General Mills (GIS; Baa2, BBB; S) FY24 results

FY is 12m to May.

Weak 4Q leaves a flat year and guidance is not pointing to a reversal in FY25. This is still a staple but higher equity returns in the face of flat operating performance is never nice to see. There were positives in earnings call "Most of the acquisitions we do are kind of in that $1 billion to $1.5 billion price range, which we can easily accommodate with a modest adjustment in our share repurchase patterns.". If it uses that approach then we don't see much rating risk (its gross 3.1x which looks fine). Re. the curve it trades in line with higher rated and growing Haleon (30s a cheap view). It also only gives away LSD spread to McDoanld's (Baa1/BBB+). Re. supply, it issued $1.6b this year including €1b locally and a revisit looks unlikely but is possible with €750m in floaters due next month. Hard to get excited after it's 2-parter in April priced flat and through our FVs.

• It's weak on the open after a 4Q miss; -6% organic fall vs. c-3.3%, volume -2% vs. c-2.4% in line but pricing letting it down at -4% vs. c-1.5%. Gross (34.9%) and operating margins (17%) were firmer than expectations.
• Net it left FY24 sales at $19.9b (-1%) on -3% volume and +2% pricing, gross margins at up 60bps at 34.8% and adj. operating up 90bps to 18.1%.
• $2.5b in FCF more than directed to equity holders with $3.3b in returns; $1.4b in dividends (+6%yoy) and $2b in buybacks (+43%). Net leverage at 3x vs. 2.7x last year and past target of 3x. Note cash & eqv's are small $418m leaving gross at 3.1x.
• FY25 guidance is for organic sales flat to +1% (c+1.2%), adj. operating profit -2% to flat (c+0.9%) including a 2% headwind from insensitive compensation. FCF conversion>95% of net income (96% this year).