MINNEAPOLIS — On June 28, General Mills reported its fourth-quarter and full-year fiscal 2023 earnings for the three- and six-month periods ended May 28. The company shared it is looking to capacity investments, innovation and marketing to drive its pet segment — and other currently constrained segments — forward in fiscal 2024.
The company’s pet segment — which consists of the Blue Buffalo brand and pet treat brands formerly owned by Tyson — saw a 7% net sales increase to $655 million in the fourth quarter. Organic growth rose 7%. According to the company, dry pet food sales were up in the double digits and pet treats grew in the high-single digits, while wet pet food saw sales decline in the high-single digits.
Segment profit for General Mills’ pet business was up 18% to $133 million, which the company attributed to favorable price realization and mix and cost savings partially offset by input cost inflation, media investment and other factors.
“As we communicated over the past two quarters, our key pet food platforms are in different phases of recovery from our earlier capacity and service challenges,” said Jeff Harmening, chairman and chief executive officer of General Mills, in the company’s fourth-quarter earnings call on June 28.
The pet segment’s full-year net sales came to $2.5 billion, up 9% year-over-year. Organic sales were also up 9%. Dry pet food and pet treat sales were up in the double digits, while wet food sales remained flat. Pet segment operating profit for the full year was down 5% to $466 million, which the company attributed to higher input costs, lower volume and heightened SG&A expenses.
“As we look ahead, we expect to drive pet operating profit growth a bit faster than organic net sales growth in fiscal 2024, supported by improved volume performance, lower disruption-related supply chain costs, and benefits from our SRM capability,” Harmening added.
The company recently launched two new innovations — Nudges On-The-Go, which offers convenient packaging and represents a “new usage occasion,” and Blue Benebars, a function-focused take on a familiar pet snack offering. Blue Buffalo also unveiled a high-protein dog food line in March 2023, BLUE Wilderness Premier Blend, which was designed as a nutrient-dense option to “indulge dogs’ wild sides.”
Harmening also noted efforts to increase capacity for three business segments, one of which is pet food. The company broke ground on an expansion of its existing Blue Buffalo facility in Richmond, Ind., in March 2023.
“We also increased our investment in growth capital by double-digits, supporting additional capacity on constrained platforms including fruit snacks, pet food and hot snacks,” he said.
Overall, General Mills reported fourth-quarter net sales of $5 billion, up 3% year-over-year, and organic net sales growth of 5%. Operating profit totaled $818 million in the fourth quarter, down 19%, while adjusted operating profit was flat compared to year-ago at $889 million.
For the full fiscal year, the company reported net sales of $20.1 billion, up 6% from fiscal 2022, with organic net sales up 10%. Full-year operating profit came to $3.4 billion, down 1% year-over-year, but adjusted operating profit was up 8% to $3.46 billion.
“We delivered excellent results in fiscal 2023, including generating double-digit growth in organic net sales and constant-currency adjusted diluted EPS and exceeding $20 billion in annual net sales for the first time in our company’s history,” Harmening said. “Led by our Accelerate strategy, our team successfully navigated a highly dynamic operating environment with agility, focus and resilience.”
General Mills shared its fiscal 2024 outlook, saying it “expects the largest factors impacting its performance in fiscal 2024 will be the economic health of consumers, the moderating rate of input cost inflation, and the increasing stability of the supply chain environment.” The company hopes to combat these factors through innovation, in-store support, marketing and net price realization, General Mills stated.
For fiscal 2024, the company expects organic sales growth between 3% and 4%. Adjusted operating profit is projected to grow between 4% and 6% from the $3.5 billion it reported in fiscal 2023. Adjusted diluted earnings per share are also expected to grow between 4% and 6% year-over-year.
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