General Mills Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Matt Smith - Stifel, Nicolaus & Company, Incorporated - Analyst : Hey, good morning. I believe when you initially provided fiscal '25 guidance, you weren't assuming much improvement in your categories with more emphasis on your competitiveness. Does the shift in more at-home food consumption give you more confidence in the organic sales outlook or are you seeing that benefit muted by continued value seeking behavior?

Question: Matt Smith - Stifel, Nicolaus & Company, Incorporated - Analyst : Thanks Jeff, and as a follow up, I appreciate that your investment span both innovation and some couponing and promotional activity. But on the couponing and promotional investments, can you talk about the re receptivity from consumers to your investment spending? Are you seeing incremental purchasing behavior from those consumers? And is the return on those investments in line with what you had expected?

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Jeff, you talked a bit about obviously the expectation of continued sort of progress around market share and competitiveness as you go through the year, I guess, would you anticipate, you know, being in a position to sort of hold share across your NAR segment for the year or maybe just the more gradual start make this sort of outcome perhaps still a bit overly optimistic. And then Kofi, I think last quarter you mentioned an expectation for an equal contribution from volume and price mix for the year. Is that still how you sort of see things playing out at this stage? Thanks so much.

Question: Michael Lavery - Piper Sandler Companies - Analyst : Thank you. Good morning. When you talked about some of the continued market share improvement, you cited one of the drivers has improved customer service levels. Can you call out maybe where that still has been an issue and what the kind of road map is or timing for improvement there?

Question: Andrew Lazar - Barclays Bank PLC - Analyst : So it's not any one particular category. It's just broad improvement for that.

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Okay. That's helpful. And on pet you said that the quarter kind of, you know, you're seeing progression. It's as you had expected. Can you give a sense of a little bit more what's ahead? And I maybe specifically on Wilderness even if the declines are moderating. Do you have an idea of when actual growth is expected and what we should be looking for there?

Question: Max Gumport - BNP Paribas Exane - Analyst : Hey, thanks for the question. Jeff last quarter, you discussed your intent to return excess cash to shareholders in the form of share repurchases if you couldn't find attractive acquisition candidates. So I think the initial read of the intent to use all the proceeds from the yogurt divestiture suggested there might not be attractive M&A out there. It seems like in today's prepared remarks, you had a bit more pointed commentary about focusing on deals that are more bolt on the nature specifically in that $1 billion to $2 billion transaction size range. So I think that helps to provide more clarity on the reason for why you're returning the proceeds to shareholders. But I'm curious what you're seeing in the current environment that has made you focus on finding the next Andes or Tyson pet treats business rather than the next Blue Buffalo. Thanks.

Question: Max Gumport - BNP Paribas Exane - Analyst : Thanks. And then with regard to improving your competitiveness, which is clearly a focus for this year, it was nice to see the progress in the first quarter. And I recognize you're far from declaring victory on that front just yet. But I'm wondering if you think investors would be making too much of a big deal out of the last month or so data, which would suggest you took a step backwards. I realized it's just a quad week and there can be volatility, but it was like in cereal, refrigerated dough, snack bar, sweet snacks, there was a bit of a step backwards. It does sound like you have more product news coming later on in 2Q. So just curious how you think we should all be reading that latest quad week of data. Thanks.

Question: Rob Dickerson - Jefferies LLC - Analyst : Great. Thank you so much. I guess you touched on kind of pricing couponing a little bit earlier, but I'm just curious, you know, as we think through, I guess Q2 and then I also I guess back half of the year, like, you know, is there a scenario that kind of plays out such that in North America price mix could actually be positive this year? I mean, clearly, you know, there's a lot of discussion around promotional needs and what we're doing on pricing and the value based consumer, et cetera. But at the same time, there's a comment in the prepared remarks that spoke to like selling the right, you know, pack size, the right channel at the right price. But then also maybe there is some price mix benefit on some of those shifts, so just trying to get a sense of kind of the price mix outlook for the year.

Question: Rob Dickerson - Jefferies LLC - Analyst : Fair enough. And then just on the M&A side, you know, again, prepared remarks, you know, spoke to kind of bolt on attraction $1 billion or $2 billion transaction size on average. Simple question, kind of where you would like to go, right? Is this kind of build up a little bit more international scale, maybe leaning into pet? So just any color you could provide would be fabulous. Thank you.

Question: Bryan Spillane - BofA Global Research - Analyst : So two for me, one just I think we've talked a little bit about, you know, kind of progress and trends. So maybe Kofi could you just tie together, I think at the start of the year, we were kind of looking at more of a back half loaded plan to begin with. So just as we're looking at the second quarter, you know, will it look somewhat similar to 1Q? I know we've got the comps are kind of wonky in pet but any color you can give us in terms of phasing, I think will be helpful and then I got a follow up.

Question: Bryan Spillane - BofA Global Research - Analyst : Okay, thank you. And then the follow up Kofi just on the divestiture and the dilution, is there stranded overhead incorporated in that, I guess underneath my question is just, you know, is it dilutive initially? But then you work through the overheads and over time it actually isn't as dilutive.

Question: Bryan Spillane - BofA Global Research - Analyst : Okay. Are there any TSAs also we should be aware of?

Question: Bryan Spillane - BofA Global Research - Analyst : Okay, but not very material.

Question: Leah Jordan - Goldman Sachs & Company, Inc. - Analyst : Good morning. Thank you for taking my question. I just wanted to follow up to the discussion on the more food at home trends supporting the volume lift. You know, is that a widespread list versus your expected baseline across categories or any notable surprises to call out there and has that demand shift impacted your view on how you're promoting or messaging in this current environment, including any update on how you're thinking about the timing of the spin throughout the year?

Question: Leah Jordan - Goldman Sachs & Company, Inc. - Analyst : Okay, great. Thank you. And then for my follow up, I don't think we've touched on international yet. Just seeing if you could provide more color on trends in that segment. I mean, it sounds like Brazil has improved from last quarter, you know, what were the key drivers in that region and then if you could comment on China as well. I mean, that seems to still be challenged, you know, how are things trending sequentially and any updated views on that region as we go throughout the year?

Question: Robert Moskow - TD Cowen - Analyst : To what extent does morning foods currently operate with an integrated cross category strategy across cereal and yogurt and does the divestiture of yogurt require you to alter your approach to the retailer or your consumer insights? And are there any implications regarding scale in that regard or is it just like there's different buyers? There's a cereal buyer, there's a refrigerated buyer, and it's very separate,

Question: Robert Moskow - TD Cowen - Analyst : And a follow up. You said 6 of your 10 categories are flat or getting better. Can you comment on the other four, like if it is snacks and dough and what's the plan for accelerating the growth in those other four?

Question: John Baumgartner - Mizuho Securities USA Inc. - Analyst : I wanted to come back to North America and the comments on competitiveness and the larger eating at home environment. You're looking at recent innovation, it seems to appeal maybe a bit differently to the frequency of consumption, the Totino's Breakfast, the taco dessert shells, the low sugar Betty Crocker. How do you assess your portfolio at this point and the frequency of consumption relative to its potential? Are there certain brands or categories where that gap is still significant? And in closing those gaps, what's the relative importance between, you know, even more innovation relative to making pack size changes or marketing differently against the business in its current state?