MINNEAPOLIS — General Mills’ decision to take a $260 million asset impairment charge during the fourth quarter against its Green Giant frozen vegetable business was a matter of priorities, according to the company. In a filing with the U.S. Securities and Exchange Commission on July 1, the company said resources used to support the Green Giant business would be allocated elsewhere. The one-time charge pushed General Mills’ fourth-quarter net income of $186.8 million down approximately 54% when compared with the same period of the previous year.
In a conference call with financial analysts on July 1, Ken Powell, chairman and chief executive officer, said the decision was related, in part, to changes that have taken place in the market for frozen vegetables.
“ … it is increasingly kind of a value focused category and the segment that is performing a little better tends to be the commodity oriented, just frozen blocks of vegetables,” he said.
Don Mulligan, chief financial officer, added that General Mills’ strategy of putting the consumer first is forcing the company to think in a more strategic, agile fashion.
“Sometimes you are constrained by the number of resources you can put against a business,” he said. “And so the cost savings initiatives that we are undertaking to free up resources to get after opportunities like this I think will allow us to be better and more adaptable and more agile as these kinds of shifts happen as we go forward.”
Despite taking the charge and reallocating resources, Mr. Powell said General Mills is not abandoning the brand.“The fact that we have done that (taken the impairment charge) shouldn’t take away from the fact that Green Giant is in fact a profitable business for us,” Mr. Powell said. “We are going to be bringing news and innovation to Green Giant both in the U.S. and in international markets in F.Y.16. Reallocation doesn’t mean not doing things. We like that equity and we think there is innovation opportunity there so we will have news coming but we have just shifted some of the resources to areas that we see as higher growth …”