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General Mills Provides Operational Update and Raises Fiscal 2020 Outlook

May 11, 2020

MINNEAPOLIS--(BUSINESS WIRE)-- In advance of investor discussions this week, General Mills (NYSE: GIS) is providing an update on its performance and outlook for the fiscal year ending May 31, 2020.

"During this difficult and unprecedented situation, I am incredibly proud of the way General Mills has stepped up to ensure a reliable food supply for our consumers and our communities," said Jeff Harmening, General Mills Chairman and Chief Executive Officer. "Our company’s purpose is to make food the world loves, and in the current circumstances it is even more fundamental: we are making food the world needs. With consumers embracing food at home like never before, our front-line employees are working tirelessly to service this elevated demand while we take measures to ensure their safety. I am confident that our trusted, leading brands, our dedicated people, our differential capabilities, and our best-in-class execution will allow General Mills to emerge from this pandemic a stronger company.”

Operational Update
General Mills’ most important objectives are the continued health and safety of its employees and the ongoing ability to serve consumers around the world. The company has implemented rigorous employee safety measures, rooted in CDC and WHO guidance, across all its supply chain facilities, including proper hygiene, social distancing, mask use, and temperature screenings. To support employees who work at manufacturing facilities, the company has implemented incremental benefits and incentives. To date, all General Mills manufacturing and distribution facilities have continued to operate without significant disruption related to COVID-19.

In March, the company experienced an unprecedented increase in consumer demand for food at home, particularly impacting its North America Retail and Europe & Australia segments, as consumers stocked up in response to local shelter-in-place restrictions. While the magnitude of increased at-home food demand moderated in April, it remained significantly elevated compared to pre-COVID-19 levels. Notably, General Mills’ Nielsen-measured U.S. retail sales increased 45 percent and 32 percent in March and April, respectively, versus the prior year.

In contrast, the company has seen a substantial decline in away-from-home food demand since the onset of the pandemic. These trends are expected to be a significant headwind on business results in its Convenience Stores & Foodservice segment, driven primarily by the restaurant and education channels, and, to a lesser extent, in its Asia & Latin America segment. Globally, at-home food represents approximately 85 percent of General Mills net sales and away-from-home food represents the remaining 15 percent.

General Mills is partnering closely with its suppliers and customers to ensure its supply chain can meet this elevated at-home food demand. This includes taking actions to increase capacity and maximize product availability, such as optimizing product assortment across targeted platforms.

The company’s strong supply chain execution and its trusted, leading brands have contributed to recent market share gains in its at-home food businesses, including in the North America Retail, Europe & Australia, and Pet segments.

Updated Fiscal 2020 Outlook
General Mills has raised its financial expectations for the fourth quarter of fiscal 2020 to reflect stronger than anticipated at-home food demand in March and April, with an expectation that trends will moderate in May but remain significantly ahead of pre-COVID-19 levels. The company expects fourth-quarter organic net sales to increase double digits versus the prior year, led by strong growth in North America Retail and Pet. Fourth-quarter constant-currency adjusted operating profit is expected to grow faster than organic net sales, reflecting benefits from operating leverage, partially offset by increased costs related to COVID-19. As a result, the company now expects to exceed each of its previous full-year fiscal 2020 guidance ranges of 1 to 2 percent organic net sales growth, 4 to 6 percent growth in constant-currency adjusted operating profit, and 6 to 8 percent growth in constant-currency adjusted diluted earnings per share.

Due to the recent strength in the U.S. dollar, the company now expects the combination of currency translation, the impact of divestitures executed in fiscal 2019, and contributions from the 53rd week in fiscal 2020 to increase reported net sales by approximately one-half percent, which is below the previous guidance of a net 1 percent increase from these factors. The company’s outlook continues to assume its supply chain will operate with minimal disruption for the remainder of fiscal 2020.

General Mills will webcast its upcoming presentation at the BMO Global Farm to Market Conference on Wednesday, May 13, 2020 at 4:40 PM ET. Jeff Harmening, General Mills Chairman and Chief Executive Officer, will discuss how the company is executing in the current environment, discuss its strategies for generating long-term shareholder value, and answer questions from conference attendees. Interested parties can access the webcast at A replay of the webcast will be available on the company's website.

Safe Harbor
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s current expectations and assumptions. These forward-looking statements, including the statements under the caption “Updated Fiscal 2020 Outlook,” and statements made by Mr. Harmening, are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. In particular, our predictions about future net sales and earnings could be affected by a variety of factors, including: the impact of the coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers, and employees; disruptions or inefficiencies in the supply chain, including any impact of the coronavirus (COVID-19) outbreak; competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions, advertising activities, pricing actions, and promotional activities of our competitors; economic conditions, including changes in inflation rates, interest rates, tax rates, or the availability of capital; product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions or dispositions of businesses or assets, including our acquisition of Blue Buffalo and issues in the integration of Blue Buffalo and retention of key management and employees; unfavorable reaction to our acquisition of Blue Buffalo by customers, competitors, suppliers, and employees; changes in capital structure; changes in the legal and regulatory environment, including tax legislation, labeling and advertising regulations, and litigation; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, and energy; effectiveness of restructuring and cost saving initiatives; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure or breach of our information technology systems; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war. The company undertakes no obligation to publicly revise any forward-looking statements to reflect any future events or circumstances.

Non-GAAP Commentary
Our fiscal 2020 outlook for organic net sales growth, adjusted operating profit, and adjusted diluted EPS are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the effect of foreign currency exchange rate fluctuations, restructuring charges and project-related costs, acquisition integration costs, and mark-to-market effects. Our fiscal 2020 outlook for organic net sales growth also excludes the effect of a 53rd week, acquisitions, and divestitures. We are not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of changes in foreign currency exchange rates and commodity prices or the timing of acquisitions, divestitures and restructuring actions throughout fiscal 2020. The unavailable information could have a significant impact on our fiscal 2020 GAAP financial results.

For fiscal 2020, we currently expect: foreign currency exchange rates (based on a blend of forward and forecasted rates and hedge positions), acquisitions, divestitures, and a 53rd week to increase net sales growth by approximately one half of one percentage point; foreign currency exchange rates to have an immaterial impact on adjusted operating profit and adjusted diluted EPS growth; and restructuring charges and project-related costs related to actions previously announced to total approximately $54 million.

About General Mills
General Mills is a leading global food company whose purpose is to make food the world loves. Its brands include Cheerios, Annie's, Yoplait, Nature Valley, Häagen-Dazs, Betty Crocker, Pillsbury, Old El Paso, Wanchai Ferry, Yoki, BLUE and more. Headquartered in Minneapolis, Minnesota, USA, General Mills generated fiscal 2019 net sales of U.S. $16.9 billion. In addition, General Mills’ share of non-consolidated joint venture net sales totaled U.S. $1.0 billion.

Jeff Siemon

Kelsey Roemhildt

Source: General Mills