MINNEAPOLIS — General Mills Inc. touted some payoff from recent product and value investments despite a challenging fiscal 2025 and expectations for a “complicated year” in fiscal 2026.
“First and most importantly, the investments we made in second half of fiscal 2025 in greater consumer value, product news and innovation have worked as we expected, driving improved volume and pound share across our portfolio in the fourth quarter,” said Jeffrey Harmening, chairman and chief executive officer. “Second, our fourth-quarter financial results finished in line with our expectations and our updated guidance. And third, we’re clear on the job to do in fiscal ’26, which is to restore volume-driven organic sales growth by investing to deliver greater remarkability in our products and packaging, our messaging, our omnichannel execution and value for consumers.”
For the 2025 fiscal year ended May 25, net income declined 8% to $2.3 billion, equal to $4.10 per share on the common stock, from $2.5 billion, or $4.31 per share, in fiscal 2024. Adjusted net earnings were down 10.5% to $2.35 billion, or $4.21 per share, from $2.62 billion, or $4.52 per share, a year earlier. Still, the results topped Wall Street’s consensus estimate for adjusted EPS of $4.18.
Fourth-quarter net income dropped 47% to $294 million, or 53¢ per share, from $557.5 million, or 98¢ per share, in the prior-year period. Excluding restructuring, transformation, impairment and other costs, adjusted earnings fell 30% to $403 million, or 74¢ per share, from $574.7 million, or $1.01 per share, a year ago. Analysts, on average, had forecast quarterly adjusted EPS of 71¢.
At the top line, fiscal 2025 net sales decreased 2% to $19.49 billion from $19.86 billion in fiscal 2024. Operating income was down 4% year over year to $3.3 billion. In the fourth quarter, net sales declined 3% to $4.56 billion, and operating profit sank 35% to $504 million.
General Mills’ priorities for 2025 were to spur organic sales growth, create fuel for investment and drive strong cash generation, Harmening said.
“Our results against these three priorities were mixed, with challenges on the top line yet strong performance on efficiency and cash,” he said. “On our first priority of accelerating organic growth, our full-year sales trends did not meet our expectations, driven in part by continued value-seeking orientation and weaker consumer sentiment. This was particularly true in our North America Retail (NAR) segment.
“On our second priority, we delivered another strong year of industry-leading productivity, with holistic margin management cost savings of 5% of cost of goods sold. This strong performance helped us fund investments in remarkability, sustain our gross margin performance and (for the third priority) generate cash for our shareholders. In fact, we exceeded our free cash-flow conversion target in fiscal ’25, achieving a 97% conversion rate. And we continued to deploy that cash in shareholder-friendly ways, including making further progress on reshaping our portfolio. With the Whitebridge (Pet Brands) acquisition and the US and Canada yogurt divestitures, we have now turned over roughly 30% of our net sales base since 2018.”
North America Retail volume improves
General Mills’ NAR business tallied fiscal 2025 net sales of $11.91 billion, down by 5% on a reported basis and by 3% organically. Segment operating profit dropped 11% to $2.73 billion, reflecting lower volume and higher input costs, the Minneapolis-based company said. The fourth-quarter performance pulled down full-year results, as reported net sales fell by 10%, organic net sales by 7% and operating income by 29%.
Among NAR divisions, fourth-quarter net sales were down by 11% for US Snacks, by 5% for US Morning Foods, by 4% for US Meals & Baking Solutions and by 45% (constant currency) for Canada. The divestiture of the Canadian yogurt business to Sodiaal International, which closed in January, accounted for most of the quarterly sales decline in Canada, General Mills said. The sale of the US yogurt business to Groupe Lactalis SA is slated to close by the end of June.
“We made important changes to adapt to the evolving consumer environment and put our business on a path back to growth,” Harmening said of NAR’s performance. “We reassessed our strategy at the midpoint of the year, pivoting our plans and making the decision to invest in greater value for consumers, narrowing price gaps and moving below price cliffs on several North America Retail businesses. We believed that getting our value into the right zone would allow for our product news, innovation and marketing to resonate more clearly for consumers, leading to improved volume and household penetration. Importantly, we expected volume trends to improve first, with dollars lagging until we lap the investment in price. And that’s what we saw play out, with a significant improvement in North America Retail’s competitiveness in the fourth quarter.”
General Mills’ North America Retail arm held or grew pound share in 64% of its top 10 US priority businesses in Q4.
| Photo: ©ADRIANA – STOCK.ADOBE.COMDuring the fourth quarter, NAR held or grew pound share in 64% of its top 10 US priority businesses, including cereal, refrigerated dough, fruit snacks, hot snacks and soup — “five categories where we had made specific investments in a combination of value, product news, innovation and advertising,” Harmening noted.
“And we stabilized household penetration across North America Retail for the first time in three years,” he said. “We expect these investments to continue to pay off in stronger NAR competitiveness as we move into fiscal 2026.”
Fiscal 2025 net sales rose by 2% year over year to $2.8 billion for International, by 4% to $2.47 billion for North America Pet and by 2% to $2.3 billion for North America Foodservice. Operating income grew 3% for Pet and 13% for Foodservice but fell 23% for International.
‘Global transformation initiative’ underway
In reporting results, General Mills shed little light on a “transformation initiative” disclosed in a Securities and Exchange Commission filing in late May. The filing came after the company announced weak third-quarter results in March and slashed its fiscal 2025 guidance.
Under the initiative, approved during the 2025 fiscal year, General Mills said it expects to incur about $130 million in restructuring and transformation charges (including roughly $120 million in cash), mainly for severance and other benefit costs but also for consulting and professional fees and other charges. The company said it recorded $69 million in severance and benefit costs and $1 million in other costs in fiscal 2025 and expects to complete the initiative by the end of fiscal 2028.
“We recently launched a global transformation initiative, designed to further accelerate our growth,” Harmening said. “This initiative is focused on streamlining our end-to-end business processes and identifying new ways of working that match today’s evolving business environment. We’ll look to deploy new tools, technologies and operating models to enable greater agility throughout the organization. By optimizing how work gets done, our teams will be able to spend more time focused on driving growth. In addition to streamlining how we work, we expect this initiative to generate $100 million in cost savings, which we plan to reinvest in growth.”
Rough year ahead
For the 53-week fiscal 2026, General Mills forecasts adjusted diluted EPS to decline 10% to 15% and organic net sales to range from down 1% to up 1%. The company estimates the net impact of divestitures, acquisitions, foreign exchange and the 53rd week will trim full-year net sales growth by about 4%.
“As we head into fiscal ’26, we expect the operating environment will remain volatile, with consumers pressured by widespread uncertainty from tariffs, global conflicts and changing regulations,” Harmening said.
Adjusted operating profit for fiscal 2026 is projected to fall 10% to 15% in constant currency, including a 5-percentage-point net impact from the US and Canada yogurt divestitures and the Whitebridge acquisition.
“As we turn to fiscal ‘26, this is admittedly a complicated year, with many moving pieces,” said Kofi Bruce, chief financial officer. “On the top line, we expect dollar growth in our categories to be below our long-term expectations and generally in line with fiscal 2025 trends, reflecting less benefit from price/mix amid a continued challenging consumer backdrop. We expect our organic sales growth to improve in fiscal 2026 behind stronger competitiveness in response to our investments in remarkability, with contributions from volume outpacing price/mix.”
Bruce noted General Mills’ fiscal 2026 guidance reflects its expectations for the tariff impact.
“In terms of headwinds, we expect input cost inflation of roughly 3% of cost of goods sold before the impact of tariffs,” he said. “We expect the gross impact of newly enacted tariffs represents an additional risk of 1% to 2% of cost of goods sold, though we are working aggressively to mitigate the impact through product reformulation, ingredient substitution and potential strategic revenue management actions.”
