For more than two years, General Mills executives made a clear trade-off in financial performance by accepting lower sales to lift the company's profit margin.
They may no longer need to make that trade, and peanut butter is one reason why. It's showing up as an ingredient or featured flavor in more products and gaining more of a following beyond the United States.
General Mills' latest quarterly results, announced Wednesday, showed the first sales gain for the food company since early 2015.
The 2 percent jump was shaped by gains across multiple product lines and in every business unit. A 7 percent jump in U.S. cereal sales stood out, helped by a strong launch for chocolate peanut butter Cheerios.
And while General Mills' profit margin was lower than a year ago, the decline was small, met the expectations of investors and is likely to be short-lived. Executives forecast both higher sales and an operating profit margin that's back in step with the growth that metric had shown in recent years.
"We're making the turn on the top line," Chief Executive Jeff Harmening said, referring to the place on a financial statement where sales are reported, "while remaining efficient and holding our operating margin. What we don't want to do is go from one end of the boat to the other."
The performance in the three months ending Nov. 26, the second quarter of General Mills' fiscal year, helped lift the company's stock value nearly 2 percent on a day when the broader market declined.
Executives raised their outlook for the rest of the company's fiscal year, saying full-year sales should be in a range of flat to down 1 percent. Previously, they told investors to expect full-year sales to decline in a range of 1 percent to 2 percent.
The company's adjusted operating profit margin, which went above the 18 percent level for the first time in its last fiscal year, should climb above that level again over the next six months. In the first half of the fiscal year, it was 17.2 percent.
Don Mulligan, the company's chief financial officer, said the margin will be driven by cost savings in the way it buys supplies and a leveling out of the price growth of ingredients.
"In total, while we're saying our margins will be slightly down for the year, it really is slightly down. We still expect to deliver operating margins in the 18 percent range," Mulligan said.
Harmening said executives were pleased by the breadth of the improvement in product sales and profitability. "Cereal did improve, but we improved in all of our segments," he said.
Even the company's yogurt business, which has been enduring sharp sales declines that have reached 20 percent in some periods, saw an improvement in the form of a slower decline. Yogurt sales were down 11 percent in North America during the September-to-November period. They fell 17 percent in the year-ago period.
The French-style Oui yogurt that General Mills introduced earlier this year is one reason the yogurt business has arrested its steep fall. The product accounted for nearly 10 percent of the company's North American yogurt sales during the latest quarter, said Jonathon Nudi, head of the company's North America retail unit, its largest business.
As always, executives saw products leap out during the quarter. A peanut butter-flavored Haagen-Dazs ice cream found an unexpected level of demand in Europe, Harmening said, considered surprising because peanut butter has traditionally been a flavor that only did well in the United States. And Pillsbury Stuffed Waffles, a product that General Mills only sells in 7-Eleven, also made a strong debut.
"People are eating healthier and want organic and non-GMO and they want pure ingredients," Harmening said. "Well, Stuffed Waffles is probably none of those things, but they taste really good and they've got a job to do, which is fill you up in the morning. If you have a job that requires a lot of energy, you need something that fills you."
Coming next month is a new cereal called Shreds, in chocolate peanut butter and cinnamon flavors. It's an attempt by General Mills to take on the shredded wheat cereals sold by rivals Kellogg's and Post and introduce new flavors to the product category.
General Mills said its net profit fell 11 percent to $430 million, or 74 cents a share, for the three months ended Nov. 26. Excluding one-time items, the company's profit amounted to 82 cents a share, in line with the consensus of analysts.
Revenue was $4.2 billion, beating the consensus estimate of $4.08 billion.
"We've got work to do," Harmening said, "but we're pleased with what we see in this quarter and we're looking to continue that momentum."