General Mills (NYSE: GIS) reported Q4 EPS of $1.10, $0.06 better than the analyst estimate of $1.04. Revenue for the quarter came in at $5 billion versus the consensus estimate of $4.88 billion.

Fiscal 2021 Outlook and Priorities

General Mills expects the largest factor impacting its fiscal 2021 performance will be relative balance of at-home versus away-from-home consumer food demand. This balance will be determined by factors such as consumers’ ability and willingness to eat in restaurants, the proportion of people working from home, the reopening of schools, and changes in consumers’ income levels. While the COVID-19 pandemic has significantly influenced each of these factors in recent months, the magnitude and duration of its future impact remains highly uncertain. As a result, the company is not currently providing an outlook for fiscal 2021 growth in organic net sales, adjusted operating profit, and adjusted diluted EPS.

The company expects consumer concerns about COVID-19 virus transmission and the recession to drive elevated demand for food at home, relative to pre-pandemic levels. The company is tracking the level of virus control, the possibility of a second-wave outbreak, the availability of a vaccine, GDP growth, unemployment rates, consumer confidence, and wage growth, among other factors, to assess the likely magnitude and duration of elevated at-home food demand.

General Mills has outlined three key priorities for fiscal 2021 that will allow it to deliver competitive performance in the short term while continuing to advance its long-term goals:

1. Compete effectively, everywhere we play, leading to increased brand penetration, competitive service levels, strengthened customer partnerships, and market share gains in the company’s key categories. General Mills expects net sales growth in fiscal 2021 will be positively impacted by its superior execution as well as elevated at-home food demand, relative to the pre-pandemic period. The company anticipates headwinds to fiscal 2021 net sales growth from comparisons against the 53rd week, the extra month of Pet results, and the pandemic-related increase in demand in the fourth quarter of fiscal 2020. Additionally, fiscal 2021 net sales growth may be negatively impacted by a potential reduction in consumers’ at-home food inventory, which has been elevated during the pandemic.
2. Drive efficiency to fuel investment. The company anticipates that the combination of benefits from its HMM initiatives and volume leverage and headwinds from input cost inflation, increased investment in brands and capabilities, higher costs to service elevated demand, and higher ongoing health and safety-related expenses will result in an adjusted operating profit margin that is approximately in line with fiscal 2020 levels.
3. Reduce leverage to increase financial flexibility. The company expects to make further progress in fiscal 2021 in reducing its net-debt-to-adjusted-EBITDA ratio, which stood at 3.2x at the end of fiscal 2020.

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