: GIS) reported Q3 EPS of $0.79, $0.01 better than the analyst estimate of $0.78. Revenue for the quarter came in at $3.9 billion versus the consensus estimate of $3.78 billion.
Outlook General Mills updated its key full-year fiscal 2018 targets. These targets exclude the impact of the proposed Blue Buffalo acquisition.
- Organic net sales are expected to be in line with last year, which is unchanged from previous guidance. This represents a 400 basis point improvement over the fiscal 2017 growth rate. The company continues to estimate currency translation will increase reported net sales by approximately 1 percentage point in fiscal 2018.
- Constant-currency total segment operating profit is now expected to decline 5 to 6 percent, compared to the previous expectation of a range between down 1 percent and flat. The change in outlook was driven by higher-than-expected supply chain costs, including freight and logistics, commodities, and other operational costs. The company expects to generate constant-currency total segment operating profit growth in the fourth quarter, driven by favorable net price realization and mix and increased cost savings. Currency translation is expected to add 1 point to full-year total segment operating profit growth.
- The full-year fiscal 2018 adjusted effective tax rate is now expected to be approximately 26 percent, compared to the previous expectation of a 27 percent rate. We continue to estimate that the TCJA will have a 2 point favorable impact on our fiscal 2018 adjusted effective tax rate.
- Constant-currency adjusted diluted EPS is now expected to range between flat and up 1 percent from the base of $3.08 earned in fiscal 2017, compared to the previous guidance of a 3 to 4 percent increase. The company now estimates currency translation will be a 3 cent benefit to fiscal 2018 adjusted diluted EPS.
- The company continues to expect free cash flow to increase at least 15 percent from the prior year, driven by strong discipline on core working capital.
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