General Mills initiates 'transformation' programme with embedded costs
General Mills has revealed a 'global transformation' programme that will incur costs of around $130m as the US food major seeks to boost productivity.
In a filing with the US Securities and Exchange Commission yesterday (27 May), the Blue Buffalo pet food and Cheerios cereals brand owner said the 'multi-year' plan was approved by management on 20 May.
It is 'intended to drive increased productivity by enhancing end-to-end business processes, enabled by targeted organisational actions'.
Although light on detail, the initiative comes on the back of a poor set of results reported in March for the third quarter of General Mills' current 2025 fiscal year. And the company suggested yesterday the transformation programme will be accompanied by job cuts.
Sales for the period dropped 5% in organic terms, a performance the company admitted fell short of 'expectations', with volumes down four percentage points.
At the same time, General Mills downgraded its full-year guidance for a flat-to-higher print confirmed at the second-quarter stage in December. The Pillsbury cookies maker now expects organic sales to be down 1.5% to 2%.
General Mills said yesterday that of the expected $130m in total charges, about $70m will be booked in the fourth quarter of 2025, 'primarily reflecting severance expenses'.
The Old El Paso Mexican brand owner explained in the filing: 'The company anticipates that the series of actions related to the transformation initiative will be substantially completed by the end of fiscal 2028 and will result in total charges of approximately $130 million, of which approximately $120 million will be cash.'
General Mills did not reveal any further details but implied in yesterday's filings that the initiative could have more in-depth implications.
'The estimate of costs that the company expects to record, and the timing thereof, are subject to a number of assumptions and actual results may differ from current expectations,' the publicly listed business added.
'The company may also record other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the transformation initiative.'
Discussing the third-quarter results in March, chairman and CEO Jeff Harmening made a pledge to reinvest $100m from targeted savings in the 2026 financial year.
'We're reviewing new cost-efficiency initiatives that are anticipated to generate at least $100 million in additional savings in fiscal '26, with further savings expected in fiscal '27 and beyond,' Harmening explained.
'Our number one priority is to accelerate our organic sales growth by delivering remarkable consumer experiences across our leading food brands, resulting in stronger volume and improved market share performance.'
General Mills is on target to generate 5% in cost-of-goods sold savings in the current year through the company's Holistic Margin Management (HMM) programme and expects to repeat that in fiscal 2026, equating to more than $600m in 'gross productivity savings', Harmening said in March.
"General Mills initiates 'transformation' programme with embedded costs" was originally created and published by Just Food, a GlobalData owned brand.
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