Exchange: SIX | Sector: Consumer Defensive | Industry: Packaged Foods
Q1 2025
Published: Sep 18, 2024
Earnings Highlights
Revenue of $4.85B down 5.7% year-over-year
EPS of $1.03 increased by 0% from previous year
Gross margin of 34.8%
Net income of 579.90M
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General Mills Inc (GIS.SW) QQ1 2025 Results Analysis: Resilient profitability amid modest revenue headwinds in a defensive consumer staples franchise
Executive Summary
General Mills reported QQ1 2025 revenue of $4.8481 billion, down 5.7% year over year but up 2.9% quarter over quarter, reflecting ongoing top-line headwinds against a backdrop of pricing actions and portfolio discipline. The company posted a gross profit of $1.6888 billion with a gross margin of 34.83%, a slight year-over-year margin compression despite a modest QoQ improvement in profitability. Operating income reached $831.5 million, delivering an operating margin of 17.15% and a 2.4% year-over-year improvement, supported by cost controls and favorable product mix amid a softer overall demand environment. Net income stood at $579.9 million, or about 11.96% net margin, with EPS of $1.03, flat versus prior year on a per-share basis despite share repurchase activity. Free cash flow generated was $483.9 million, and operating cash flow was $624.2 million, underscoring durable cash generation in a mature, capital-intensive business model.
Capital allocation remained constructive: the company returned capital to shareholders via a $300 million share repurchase and paid $337.8 million in dividends, contributing to a net decrease in cash balance to $468.1 million by period-end. Leverage remained meaningful, with total debt of $13.32 billion and net debt of roughly $12.85 billion, resulting in a net debt to annualized EBITDA around the low-to-mid single digits (~3.3x when annualizing the quarterly EBITDA of $973.3 million). The balance sheet remains asset-heavy, with substantial goodwill and intangibles (Goodwill $14.78 billion; Intangibles $6.98 billion; total intangible-related assets around $21.7 billion), which has implications for future impairment risk and potential reassessment in a volatile commodity and FX environment.
Looking ahead, the company benefits from a diversified packaged foods portfolio and generally resilient consumer demand in essential categories; however, revenue contraction and significant leverage warrant careful monitoring of input costs, pricing effectiveness, and currency dynamics. The absence of formal QQ1 2025 forward guidance in the data requires investors to focus on the trajectory of margins, cash flow generation, and deleveraging progress as key signals of sustainable value creation.
Key Performance Indicators
Revenue
4.85B
QoQ: 2.85% | YoY:-5.67%
Gross Profit
1.69B
34.83% margin
QoQ: 0.03% | YoY:-4.37%
Operating Income
831.50M
QoQ: 6.71% | YoY:2.43%
Net Income
579.90M
QoQ: 4.02% | YoY:-2.62%
EPS
1.03
QoQ: 5.10% | YoY:0.00%
Revenue Trend
Margin Analysis
Key Insights
Cash & equivalents: $468.1m; Total debt: $13.3204b; Net debt: $12.853b; Total assets: $31.7692b; Total liabilities: $22.2426b; Total equity: $9.2756b.
Leverage & Returns:
Debt/Equity 1.44x; Debt/Capitalization 0.59x; Payout ratio 58.3%; Dividend yield 0.85%.
Financial Highlights
Revenue: $4.8481b (YoY -5.67%, QoQ +2.85%).
Gross Profit: $1.6888b (Gross margin 34.83%; YoY -4.37%, QoQ +0.03%).
Operating Income: $831.5m (Operating margin 17.15%; YoY +2.43%, QoQ +6.71%).
Net Income: $579.9m (Net margin 11.96%; YoY -2.62%, QoQ +4.02%).
EPS: $1.03 (YoY 0.00%, QoQ +5.10%).
Cash Flow: Net cash from operating activities $624.2m; Free cash flow $483.9m; Capital expenditure $140.3m.
Liquidity & Balance Sheet:
- Cash & equivalents: $468.1m; Total debt: $13.3204b; Net debt: $12.853b; Total assets: $31.7692b; Total liabilities: $22.2426b; Total equity: $9.2756b.
Leverage & Returns:
- Debt/Equity 1.44x; Debt/Capitalization 0.59x; Payout ratio 58.3%; Dividend yield 0.85%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
4.85B
-5.67%
2.85%
Gross Profit
1.69B
-4.37%
0.03%
Operating Income
831.50M
2.43%
6.71%
Net Income
579.90M
-2.62%
4.02%
EPS
1.03
0.00%
5.10%
Key Financial Ratios
currentRatio
0.66
grossProfitMargin
34.8%
operatingProfitMargin
17.2%
netProfitMargin
12%
returnOnAssets
1.83%
returnOnEquity
6.25%
debtEquityRatio
1.44
operatingCashFlowPerShare
$1.11
freeCashFlowPerShare
$0.86
dividendPayoutRatio
58.3%
priceToBookRatio
4.29
priceEarningsRatio
17.15
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcripts for QQ1 2025 were not provided in the dataset. As a result, no direct management quotes or call-specific quotes could be extracted. Based on the reported results, the likely themes management would address include: (1) pricing actions and mix as mitigants to input-cost inflation, (2) ongoing cost containment and efficiency programs contributing to margin stability, (3) portfolio optimization including brand strength in cereals, snacks, and pet foods, and (4) disciplined capital allocation emphasizing dividends and selective buybacks alongside debt reduction goals. Investors should monitor any call remarks on commodity cost trajectory, foreign exchange headwinds, and progress against perpetually high-level leverage targets.
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Forward Guidance
No formal forward guidance was provided in the supplied data. In a high-level view, investors should monitor: (a) progress in price realization and mix to offset input-cost inflation, (b) ongoing cost-savings programs and their impact on EBITDA margin trajectory, (c) cash flow resilience in the face of commodity volatility and FX movements, and (d) leverage trajectory and capital allocation strategy (dividends vs. buybacks vs. debt reduction). Given the substantial net debt, a credible path toward deleveraging would be an important variable for the investment thesis, complemented by steady FCF generation and whether the company can sustain its dividend despite revenue volatility.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
GIS.SW Focus
34.83%
17.20%
6.25%
17.15%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment thesis for General Mills remains that of a defensive, cash-generative consumer staples franchise with a sustainable dividend. QQ1 2025 results show disciplined cost management and margin resilience amid revenue challenges, supported by a robust free cash flow profile. However, the elevated net debt load and asset-heavy balance sheet necessitate careful scrutiny of deleveraging progress and impairment risk related to goodwill and intangibles. The absence of explicit forward targets means the market will likely hinge on two levers: (1) the effectiveness of pricing/mix and cost-savings to restore operating margin toward historical levels, and (2) the pace of deleveraging and capital allocation that balances shareholder yield with debt reduction. Key monitorables include commodity and FX trends, portfolio optimization results, and any updates to guidance or long-term margin targets.
Key Investment Factors
Growth Potential
Stable, defensible growth driven by core categories ( cereals, snacks, meals, and pet foods) with potential upside from portfolio enhancement in pet nutrition and expanded e-commerce/direct-to-consumer reach in North America and select international markets. Scale advantages and pricing actions could yield mid-single-digit organic revenue growth over time, supported by brand equity in flagship franchises like Cheerios, Betty Crocker, and Blue Buffalo.
Profitability Risk
High leverage level relative to EBITDA in a mature consumer staples company; sensitivity to commodity costs, input inflation, and currency fluctuations; exposure to macroeconomic weakness affecting at-home consumption; competitive pricing pressure from private labels; potential impairment risk given substantial goodwill/intangible assets; appetite and pace for further buybacks in a rate-tight environment.
Financial Position
Solid operating cash flow generation (FCCF) with $624.2m from operations and $483.9m of free cash flow in QQ1 2025, supporting a dividend payout and modest buybacks ($300m). Balance sheet remains asset-heavy with goodwill and intangibles totaling ~$21.7b, contributing to leverage metrics (net debt/EBITDA ~3.3x annualized). Liquidity supports ongoing distributions but warrants vigilance on debt management and impairment considerations over time.
SWOT Analysis
Strengths
Strong, diversified brand portfolio across cereals, snacks, and pet foods (e.g., Cheerios, Betty Crocker, Blue Buffalo) with broad U.S. and international distribution.
Resilient cash flow generation typical of consumer staples, supporting stable dividends and share repurchases.