General Mills ‘gaining traction’ in European ice cream, snacks

By Katy Askew contact

- Last updated on GMT

General Mills ‘gaining traction’ in European ice cream, snacks

Related tags: Ice cream, General mills

General Mills has returned its European business to growth thanks to higher sales from its Häagen-Dazs and snack bar brands.

General Mills reported a 2% gain in first-quarter organic sales in its European and Australian reporting segment yesterday (20 September).

The news means that General Mills has been able to stem a sales decline in the region, Susquehanna International analyst Pablo Zuanic noted. “Europe & Australia segment organic sales improved to +2% after -9% last quarter and -4% in FY17, benefiting from innovation and geographic expansion of Haagen-Dazs, Natural Valley and Fiber One.”

Detailing the result during a conference call, chief financial officer Don Mulligan revealed that the company saw “good growth on our ice cream and snacks”​ businesses.

“We continue to expand Häagen-Dazs… in European markets in our stick bar; pint and mini cup innovation is gaining traction. Snack bars benefited from a strong performance on our Fiber One and Nature Valley brands as we continue to increase household penetration behind effective messaging and innovation.”

Gaining momentum in UK, France

Chief executive Jeff Harmening said that the improvements were the result of “great focus and urgency”​ to deliver against General Mill’s global growth priorities.

In July, Harmening outlined General Mill’s ambition to improve top-line trends this year, with plans to invest in "differential growth"​ by backing its global Old El Paso, Häagen-Dazs ice cream and snack bar businesses and improving its domestic fortunes, particularly in US yoghurt.

“Our efforts are beginning to pay off and we're confident with the direction that we're headed,”​ he said yesterday.

“Our fiscal '18 plans on Häagen-Dazs call for growth from innovation, geographic expansion and increased media and we're seeing good results so far. Over the last 12 weeks, this business posted 20% retail sales growth in measured channels across the globe.

“The UK, our second largest ice cream market in retail channels led the way with 66% growth behind our new mini cups launch, the continued growth of stick bars and our new advertising campaigns. And France, our largest retail market posted 16% growth behind the launch of many stick bars and I must admit, an unusually warm summer didn't exactly hurt our European Häagen-Dazs results in the quarter.”

Harmening suggested General Mills will step up its performance moving into the second quarter.

“We're going to build on the momentum that we saw in the first quarter as we approach the second quarter… We'll increase our brand-building investment behind Häagen-Dazs, Nature Valley and our cereal portfolio,” ​he detailed. “In the second quarter, we continue our rollout of stick bars, mini stick bars and mini cups.”

Group performance still down

Despite making headway in Europe, General Mills’ US performance weighed on its overall sales trajectory, which sank by 4% to $3.8bn in the quarter ended 27 August.

Net earnings declined 1% to US$405m after operating profit dipped 3% to $626m.

Here the company’s European performance showed some strain, with margins coming under pressure in the region. “Segment operating profit was down $13 million in Europe and Australia, driven by significant raw material inflation, especially dairy and vanilla, which impact both Häagen-Dazs and Yoplait, as well as currency-driven inflation on products imported into the UK,”​ Mulligan noted.

General Mills confirmed its full-year outlook for a drop in sales of 1-2%. Operating margin, excluding currency exchange, is expected to be flat to up 1% and net earnings are forecast to rise by 1-2%.

Related topics: Business, Dairy, Prepared foods, Snacks

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