General Mills cuts sales, earnings outlook for FY17
General Mills said that in response to revised second-half growth expectations driven largely by recent sales performance on U.S. yogurt and soup, the company is reducing its sales and earnings outlook for the fiscal year ending May 2017. The company expects to deliver an adjusted operating profit margin of at least 18% in fiscal 2017, which represents an increase of at least 120 basis points over fiscal 2016 levels. General Mills fiscal 2017 organic net sales are now expected to decline approximately 4%. This represents the low end of the previous range of a 3%-4% decline, due primarily to a widening gap between the company's level of promotional activity and that of competitors in the U.S. yogurt and soup categories. Total segment operating profit growth in constant currency is expected to range from down 1% to up 1%, largely reflecting lower sales but also including incremental spending planned for the fourth quarter to strengthen key business lines. The company remains on track to deliver $380M in cost-of-goods savings from Holistic Margin Management and $500M in savings from its incremental efficiency and cost savings initiatives, including global supply chain and organizational restructuring as well as the implementation of zero-based budgeting. Fiscal 2017 adjusted diluted earnings per share are expected to increase 5%-7% in constant currency. The adjusted effective tax rate is now expected to be 29%. The company expects free cash flow to increase at a mid single-digit rate. Previously, General Mills had been targeting total segment operating profit growth of 2%-4% in constant currency, 150 basis points of improvement in adjusted operating profit margin, adjusted diluted EPS growth of 6%-8% in constant currency, an adjusted effective tax rate of approximately 29.8%, and high single-digit growth in free cash flow. FY17 EPS, revenue consensus are $3.08, $15.69B, respectively.