Analysis of Geographic Areas
General Mills Inc. operates in 2 regions: United States and Non-United States.
Area Asset Turnover
General Mills Inc., asset turnover by geographic area
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| United States | 4.34 | 3.67 | 4.13 | 4.33 | 4.58 | 4.54 |
| Non-United States | 4.81 | 4.55 | 4.53 | 4.69 | 4.86 | 4.54 |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
The analysis of asset turnover by geographic area from 2014 to 2019 reveals a divergence in operational efficiency between domestic and international segments. While both regions began the period with an identical turnover ratio of 4.54, the Non-United States segment consistently maintained higher and more stable efficiency levels compared to the United States operations.
- United States Asset Turnover
- The domestic market experienced significant volatility over the six-year period. After a marginal increase to 4.58 in 2015, a steady three-year decline was observed, reaching a period low of 3.67 in 2018. This downward trend indicates a temporary decrease in the efficiency of generating revenue from domestic assets. However, a strong recovery occurred in 2019, with the ratio ascending to 4.34.
- Non-United States Asset Turnover
- International operations demonstrated greater resilience and overall higher asset productivity. Following the initial 2014 baseline, the ratio peaked at 4.86 in 2015. Despite slight fluctuations between 2016 and 2018, where the ratio remained within a narrow band of 4.53 to 4.69, the segment ended the period with a strong upward movement to 4.81 in 2019.
- Comparative Geographic Performance
- A comparative analysis shows that Non-United States assets outperformed United States assets in every year following 2014. The performance gap was most pronounced in 2018, where the international turnover ratio (4.55) significantly exceeded the domestic ratio (3.67). This suggests that international assets were utilized more effectively to drive sales than domestic assets during the period of highest volatility in the United States.
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Area Asset Turnover: United States
General Mills Inc.; United States; area asset turnover calculation
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 12,462,800) | 11,115,600) | 11,160,900) | 11,930,900) | 12,501,800) | 12,523,000) |
| Land, buildings, and equipment | 2,872,800) | 3,031,700) | 2,704,000) | 2,755,100) | 2,727,500) | 2,756,600) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 4.34 | 3.67 | 4.13 | 4.33 | 4.58 | 4.54 |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
1 2019 Calculation
Area asset turnover = Net sales ÷ Land, buildings, and equipment
= 12,462,800 ÷ 2,872,800 = 4.34
The financial performance within the United States geographic area is characterized by a period of declining operational efficiency between 2015 and 2018, followed by a significant recovery in 2019. This trend is primarily driven by fluctuations in net sales and strategic changes in fixed asset levels.
- Net Sales Trends
- A consistent downward trend in net sales was observed from 2014, when sales stood at 12,523,000 thousand US$, reaching a low of 11,115,600 thousand US$ in 2018. This contraction represents a decline of approximately 11.2% over four years. However, 2019 marked a substantial reversal, with net sales increasing to 12,462,800 thousand US$, nearly returning to 2014 levels.
- Fixed Asset Investment
- Investments in land, buildings, and equipment remained relatively stable between 2014 and 2017, fluctuating within a narrow range of 2.7 billion US$. A notable increase occurred in 2018, where asset values peaked at 3,031,700 thousand US$. This was followed by a reduction to 2,872,800 thousand US$ in 2019, suggesting a correction or divestment following the 2018 peak.
- Area Asset Turnover Efficiency
- The area asset turnover ratio, which measures the efficiency of generating sales from fixed assets, peaked at 4.58 in 2015. A steady decline followed, reaching a period low of 3.67 in 2018. This decline was the result of a dual negative impact: falling net sales occurring simultaneously with an increase in the asset base. The ratio recovered sharply to 4.34 in 2019, driven by the surge in net sales and a simultaneous reduction in land, buildings, and equipment.
The correlation between the metrics indicates that the efficiency trough in 2018 was an outlier caused by the convergence of minimum sales volume and maximum asset investment. The 2019 results demonstrate a return to operational efficiency levels seen in the 2014-2016 period.
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Area Asset Turnover: Non-United States
General Mills Inc.; Non-United States; area asset turnover calculation
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 4,402,400) | 4,624,800) | 4,458,900) | 4,632,200) | 5,128,500) | 5,386,600) |
| Land, buildings, and equipment | 914,400) | 1,015,500) | 983,700) | 988,500) | 1,055,800) | 1,185,300) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 4.81 | 4.55 | 4.53 | 4.69 | 4.86 | 4.54 |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
1 2019 Calculation
Area asset turnover = Net sales ÷ Land, buildings, and equipment
= 4,402,400 ÷ 914,400 = 4.81
The financial performance in non-United States geographic areas is characterized by a general contraction in both revenue and the physical asset base between 2014 and 2019. Despite a downward trend in total net sales, the efficiency of asset utilization remained relatively stable, indicating a proportional adjustment of fixed assets to align with declining sales volumes.
- Net Sales Trends
- A consistent downward trajectory in net sales is observed, moving from 5,386,600 thousand US dollars in 2014 to 4,402,400 thousand US dollars by 2019. The most significant decline occurred between 2015 and 2016, while a brief period of recovery was noted in 2018 before sales decreased again in the final year of the analyzed period.
- Fixed Asset Management
- Investment in land, buildings, and equipment followed a similar downward pattern, decreasing from 1,185,300 thousand US dollars in 2014 to 914,400 thousand US dollars in 2019. This reduction suggests a strategic downsizing of the physical infrastructure or an accelerated depreciation of assets in non-US markets to offset the diminishing revenue streams.
- Area Asset Turnover Analysis
- The area asset turnover ratio remained resilient, fluctuating within a narrow range between 4.53 and 4.86. The ratio peaked in 2015 at 4.86 and showed a notable recovery to 4.81 in 2019. This stability indicates that the reduction in fixed assets effectively balanced the decline in net sales, maintaining a consistent level of operational efficiency in converting physical assets into revenue.
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Net sales
General Mills Inc., net sales by geographic area
US$ in thousands
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| United States | 12,462,800) | 11,115,600) | 11,160,900) | 11,930,900) | 12,501,800) | 12,523,000) |
| Non-United States | 4,402,400) | 4,624,800) | 4,458,900) | 4,632,200) | 5,128,500) | 5,386,600) |
| Total | 16,865,200) | 15,740,400) | 15,619,800) | 16,563,100) | 17,630,300) | 17,909,600) |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
Total net sales exhibited a general downward trajectory between 2014 and 2017, followed by a recovery phase from 2018 through 2019. While the overall revenue fluctuations were driven primarily by the domestic market, the international segment showed a more consistent pattern of contraction over the analyzed period.
- United States Market Trends
- Net sales in the United States experienced a period of decline, falling from 12,523,000 thousand dollars in 2014 to a low of 11,115,600 thousand dollars in 2018. However, a significant recovery occurred in 2019, with sales increasing to 12,462,800 thousand dollars, nearly returning to 2014 levels.
- Non-United States Market Trends
- International net sales demonstrated a steady decline over the six-year period. Revenue decreased from 5,386,600 thousand dollars in 2014 to 4,402,400 thousand dollars in 2019. Despite a minor increase in 2018, the segment failed to sustain growth, reflecting a persistent erosion of market share or revenue in non-domestic regions.
- Total Revenue and Geographic Concentration
- Total net sales reached a peak of 17,909,600 thousand dollars in 2014 and hit a trough of 15,619,800 thousand dollars in 2017. The data indicates a high level of geographic concentration, with the United States accounting for the vast majority of total sales. As international revenues declined, the company's dependence on the domestic market intensified, making total performance highly sensitive to U.S. consumer trends.
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Land, buildings, and equipment
General Mills Inc., land, buildings, and equipment by geographic area
US$ in thousands
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| United States | 2,872,800) | 3,031,700) | 2,704,000) | 2,755,100) | 2,727,500) | 2,756,600) |
| Non-United States | 914,400) | 1,015,500) | 983,700) | 988,500) | 1,055,800) | 1,185,300) |
| Total | 3,787,200) | 4,047,200) | 3,687,700) | 3,743,600) | 3,783,300) | 3,941,900) |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
The analysis of land, buildings, and equipment from 2014 to 2019 reveals a strategic concentration of fixed assets within the United States, contrasted by a steady contraction in international holdings. Total asset values fluctuated within a range of approximately 3.69 billion to 4.05 billion US dollars, ending the period nearly aligned with 2014 levels.
- Domestic Asset Trends
- Assets located in the United States remained relatively stable between 2014 and 2017, hovering around 2.7 billion US dollars. A notable expansion occurred in 2018, with values peaking at 3.03 billion US dollars, followed by a moderate reduction to 2.87 billion US dollars in 2019. This suggests a significant capital expenditure event in 2018.
- International Asset Trends
- Non-United States assets exhibited a persistent downward trajectory over the analyzed period. Starting at 1.19 billion US dollars in 2014, these assets declined to 914.4 million US dollars by 2019. The decrease was most pronounced between 2014 and 2016, followed by a period of relative stagnation and a final dip in 2019.
- Geographic Allocation and Concentration
- The distribution of fixed assets shifted increasingly toward the domestic market. In 2014, United States assets represented approximately 69.7% of the total geographic allocation. By 2019, this concentration increased to approximately 75.8%. This trend indicates a systematic reduction in the relative weight of international physical infrastructure compared to domestic operations.
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