Analysis of Reportable Segments
General Mills Inc. operates in 5 segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet.
Segment Profit Margin
General Mills Inc., profit margin by reportable segment
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| North America Retail | 22.94% | 21.92% | 22.59% | 21.50% | 20.52% | — |
| Convenience Stores & Foodservice | 21.30% | 20.34% | 21.45% | 19.70% | 17.70% | — |
| Europe & Australia | 6.54% | 7.16% | 9.00% | 10.03% | 8.44% | — |
| Asia & Latin America | 4.38% | 2.32% | 4.84% | 4.05% | 6.32% | — |
| Pet | 18.76% | — | — | — | — | — |
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).
Analysis of segment profit margins reveals a clear divergence in performance between domestic and international operations. While North American segments demonstrate consistent margin expansion and stability, international segments exhibit a general trend of contraction and increased volatility.
- North America Retail
- This segment represents the most profitable area of operation, with margins increasing from 20.52% in 2015 to 22.94% in 2019. Aside from a marginal dip in 2018, the trend reflects steady operational efficiency and pricing power.
- Convenience Stores & Foodservice
- A positive growth trend is observed, with margins rising from 17.70% in 2015 to 21.30% in 2019. Profitability peaked in 2017 at 21.45% before experiencing a slight correction in 2018 and subsequent recovery.
- Europe & Australia
- Performance in this region shows a downward trajectory following a peak of 10.03% in 2016. Margins declined steadily thereafter, reaching a period low of 6.54% by 2019, indicating increasing cost pressures or pricing challenges in these markets.
- Asia & Latin America
- This segment is characterized by the lowest profitability and the highest volatility. Margins fell from 6.32% in 2015 to a low of 2.32% in 2018, with a partial recovery to 4.38% in 2019.
- Pet
- The Pet segment was introduced in 2019, entering the portfolio with a strong initial profit margin of 18.76%, positioning it as a high-margin contributor comparable to the North American domestic segments.
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Segment Profit Margin: North America Retail
General Mills Inc.; North America Retail; segment profit margin 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) | ||||||
| Segment operating profit | 2,277,200) | 2,217,400) | 2,303,600) | 2,351,200) | 2,382,700) | —) |
| Net sales | 9,925,200) | 10,115,400) | 10,196,900) | 10,936,600) | 11,612,100) | —) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 22.94% | 21.92% | 22.59% | 21.50% | 20.52% | — |
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
Segment profit margin = 100 × Segment operating profit ÷ Net sales
= 100 × 2,277,200 ÷ 9,925,200 = 22.94%
An analysis of the North America Retail segment reveals a divergence between revenue performance and operational efficiency from 2015 to 2019. While net sales experienced a consistent decline, the segment profit margin generally expanded, indicating effective cost management or a strategic shift toward higher-margin offerings.
- Net Sales Trend
- A continuous downward trajectory in net sales is observed over the five-year period. Revenue decreased from US$ 11,612.1 million in 2015 to US$ 9,925.2 million in 2019, representing a cumulative decline of approximately 14.5%.
- Segment Operating Profit Stability
- Despite the erosion of the top line, operating profit remained relatively resilient. After a gradual decline from US$ 2,382.7 million in 2015 to a low of US$ 2,217.4 million in 2018, the segment recorded a recovery in 2019, increasing to US$ 2,277.2 million.
- Segment Profit Margin Expansion
- The segment profit margin demonstrated a general upward trend, rising from 20.52% in 2015 to 22.94% in 2019. Although a slight contraction occurred in 2018 (dropping to 21.92%), the overall trajectory indicates an improvement in the conversion of sales to operating profit.
The data suggests that the segment successfully mitigated the impact of falling sales through operational leverage or pricing strategies. The increase in profit margin despite a reduction in total revenue highlights an improvement in overall operational efficiency within the North America Retail segment.
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Segment Profit Margin: Convenience Stores & Foodservice
General Mills Inc.; Convenience Stores & Foodservice; segment profit margin 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) | ||||||
| Segment operating profit | 419,500) | 392,600) | 401,200) | 378,900) | 353,100) | —) |
| Net sales | 1,969,100) | 1,930,200) | 1,870,000) | 1,923,800) | 1,995,100) | —) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 21.30% | 20.34% | 21.45% | 19.70% | 17.70% | — |
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
Segment profit margin = 100 × Segment operating profit ÷ Net sales
= 100 × 419,500 ÷ 1,969,100 = 21.30%
The Convenience Stores and Foodservice segment exhibited a general trend of profitability expansion between fiscal years 2015 and 2019, characterized by an increase in operating margins despite fluctuations in net sales.
- Net Sales Performance
- A period of contraction is observed from May 2015 to May 2017, with net sales declining from US$ 1,995.1 million to US$ 1,870.0 million. This downward trend reversed in the subsequent two years, with sales recovering to US$ 1,969.1 million by May 2019, though remaining slightly below 2015 levels.
- Segment Operating Profit
- Operating profit demonstrated a consistent upward trajectory for the majority of the period. Profit grew steadily from US$ 353.1 million in 2015 to a peak of US$ 401.2 million in 2017. Despite a slight retraction to US$ 392.6 million in 2018, the segment achieved its highest operating profit of US$ 419.5 million in 2019.
- Segment Profit Margin Analysis
- The segment profit margin showed significant expansion, rising from 17.70% in 2015 to 21.45% in 2017. This indicates that operating efficiency improved even as net sales decreased during that specific interval. After a moderate decline to 20.34% in 2018, the margin rebounded to 21.30% in 2019, suggesting a sustained improvement in the segment's ability to convert sales into operating profit compared to the baseline established in 2015.
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Segment Profit Margin: Europe & Australia
General Mills Inc.; Europe & Australia; segment profit margin 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) | ||||||
| Segment operating profit | 123,300) | 142,100) | 164,200) | 200,300) | 179,400) | —) |
| Net sales | 1,886,700) | 1,984,600) | 1,824,500) | 1,998,000) | 2,126,500) | —) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 6.54% | 7.16% | 9.00% | 10.03% | 8.44% | — |
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
Segment profit margin = 100 × Segment operating profit ÷ Net sales
= 100 × 123,300 ÷ 1,886,700 = 6.54%
The Europe & Australia segment exhibited a general deterioration in profitability and operational efficiency between 2015 and 2019. While the period began with a brief improvement in margins, the subsequent three years were characterized by a steady contraction in both absolute profit and percentage margins.
- Segment Operating Profit
- Operating profit reached a peak of US$ 200.3 million in May 2016 before initiating a consistent downward trajectory. By May 2019, operating profit fell to US$ 123.3 million, representing a significant decrease from the 2016 peak.
- Net Sales Performance
- Net sales demonstrated volatility throughout the period. Following a decline from US$ 2.13 billion in 2015 to a low of US$ 1.82 billion in 2017, sales saw a temporary recovery to US$ 1.98 billion in 2018 before decreasing again to US$ 1.89 billion in 2019.
- Segment Profit Margin
- The profit margin peaked at 10.03% in May 2016. Following this high, the margin declined annually, falling to 9.00% in 2017, 7.16% in 2018, and ultimately 6.54% in 2019. This indicates a sustained compression of margins over the final three years of the analyzed period.
- Operational Efficiency Trends
- A notable divergence occurred in the 2018 fiscal year, where net sales increased while both operating profit and profit margins continued to decline. This suggests that the growth in top-line revenue was offset by rising operating expenses or pricing pressures, which prevented the segment from converting higher sales into improved profitability.
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Segment Profit Margin: Asia & Latin America
General Mills Inc.; Asia & Latin America; segment profit margin 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) | ||||||
| Segment operating profit | 72,400) | 39,600) | 83,600) | 69,100) | 119,800) | —) |
| Net sales | 1,653,300) | 1,710,200) | 1,728,400) | 1,704,700) | 1,896,600) | —) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 4.38% | 2.32% | 4.84% | 4.05% | 6.32% | — |
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
Segment profit margin = 100 × Segment operating profit ÷ Net sales
= 100 × 72,400 ÷ 1,653,300 = 4.38%
The financial performance of the Asia & Latin America segment from 2015 to 2019 is characterized by a general contraction in net sales and significant volatility in operating profitability. The segment failed to maintain the efficiency levels observed at the beginning of the period, with profit margins experiencing sharp fluctuations.
- Net Sales Trajectory
- A general downward trend in net sales is observed, declining from $1,896,600 thousand in 2015 to $1,653,300 thousand in 2019. While a marginal increase occurred in 2017, the overall trend indicates a steady erosion of the revenue base over the five-year period.
- Segment Operating Profit Volatility
- Operating profit exhibited substantial instability. Starting at $119,800 thousand in 2015, the profit dropped sharply in 2016 and experienced another severe decline in 2018, reaching a period low of $39,600 thousand. Although a recovery to $72,400 thousand was recorded in 2019, the profit levels remained significantly below the 2015 baseline.
- Segment Profit Margin Analysis
- The segment profit margin mirrored the volatility of operating profit, peaking at 6.32% in 2015. The margin declined to 4.05% in 2016, recovered slightly to 4.84% in 2017, and hit a minimum of 2.32% in 2018. The subsequent increase to 4.38% in 2019 suggests a partial recovery in operational efficiency, although the margin remained well below the 2015 peak.
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Segment Profit Margin: Pet
General Mills Inc.; Pet; segment profit margin calculation
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating profit | 268,400) | —) | —) | —) | —) | —) |
| Net sales | 1,430,900) | —) | —) | —) | —) | —) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 18.76% | — | — | — | — | — |
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
Segment profit margin = 100 × Segment operating profit ÷ Net sales
= 100 × 268,400 ÷ 1,430,900 = 18.76%
Financial performance for the Pet segment is documented exclusively for the fiscal year ending May 26, 2019, as no figures are available for the period between 2014 and 2018.
- Segment Revenue and Profitability
- For the fiscal year ending May 26, 2019, net sales for the Pet segment totaled 1,430,900 thousand US dollars, while segment operating profit reached 268,400 thousand US dollars.
- Profit Margin Analysis
- The segment profit margin for the reported period was 18.76%, reflecting the proportion of operating profit relative to net sales.
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Net sales
General Mills Inc., net sales by reportable segment
US$ in thousands
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| North America Retail | 9,925,200) | 10,115,400) | 10,196,900) | 10,936,600) | 11,612,100) | —) |
| Convenience Stores & Foodservice | 1,969,100) | 1,930,200) | 1,870,000) | 1,923,800) | 1,995,100) | —) |
| Europe & Australia | 1,886,700) | 1,984,600) | 1,824,500) | 1,998,000) | 2,126,500) | —) |
| Asia & Latin America | 1,653,300) | 1,710,200) | 1,728,400) | 1,704,700) | 1,896,600) | —) |
| Pet | 1,430,900) | —) | —) | —) | —) | —) |
| Total | 16,865,200) | 15,740,400) | 15,619,800) | 16,563,100) | 17,630,300) | —) |
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 overall trajectory of total net sales indicates a period of contraction followed by a recovery phase. Total net sales declined from 17.63 billion in 2015 to a low of 15.62 billion in 2017, before increasing to 16.87 billion by 2019. This recovery in the final two years is notably influenced by the introduction of a new reporting segment.
- North America Retail
- A consistent downward trend is observed in this segment, which represents the largest portion of total revenue. Net sales decreased every year from 11.61 billion in 2015 to 9.93 billion in 2019, reflecting a steady erosion of the revenue base in this core market.
- Convenience Stores and Foodservice
- This segment demonstrated relative resilience. Following a decline from 2.00 billion in 2015 to 1.87 billion in 2017, the segment recovered to 1.97 billion by 2019, nearly returning to its 2015 performance levels.
- International Markets
- Both international segments experienced overall declines. Europe and Australia saw sales drop from 2.13 billion in 2015 to 1.89 billion in 2019, characterized by significant volatility between 2017 and 2018. Asia and Latin America exhibited a more gradual decline, falling from 1.90 billion in 2015 to 1.65 billion in 2019.
- Pet Segment
- The Pet segment appears as a new contributor to the revenue stream in 2019, adding 1.43 billion in net sales. The inclusion of this segment significantly offset the ongoing declines in the North America Retail and international segments, contributing substantially to the increase in total net sales for the 2019 fiscal year.
In summary, the growth in total net sales toward the end of the period was not driven by organic recovery in legacy segments, but rather by the diversification of the portfolio through the Pet segment, as the primary retail and international segments continued to face downward pressure.
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Segment operating profit
General Mills Inc., segment operating profit by reportable segment
US$ in thousands
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | |
|---|---|---|---|---|---|---|
| North America Retail | 2,277,200) | 2,217,400) | 2,303,600) | 2,351,200) | 2,382,700) | —) |
| Convenience Stores & Foodservice | 419,500) | 392,600) | 401,200) | 378,900) | 353,100) | —) |
| Europe & Australia | 123,300) | 142,100) | 164,200) | 200,300) | 179,400) | —) |
| Asia & Latin America | 72,400) | 39,600) | 83,600) | 69,100) | 119,800) | —) |
| Pet | 268,400) | —) | —) | —) | —) | —) |
| Total | 3,160,800) | 2,791,700) | 2,952,600) | 2,999,500) | 3,035,000) | —) |
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 segment operating profit experienced a gradual contraction between 2015 and 2018, decreasing from 3,035,000 thousand USD to 2,791,700 thousand USD. However, a significant recovery occurred in 2019, with total profit rising to 3,160,800 thousand USD, marking the highest value in the observed period.
- North America Retail Performance
- As the largest contributor to total operating profit, this segment exhibited a sustained downward trend from 2015 to 2018, falling from 2,382,700 thousand USD to 2,217,400 thousand USD. A partial reversal of this trend was observed in 2019, with profit increasing to 2,277,200 thousand USD.
- Convenience Stores and Foodservice Growth
- This segment demonstrated consistent growth over the majority of the period. Operating profit rose from 353,100 thousand USD in 2015 to a peak of 419,500 thousand USD in 2019, reflecting a steady upward trajectory despite a minor dip in 2018.
- International Segment Contraction
- Both the Europe & Australia and Asia & Latin America segments showed overall declines. Europe & Australia reached a peak of 200,300 thousand USD in 2016 before declining steadily to 123,300 thousand USD by 2019. The Asia & Latin America segment exhibited high volatility, dropping from 119,800 thousand USD in 2015 to a low of 39,600 thousand USD in 2018, before recovering to 72,400 thousand USD in 2019.
- Impact of the Pet Segment
- The emergence of the Pet segment in 2019 introduced a substantial new revenue stream, contributing 268,400 thousand USD to the operating profit. This addition was a primary driver in the overall increase of total segment operating profit for that fiscal year.
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