Feb 17 (Reuters) – General Mills cut its annual core sales and profit forecasts on Tuesday as the Cheerios cereal maker contends with a volatile economic backdrop and evolving consumer tastes.
Shares of General Mills, which left its annual outlook unchanged in December, were down about 3% in early trading. They have fallen nearly 19% in the last 12 months.
General Mills and other packaged food companies are under pressure as lower-income shoppers, hit hardest by persistent inflation, trade down to value brands and private-label goods. At the same time, the industry is contending with evolving dietary preferences and a growing push toward healthier foods, accelerated by the broader adoption of GLP-1 weight‑loss drugs.
“Cost of living and housing pressures are reshaping spending patterns, and value is a core expectation that is here to stay,” CEO Jeffrey Harmening said at the Consumer Analyst Group of New York (CAGNY) conference on Tuesday.
Executives said the company’s cereal business, its second biggest revenue generator, was under pressure from increased competition from protein offerings at breakfast.
Earlier this month, PepsiCo cut prices on core brands such as Lay’s and Doritos by up to 15% following a consumer backlash against earlier price hikes, while Kraft Heinz last week paused its splitting plans and forecast weak annual earnings after missing quarterly results estimates on tepid demand.
General Mills now expects annual sales to be down 1.5% to 2%, compared with its previous range of down 1% to an increase of 1%.
“The previous forecast for sales to increase as much as 1% seemed unrealistic to us. So, the updated guidance is more in line with the recent trends at the company. Moreover, the revision puts guidance more in line with the experiences at other food companies such as Kraft Heinz and Conagra,” said senior bond analyst Dave Novosel at GimmeCredit, an independent corporate bond research house.
It also sees annual adjusted operating profit and adjusted earnings per share down 16% to 20% in constant currency, compared with its previous range of down 10% to 15% in constant currency.
(Reporting by Koyena Das in Bengaluru; Editing by Tasim Zahid)
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