General Mills said Monday its sales and profit would rise in the double-digit range for the current quarter, the first time it has seen such gains since the last recession.
Since Americans began to work and school from home two months ago, sales of General Mills' core products — flour, cereals, baking mixes, snack and even its recently acquired pet food business — have soared.
For investors, the company has long been considered a "sleep well at night" option. It has been reliably delivering dividends for more than 100 years and, in good times, steady if not necessarily exciting results. But Monday's announcement highlighted General Mills' other appeal to investors: It has often been a winning bet in bad times.
"Our company's purpose is to make food the world loves, and in the current circumstances it is even more fundamental: We are making food the world needs," Jeff Harmening, the company's chief executive, said in a statement.
Other large food processors, including Kraft Heinz and Frito Lay, have seen similar jumps in sales of their products as consumers flock to familiar brands.
General Mills' 26 North American manufacturing plants have been producing at above-normal capacity since mid-March. It reduced the variety of flavors and package sizes on some goods to increase quantities overall.
In March, General Mills' U.S. retail sales were about 45% higher than a year ago, according to market researcher Nielsen. In April, they were up 32%. Those gains offset steep declines in sales of foods to restaurants and other food-service institutions.
Because General Mills gets about 85% of its global sales from shoppers buying products for home consumption, the firm will experience sales growth of more than 10% in the three months ending later this month. The company said its operating profit, not adjusted for currency fluctuations, will grow at an even higher rate than sales despite some higher costs related to combating COVID-19.
The last time General Mills saw sales growth exceed 10% was during two quarters over the spring and summer of 2008, around the start of the last recession in the U.S.
On Monday, company executives said the burst in sales during March and April has slowed down this month but will "remain significantly ahead of pre-COVID-19 levels."
The performance is a big change from the routine of recent years in which General Mills worked hard to achieve 1% organic sales growth, or sales increases not related to acquisitions, in a quarter. For a long stretch of quarters in 2016 and 2017, the company experienced sales declines.
Before the effects of the pandemic, General Mills executives were expecting the current fiscal year, which also ends this month, to yield sales growth of around 1% at best. Now, they expect sales to grow 1% to 2% for the entire fiscal year.
General Mills shares closed up 1.8% on Monday, outperforming broad market indexes. For the year so far, General Mills shares are up 13.5% while the S&P 500 is down 9.3%.