By Dhirendra Tripathi
Investing.com – General Mills stock (NYSE:GIS) was Tuesday bearing the brunt of the company’s second-quarter earnings miss.
The stock fell 5%, weighed down by soaring prices of ingredients for its cereals and ice creams as well as surging labor and freight costs. The company sold lower volumes.
According to the company, it was a quarter when at-home demand for food rose and so did input costs inflation and supply chain disruptions.
The maker of processed food resorted to price hikes and played with pack sizes to combat pressure brought on by higher prices of wheat, corn and edible oils. While the company is undertaking price hikes in the current quarter, there could be more increases following that, according to comments made by the management during a call with analysts.
Net sales rose 6% year-on-year to $5 billion to top estimates but adjusted profit per share fell 7% to 99 cents. Cost of sales jumped 13%. Lower selling, general and administrative expenses grew at a slower rate and that helped the profit.
The company raise its revenue outlook, banking on strong demand for its meals, snacks and baked items as well as its products for cats and dogs.
General Mills now expects organic net sales to grow 4% to 5%, a contrast to the 3% to 1% decline it factored in earlier.