MINNEAPOLIS — General Mills, Inc. on June 26 reported on its fiscal 2019 earnings, ended May 26, 2019, as well as its fourth quarter earnings. The company also presented its fiscal 2020 outlook.

Overall, the company reported $4.16 billion in revenue in the fourth quarter, representing 7% year-over-year growth. Operating profit of all segments grew 13% over the same period to $818.6 million.

For fiscal 2019, General Mills earned $16.87 billion in revenue, up 7% from fiscal 2018 net sales. Total operating profit totaled $3.16 billion, up 13% from year-ago.

General Mills reported earnings and growth figures for its pet segment, Blue Buffalo, on a pro forma basis for the fourth quarter and fiscal year 2019, projected from seven days after the pet food manufacturer was acquired on April 24, 2018.

“In fiscal 2019, we executed well, successfully transitioned Blue Buffalo into our portfolio and delivered on our financial commitments… We also delivered double-digit top line and bottom line growth for Blue Buffalo, as we said we would at the beginning of the year,” said Jeff Harmening, chairman and CEO of General Mills.

On a pro forma basis, net sales of Blue Buffalo increased 38% to $405.6 million in the fourth quarter and 11% to $1.43 billion for the fiscal year. General Mills attributes revenue growth to the expansion of the brand into the Food, Drug and Mass (FDM) channels and e-commerce market share gains.

Operating profit for the pet segment grew 82% to $110.1 million in the fourth quarter but decreased 11% to $268 million over the fiscal year due to one-time inventory adjustment and intangible asset amortization, according to General Mills.

Harmening reported sales of Blue Buffalo in the FDM channel were up 30% in the fourth quarter compared to the fourth quarter fiscal 2018.

“In the month of April, Blue was the market share leader in a number of FDM accounts and held double-digit market share at three large customers,” he added.

E-commerce currently makes up approximately 25% of Blue Buffalo’s net sales, said Harmening, and online sales grew 21% in fiscal 2019.

As General Mills shifts Blue Buffalo’s retail focus toward FDM and e-commerce, pet specialty sales for the brand declined at a double-digit rate in fiscal 2019.

“This channel [pet specialty] remains important for Blue and we'll continue to partner with specialty customers to bring product variety, unique innovation and education to serve pet parents in the channel,” Harmening explained.

For example, he said, General Mills plans to launch a new super premium line, Carnivora, for the pet specialty channel later in the summer of 2019 to reassure its commitment to the channel.

“Overall, we're happy with Blue Buffalo's performance in year one and we see a long runway of growth ahead for this important business,” Harmening concluded.

The company detailed its financial goals for fiscal 2020, including organic net sales growth by 1-2%; adjusted operating profit increase of 2-4%; adjusted diluted EPS increase by 3-5%; and free cash flow of at least 95% of adjusted after-tax earnings.

“In fiscal 2020, our plans include continued strong innovation and investments in capabilities and brand building to accelerate our topline growth, efficiency initiatives to maintain our strong margins, and a disciplined focus on cash to further reduce our leverage,” Harmening said.  “We remain confident that executing our Consumer First strategy and our Compete, Accelerate, and Reshape growth framework will drive sustainable, profitable growth and attractive long-term returns for our shareholders.”

The company also reiterated its “consumer first” strategy, which involves strong product innovation, effective consumer marketing and in-store execution; accelerating growth across key product categories; and developing its portfolio through acquisitions and divestitures, of which Blue Buffalo is included.

General Mills CFO Don Mulligan sat down with Deutsche Bank Research Analyst Robert Dickerson June 11 to discuss the company’s business strategy and recent performance, including its pet business.

In addition, Blue Buffalo recently opened a $200 million manufacturing facility in Richmond, Indiana.

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