The Brutal Math of Narrow Profit Margins: General Mills Profit Drops 14% on 1% Sales Drop

Gaius · 2024-09-19T17:06:55.078Z

Jezcoe:

Gaius:

Jezcoe:

Gaius:

Jezcoe:

Are they lying?

Jezcoe:

So then what does this mean?

Net sales of $19.9 billion decreased 1 percent from the prior year; organic net sales¹ were 1 percent below year-ago results that grew double digits

I don’t believe so.
They reported a net sales drop of 1%, (just like you posted)
They reported a drop in “organic net sales” which can defined however the company likes, of 1%. (Just like you posted.)

I have no reason to think they are lying when they posted a 1% sales drop using tow differnt ways of calculating. In fact WSJ/MarketWatch and Gaius both used those numbers. It seems unanimous.

So they made the same profit with a 1% drop in sales.

right?

Hmm I dunno.

What number do you see in the screenshot below?
(I see a 14.)

image1202×361 35.4 KB

https://www.marketwatch.com/story/general-mills-profit-falls-14-on-inflation-woes-6800ff41

That is 4th quarter.

I am talking about the yearly profit… which is flat from 2023.

Their fiscal year ends May 31.

Here is how the company, and WSJ, and I have all compared General Mills this year to last year using their recently-released earnings statement. (A legal document legally-required to follow standard procedures known as GAAP.)

image1800×852 228 KB

Jezcoe · 2024-09-19T17:13:25.167Z

Gaius:

Jezcoe:

Gaius:

Jezcoe:

Gaius:

Jezcoe:

Are they lying?

Jezcoe:

So then what does this mean?

Net sales of $19.9 billion decreased 1 percent from the prior year; organic net sales¹ were 1 percent below year-ago results that grew double digits

I don’t believe so.
They reported a net sales drop of 1%, (just like you posted)
They reported a drop in “organic net sales” which can defined however the company likes, of 1%. (Just like you posted.)

I have no reason to think they are lying when they posted a 1% sales drop using tow differnt ways of calculating. In fact WSJ/MarketWatch and Gaius both used those numbers. It seems unanimous.

So they made the same profit with a 1% drop in sales.

right?

Hmm I dunno.

What number do you see in the screenshot below?
(I see a 14.)

image1202×361 35.4 KB

https://www.marketwatch.com/story/general-mills-profit-falls-14-on-inflation-woes-6800ff41

That is 4th quarter.

I am talking about the yearly profit… which is flat from 2023.

Their fiscal year ends May 31.

Here is how the company, and WSJ, and I have all compared General Mills this year to last year using their recently-released earnings statement. (A legal document legally-required to follow standard procedures known as GAAP.)

image1800×852 228 KB

Yeah… they are pulling from this.

investors.generalmills.com

General Mills Reports Fiscal 2024 Fourth-quarter and Full-year Results and...

General Mills Board of Directors Declares Dividend Increase Full Year Highlights Net sales of $19.9 billion decreased 1 percent from the prior year; organic net sales1 were 1 percent below year-ago results that grew double digits Operating profit of...

There are charts and everything.

General Mills1264×282 20.5 KB

So the profit was flat.

They were able to make the same profit on fewer sales… so much so that they spent $2 billion on stock buybacks and raised the dividend.

I fail to see the brutal part.

Gaius · 2024-09-19T17:20:46.680Z

your link is dated June 26, 2024

and again again again the brutal part is not the company supposedly talking a loss (Nobody said that. That strawman is already dead)

It is about the FACT that if any presidential policy would cause a 1% drop in revenues, it would also cause a 14% drop in profit.

I sure hope our next president wouldn’t do anything to harm revenues 1% or so. As can clearly see, that would be brutal.

Jezcoe · 2024-09-19T18:28:50.718Z

Gaius:

your link is dated June 26, 2024

and again again again the brutal part is not the company supposedly talking a loss (Nobody said that. That strawman is already dead)

It is about the FACT that if any presidential policy would cause a 1% drop in revenues, it would also cause a 14% drop in profit.

I sure hope our next president wouldn’t do anything to harm revenues 1% or so. As can clearly see, that would be brutal.

You are just looking at the last quarter and claiming that government policies are causing a company that made $4.8 Billion in sales and still expects to meet it’s annual projections.

Yes they did sell less and that led to a decline in revenue which oddly enough led to only a $300 million stock buyback instead of the projected $500 million stock buyback.

They were forced to buy $200 Million less of their own stock… now that is brutal.

Gaius · 2024-09-19T18:33:09.461Z

Jezcoe:

Gaius:

your link is dated June 26, 2024

and again again again the brutal part is not the company supposedly talking a loss (Nobody said that. That strawman is already dead)

It is about the FACT that if any presidential policy would cause a 1% drop in revenues, it would also cause a 14% drop in profit.

I sure hope our next president wouldn’t do anything to harm revenues 1% or so. As can clearly see, that would be brutal.

You are just looking at the last quarter and claiming that government policies are causing a company that made $4.8 Billion in sales and still expects to meet it’s annual projections.

Yes they did sell less and that led to a decline in revenue which oddly enough led to only a $300 million stock buyback instead of the projected $500 million stock buyback.

They were forced to buy $200 Million less of their own stock… now that is brutal.

Wrong again.
I am making no such claim.

How about you begin by NOT making up words and shoving them into my mouth.
The only claim I am making is that a 1% drop in revenues can lead to a 14% drop in profits (as per this example provided.) and that is BRUTAL

Try it this way (repeat the below out loud until it sticks.)
“Geee Gaius you are absolutely 100% right, and it is a good thing you’re not saying General Mills is losing money, because, as we both know, they are not.”

Jezcoe · 2024-09-19T18:36:51.051Z

Gaius:

Jezcoe:

Gaius:

your link is dated June 26, 2024

and again again again the brutal part is not the company supposedly talking a loss (Nobody said that. That strawman is already dead)

It is about the FACT that if any presidential policy would cause a 1% drop in revenues, it would also cause a 14% drop in profit.

I sure hope our next president wouldn’t do anything to harm revenues 1% or so. As can clearly see, that would be brutal.

You are just looking at the last quarter and claiming that government policies are causing a company that made $4.8 Billion in sales and still expects to meet it’s annual projections.

Yes they did sell less and that led to a decline in revenue which oddly enough led to only a $300 million stock buyback instead of the projected $500 million stock buyback.

They were forced to buy $200 Million less of their own stock… now that is brutal.

Wrong again.
I am making no such claim.

How about you begin by NOT making up words and shoving them into my mouth.
The only claim I am making is that a 1% drop in revenues can lead to a 14% drop in profits (as per this example provided.) and that is BRUTAL

Try it this way (repeat the below out loud until it sticks.)
“Geee Gaius you are absolutely 100% right, and it is a good thing you’re not saying General Mills is losing money, because, as we both know, they are not.”

They are making less money but somehow are still able to find a couple hundred million to buy back stock.

I don’t see that as brutal.

Gaius · 2024-09-19T18:40:11.296Z

Jezcoe:

They are making less money but somehow are still able to find a couple hundred million to buy back stock.

I don’t see that as brutal.

The 14x multiplier is brutal, but yes they are making a profit and since the outlook for their economy is bleak they see no need to increase production.

Leaving them with three choices

Use it to pay down debt (my preference)
Return the profits to shareholders (Their choice)
Give it away to provide free surgery for recently castrated Hezballah terrorists,

Jezcoe · 2024-09-19T18:42:07.284Z

Gaius:

outlook for their economy is bleak

They say in their quarterly statements the exact opposite.

Gaius · 2024-09-19T19:02:50.685Z

Their forward-looking statements anticipated 2025 would see

cost reductions (layoffs) “roughly 4 to 5 percent of cost of goods sold”
“Organic net sales are expected to range between flat and up 1 percent.”
“Adjusted operating profit is expected to range between down 2 percent . . .”

You don’t have to call it bleak, but clearly, they are not looking for people to start eating more name-brand cereal and name-brand cookies. Business is going down, not up and they see zero need to invest and expand . . . but now I’m getting off topic.

biggestal99 · 2024-09-19T19:08:29.018Z

General Mills stock is only up 13% this year.

thats really bad for the stockholders.

Allan

Jezcoe · 2024-09-19T19:09:04.039Z

Gaius:

Their forward-looking statements anticipated 2025 would see

cost reductions (layoffs) “roughly 4 to 5 percent of cost of goods sold”

“Organic net sales are expected to range between flat and up 1 percent.”

“Adjusted operating profit is expected to range between down 2 percent . . .”

You don’t have to call it bleak, but clearly, they are not looking for people to start eating more name-brand cereal and name-brand cookies. Business is going down, not up and they see zero need to invest and expand . . . but now I’m getting off topic.

They are still profiting and doing hundreds of millions in stock buybacks but you think that they are going to do layoffs to offset that they aren’t making as much money?

Plus if you look into their statement it looks like one of the major drags is the organic brands.

Makes sense… they are higher cost to consumer and offer no real benefit other than good feelings.

Gaius · 2024-09-19T19:14:22.155Z

Jezcoe:

They are still profiting and doing hundreds of millions in stock buybacks but you think that they are going to do layoffs to offset that they aren’t making as much money?

Yup.
Grandma has money invested.
The company predicts growth will be flat to mildly negative.

It should pay down its debt
but it has chosen a combination of cost-cutting and returning the profits to investors.

Gaius · 2024-09-19T19:16:04.079Z

biggestal99:

General Mills stock is only up 13% this year.

thats really bad for the stockholders.

Allan

How much would it be up if they hadn’t used their profits to buy back stock?

Jezcoe · 2024-09-19T19:19:35.931Z

Gaius:

The company predicts growth will be flat to mildly negative.

The myth of infinite growth has hurt many companies.

Being very profitable isn’t enough… they must be wildly profitable.

Gaius:

it has chosen a combination of cost-cutting and returning the profits to investors.

This is why labor unions are needed.

LucyLou · 2024-09-19T19:28:34.765Z

“Brutal” is no where to be found though.

Gaius · 2024-09-19T19:37:41.932Z

LucyLou:

“Brutal” is no where to be found though.

Incorrect.
"Profitless: is nowhere to be found (but I did not say that. I said the math is brutal.)
“Taking a loss” is nowhere to be found (but I did not say that. I said the math is brutal.)
“Stock doing down” is nowhere to be found, (but I did not say that. I said the math is brutal)
“Company in touble” is nowhere to be found (but I did not say that. I said the math is brutal.)

The 14-to-1 math is brutal, and that is what I said.
Is my phrase “The Brutal Math of Narrow Profit Margins” really genuinely that hard to understand?

Guvnah · 2024-09-19T21:19:51.832Z

Gaius:

really genuinely that hard to understand?

The libs are extra trollish today.

Gaius · 2024-09-19T21:21:00.798Z

Guvnah:

Gaius:

really genuinely that hard to understand?

The libs are extra trollish today.

Yeah but we should keep the around.
Once in a while they provide thoughtful input.

Gaius · 2024-09-19T21:29:56.384Z

A local apple-picker picked 1% fewer apples today
he lost 14% of his wages. MAN that was brutal.

(Notice I didn’t say he took a net loss etc., just that the math is brutal.)

Guvnah · 2024-09-19T21:46:45.834Z

Gaius:

he lost 14% of his wages. MAN that was brutal.

But he still made money!