GENERAL MILLS INC Q1 FY2026 earnings call

• Strategy: Returning to profitable organic growth as the way to create value for shareholders. - Investments: Made significant investments to address price cliffs and gaps, with progress seen in categories like Pillsbury and Totino's, and expanding to cereal, soup, and fruit snacks. - Innovation: Increasing investment in innovation and new product news, with new product volumes already up 25%, and plans for more in Q2 and beyond. - Divestitures and Acquisitions: Executing well on the Yoplait divestiture and Whitebridge acquisition. - Category Performance: Strengthened pound share in 8 of 10 top categories, holding pound share in Pet, and continuing strong competitiveness in foodservices and international. - Pet Business: Encouraged by BLUE Life Protection Formula, cat feeding, and Tiki Cat retail sales, but working on improving Wilderness dog food and Treats business.

In North America Retail, the top 10 categories saw pound share improvement. For example, bars, fruit snacks, salty snacks, and cereal categories showed positive trends. In the Pet segment, the BLUE Pet business had core results generally in line with the previous year, with the BLUE Life Protection Formula growing dollars and pounds, cat feeding business doing well, and Tiki Cat retail sales up double digits. However, there were shipment timing headwinds in Pets, and the Wilderness dog food segment had a slowdown. The Treats business inflected to positive volume growth in Q1. Revenue contribution details were mentioned in terms of various category performances and segment-specific trends.

• Reaffirmed fiscal '26 guidance. - Completed majority of base shelf price adjustments in Q1, with remaining to be completed in Q2 to ensure right market leading execution for baking and soup season. - New product investment moving from 3.5% to 5% of net sales. - Expectations for improvement in profit results in the back half of the year, particularly in Q4. - Fresh pet food launch plans to ramp up distribution into the next calendar year.

• External factors affecting volume, including consumers still recovering from inflation with wages not catching up, and potential impact of GLP-1s. - State-level regulations on additives posing challenges and potential cost and confusion for consumers. - Volatility in the pet business, including shipment timing headwinds in Pets and challenges in segments like Wilderness dog food. - Transitory effects on margin and profit growth due to timing-related items like inflation phasing and trade expense timing benefits unwinding.

Q: Ongoing debate in food space about structural vs non-structural volume environment.

A: Jeffrey Harmening believes it's largely in General Mills' control, with volumes stable and mostly up to their control as they can adapt to consumer habits.

Q: Path back to volume growth and category volume vs share.

A: Dana McNabb explains top 10 categories in NAR saw pound share improvement, but factors like flower and desserts being down, shipment timing headwinds in Pets, and work needed in some categories like Cereal and Totino's affect total volume.

Q: Trends in dog food and pet treats.

A: Dana McNabb discusses BLUE Pet business, challenges in Wilderness dog food, and positive inflection in Treats business.

Q: Detail on price investments and innovation timetable.

A: Dana McNabb explains base shelf price adjustments completed in Q1 with remainder in Q2, and focus on elevating new product work with new products expected in the remainder of the year.

Q: Margin performance and inflation phasing.

A: Kofi Bruce talks about inflation phasing being lighter than expected in Q1, trade expense timing benefit in international, and expectations of unwind in Q2 affecting Q2 profit.

Q: Categories or brands driving household penetration gains.

A: Dana McNabb mentions bars, fruit snacks, salty snacks, and Cereal categories, with price value and remarkability approach driving penetration improvement.

Q: Efforts on reformulation and innovation pace.

A: Jeffrey Harmening discusses efforts to remove artificial dyes as consumers are more ready, and innovation pace stepping up with new products like Cheerios Protein and Haagen-Dazs stick bars showing success.

Q: Category performance evolution and GLP-1 impact.

A: Jeffrey Harmening states year-to-date performance played out as expected, with top 10 categories in NAR performing better than expected, and GLP-1s having some impact but also opportunities.

Q: Pet phasing in Q2 and framing puts and takes.

A: Kofi Bruce mentions not making quarterly predictions on pet but notes volatility in shipment timing and modest contribution from fresh pet launch.

Q: Competition with away-from-home channel.

A: Jeffrey Harmening says General Mills is well-positioned in the noncommercial food service channel, which is growing and where they are gaining share.