General Mills predicts elevated at-home demand to remain following strong year

General Mills has recorded a 3% net sales increase in its 2021 fiscal year; despite a weak fourth-quarter as at-home food demand decreases relative to the start of the pandemic.

Full-year net sales stood at $18.1 billion, rising organically by 4% following three strong quarters; while operating profit went up by 6% to $3.1 billion.

Meanwhile in Q4, General Mills’ net sales fell 10% to $4.5 billion as people bought less food to eat at home compared to the surge during the outset of the pandemic. Q4 operating profit fell 34% to $548 million.

Nevertheless, General Mills believes that changes in consumer behaviours driven by the pandemic will continue to result in an ongoing elevated demand for food eaten at home – due to more consumers working from home and an increase in appreciation for cooking and baking. According to the owner of Old El Paso and Cheerios, 85% of its net sales represent at-home food occasions.

The company’s largest unit, North America retail, witnessed its net sales increase 2% in the full-year to $11 billion; despite falling 17% in Q4, driven by significant sale declines for its meals and baking products.

While the firm’s convenience stores and foodservice segment posted a FY net sales decline of 4%, the unit witnessed a 25% rise in the fourth-quarter, reflecting the gradual recovery of away-from-home channels.

General Mills reported an 8% net sales increase in the 12 months in Europe and Australia; and a 10% increase in Asia and Latin America. In the fourth-quarter, the latter unit recorded 17% net sales growth as it benefitted from a recovery in food outlets, such as Häagen-Dazs shops in Asia.

General Mills chairman and CEO, Jeff Harmening, said: “I’m pleased with the results the General Mills team delivered in fiscal 2021 under difficult circumstances. We competed effectively, generated strong top- and bottom-line growth, and further improved our balance sheet, allowing us to resume dividend growth and share repurchases.

“In addition, we advanced our Accelerate strategy by investing in our brands, strengthening our capabilities, building on our leading position as a force for good, and taking significant steps to reshape our portfolio and our organisation for future growth.”

As part of its Accelerate strategy, General Mills has acquired Tyson Foods’ pet treats business and agreed to divest its European Yoplait operations.

The company says at-home food demand will decline year-over-year in fiscal 2022 across most of its core markets, though will remain above pre-pandemic levels.

For full-year fiscal 2022, General Mills predicts organic net sales to decline 1-3%.