General Mills (GIS) reported a modest organic top-line gain in Q2 2025, with organic net sales up 1% and adjusted operating profit increasing 7% in constant currency, accompanied by a 12% rise in adjusted diluted EPS in constant currency. The quarterly outturn was aided by timing-related items that boosted net sales by ~1.5 percentage points and operating profit/EPS by ~6 percentage points, all of which are expected to reverse in the second half. Management also highlighted ongoing investments to accelerate volume and share growth across its leading brands, supported by robust HMM (high multiple cost) savings aimed at offsetting inflation and funding brand reinvestment.
Looking forward, the company reaffirmed its organic net sales guidance for fiscal 2025 at flat to up 1%, but lowered the midpoint for adjusted operating profit and adjusted EPS growth to reflect incremental branding and promotional investments. GIS continues to target at least 95% free cash flow conversion and remains focused on capital allocation through buybacks, dividends, and selective M&A as part of its portfolio reshaping plan. Notably, North America Pet returned to growth and share momentum improved in several core categories, while Refrigerated Dough remains a key area of execution risk that the company plans to address with price/value actions, product renovations, and stepped-up media support. The near-term margin profile will reflect the timing reversal, higher investments to support volume, and a partial reset of incentive compensation, with the full-year guidance implying an ~8% decline in adjusted operating profit in constant currency in the second half, offset by continued HMM savings and volume-driven upside in select franchises.
Overall, GIS presents a disciplined cash-generating profile with a diversified product portfolio, meaningful cost savings, and a clear plan to accelerate organic growth while managing near-term margin pressures. The stock hinges on execution of the refrigerated dough turnaround, continued share gains in pet and cereal, and the successful closing of strategic acquisitions (Whitebridge Pet Brands) and divestitures (North American Yogurt) that will recalibrate the mix and growth trajectory going into fiscal 2026 and beyond.