Q2 2025 General Mills Inc Earnings Call - Pre-recorded

<unk> second quarter earnings.

Later this morning, we will hold a separate live question and answer session on today's results, which you can hear via webcast on our Investor Relations website.

Speaker Change: Joining me for this morning's presentation are Jeff Harmening, our chairman and CEO and Kofi Bruce our CFO.

Before I hand things over to them, let me first touch on a few housekeeping items.

Speaker Change: First on our website, you'll find our press release that posted this morning, along with a copy of the presentation and a transcript of these remarks.

Speaker Change: Please note that today's remarks include forward looking statements that are based on management's current views and assumptions.

Speaker Change: The second slide in today's presentation with several factors that could cause our future results to be different than our current estimates.

Jeff Harmening: Kofi will provide more context on these items and our back half expectations later in the presentation. Slide six outlines our three key priorities for fiscal 2025. As I mentioned upfront, our number one priority is to accelerate our organic sales growth by delivering remarkable consumer experiences across our leading food brands, resulting in a stronger volume and improved market share performance. Second, we will create fuel for investment by generating strong levels of cost savings to offset inflation and reinvest back into our brands. And third, we will continue to drive strong cash generation while maintaining our disciplined approach to capital allocation. Slide seven shows our pound and dollar share performance through the first half of fiscal 2025.

Kofi will provide more context on these items and our back half expectations later in the presentation. Slide six outlines our three key priorities for fiscal 2025. As I mentioned upfront, our number one priority is to accelerate our organic sales growth by delivering remarkable consumer experiences across our leading food brands, resulting in a stronger volume and improved market share performance. Second, we will create fuel for investment by generating strong levels of cost savings to offset inflation and reinvest back into our brands. And third, we will continue to drive strong cash generation while maintaining our disciplined approach to capital allocation. Slide seven shows our pound and dollar share performance through the first half of fiscal 2025.

Jeff Harmening: And with that I'll turn it over to Jeff.

Speaker Change: Thank you, Jeff and good morning, everyone.

Jeff Harmening: Entering fiscal 2025, our top priority was to accelerate our organic net sales growth and specifically our volume growth by delivering remarkable experiences to consumers across our leading food brands as we look at the first half of the year, we made encouraging progress accelerating our volume growth and market share.

Good morning, and welcome to General note the second quarter of fiscal 'twenty 25 earnings Conference call.

All participants are in a listen only mode.

Jeff Harmening: Trends, including returning our North America pet business to growth.

After the Speakers' remarks, we will conduct a question and answer session.

Jeff Harmening: General Mills first half organic volume growth was four points better than our fiscal 'twenty. Four result, and we drove a significant increase in the proportion of our business growing share.

Ask a question at this time, you will need to press star followed by the number one on your telephone keypad.

As a reminder, this conference call is being recorded.

Jeff Harmening: Our pound share has improved most notably with dollar share improving at a slower rate as we expected given our investments to increase value for consumers.

Speaker Change: I would now like to turn the call over to Jeff Siemon, Vice President of Investor Relations and Treasurer. Thank you. Please go ahead.

Jeff Harmening: We strengthened our competitiveness in Q2, with 56% of our priority businesses growing or holding pound share and 38% growing or holding dollar share, both of which were significant improvements from Q1 and fiscal 2024 levels. Importantly, all four segments drove improved pound and dollar share trends in Q2, and we saw our US pet food business return to pound share growth and held dollar share for the first time in more than two years. We'll look to build on this positive share momentum as we move through the second half of fiscal 2025. We're seeing encouraging broad-based improvements in our competitiveness across North America Retail as well. North America Retail's pound and dollar trends strengthened in Q2 in seven of our top 10 US retail categories. Nearly 60% of our US.

We strengthened our competitiveness in Q2, with 56% of our priority businesses growing or holding pound share and 38% growing or holding dollar share, both of which were significant improvements from Q1 and fiscal 2024 levels. Importantly, all four segments drove improved pound and dollar share trends in Q2, and we saw our US pet food business return to pound share growth and held dollar share for the first time in more than two years. We'll look to build on this positive share momentum as we move through the second half of fiscal 2025. We're seeing encouraging broad-based improvements in our competitiveness across North America Retail as well. North America Retail's pound and dollar trends strengthened in Q2 in seven of our top 10 US retail categories. Nearly 60% of our US.

Speaker Change: Hi, good morning, everyone and thank.

Jeff Harmening: These results are due to our continued focus on delivering remarkable experiences to consumers across a total product offering we are investing to bring consumers superior products and benefits at the right value supported with remarkable brand building an omnichannel visibility. This work drove improved performance on many important businesses.

Speaker Change: Thank you Julien we appreciate you all joining us today for our Q&A session on our second quarter fiscal 2025 results.

Speaker Change: I Hope you all had time to review our press release and listen to the prepared remarks and view our presentation material.

Which we made available this morning on our Investor Relations website.

Speaker Change: It's important to note that in our Q&A session. We may make forward looking statements that are based on management's current views and assumptions.

Jeff Harmening: Such as pet food cereal fruit snacks, and our foodservice product lines at the same time, we have more work to do in other places with refrigerated dough offering the biggest opportunity for improvement and challenging consumer trends in China, continuing to present, a headwind in that market.

Speaker Change: So please refer to this mornings press release for factors that could impact forward looking statements and for reconciliations of non-GAAP information.

Speaker Change: We may discuss on today's call.

Jeff Harmening: To achieve and build on our broad based improvements in volume and share we've stepped up our investment to bring greater value to consumers, which results in a lower outlook on operating profit and EPS in fiscal 2025.

Speaker Change: I'm joined this morning by Jeff Harmening, our chairman and CEO Kofi Bruce our CFO.

Dana Mcnabb group President of North America retail.

Jeff Harmening: Retail priority businesses grew or held pound share in Q2, and our results on dollar share moved up to 50% growing or holding share over the past month as we returned our US cereal business to dollar share growth behind great consumer news, advertising, and merchandising execution, including successful campaigns with the Kelce Brothers and Chex holiday season. These share improvements have translated into strengthened retail sales growth across most of our US portfolio from Q1 to Q2. Those gains have been largely offset, however, by a step back on refrigerated dough, which has had a disappointing start to the key baking season. As we move to the second half, we'll build on our improving momentum on businesses like cereal, fruit snacks, Mexican food, and soup, and we'll step up our plans and reinvest to improve our trends on refrigerated dough.

Retail priority businesses grew or held pound share in Q2, and our results on dollar share moved up to 50% growing or holding share over the past month as we returned our US cereal business to dollar share growth behind great consumer news, advertising, and merchandising execution, including successful campaigns with the Kelce Brothers and Chex holiday season. These share improvements have translated into strengthened retail sales growth across most of our US portfolio from Q1 to Q2. Those gains have been largely offset, however, by a step back on refrigerated dough, which has had a disappointing start to the key baking season. As we move to the second half, we'll build on our improving momentum on businesses like cereal, fruit snacks, Mexican food, and soup, and we'll step up our plans and reinvest to improve our trends on refrigerated dough.

And John Doody Group, President of our North America patch foodservice and our international segments.

Jeff Harmening: Amidst the dynamic and uncertain macroeconomic backdrop for consumers. We believe this is the right choice to further strengthen the marketability of our offerings, which will better position general mills for sustainable growth in fiscal 'twenty six and beyond.

Speaker Change: Before we open for questions I'm going to hand, it over to Jeff Harmening for a few opening remarks.

Speaker Change: Alright, Thanks, Jeff and as you said before we get into Q&A in a more detailed business discussion. Let me, let me lay out a kind of an overarching perspective in <unk>.

Jeff Harmening: Our Q2s results are summarized on slide five <unk>.

Speaker Change: Go back to June we laid out our plans for fiscal 'twenty five and then we said our top priority for this year is to accelerate our organic sales growth and specifically our volume growth.

Organic net sales were up 1% adjusted operating profit was up 7% in constant currency and adjusted diluted EPS was up 12% in constant currency. These results were ahead of our expectations, especially on the bottom line, even as our outlook on the Euro has come down.

Speaker Change: And we do that by leveraging a remarkable experience framework to improve our market share.

Speaker Change: So the first half of the year, we've executed that plan and we're seeing good results with broad based improvements in our volume and our share trends and we've done that by stepping up our investment in the business above our original plans in response to a more prolong and I would say significant value seeking behaviors on the part of consumers.

Jeff Harmening: The key reason for this unusual difference is that our Q2 results benefited from timing related items that drove a one five point benefit to net sales and a six point benefit to operating profit and EPS all of which are expected to reverse in the second half.

Jeff Harmening: Our plan for refrigerated dough this year included product renovation news, stronger marketing behind the Pillsbury Doughboy, and targeted investments in value. As we moved through Q2, it became clear that our product news and media support were not breaking through because we didn't have the right value for consumers at the shelf. We've taken a number of actions recently to reverse the trends on refrigerated dough. We've already brought more value to consumers in December by adding investment to narrow price gaps across a broader range of items. We're stepping up our taste renovation news in H2 across 30% of our portfolio, with new, more cinnamon news on Pillsbury cinnamon rolls and continued support behind our more flaky layers news on biscuits.

Our plan for refrigerated dough this year included product renovation news, stronger marketing behind the Pillsbury Doughboy, and targeted investments in value. As we moved through Q2, it became clear that our product news and media support were not breaking through because we didn't have the right value for consumers at the shelf. We've taken a number of actions recently to reverse the trends on refrigerated dough. We've already brought more value to consumers in December by adding investment to narrow price gaps across a broader range of items. We're stepping up our taste renovation news in H2 across 30% of our portfolio, with new, more cinnamon news on Pillsbury cinnamon rolls and continued support behind our more flaky layers news on biscuits.

Speaker Change: We're bringing more value to consumers across all aspects of our total product offering including increased product renovation news increased brand building and promotional support.

<unk> will provide more context on these items and our back half expectations later in the presentation.

Jeff Harmening: Slide six outlines our three key priorities for fiscal 2025, as I mentioned upfront our number one priority is to accelerate our organic sales growth by delivering remarkable consumer experiences across our leading food brands, resulting in a stronger volume and improved market share performance.

Speaker Change: And as I said these investments are working are leaning into our greening of superior messaging for example on Blue Buffalo Pet food business is let us back to growth strong brand campaigns in innovation have helped return our U S cereal business the pound share growth.

And we drove accelerated retail sales performance and some other really important U S categories, including fruit snacks, and Mexican foods soup snack bars, as well as foodservice channels and in many of our international markets.

We will create fuel for investment by generating strong levels of H M M cost savings to offset inflation and reinvest back into our brands and third we will continue to drive strong cash generation, while maintaining our disciplined approach to capital allocation.

But we do have other work to do in other places like on U S. Refrigerated dough. So we're adjusting our plans there and already have adjust our plans are to ensure that pillsbury brings more value to consumers across a broader portion of our portfolio and so stepping back we are confident.

Jeff Harmening: We're launching new cookie varieties, including Monster Cookie and Double Chocolate flavors, as well as Grinch Holiday shapes to accelerate the strong growth we've been delivering since we unlocked new capacity earlier this year. We're significantly increasing our media support in Q3 to ensure Pillsbury has greater visibility through the remainder of the key baking season. The return of the Doughboy and our new campaign is working, and we expect media investment to be up more than 40% on our canned dough line in Q3. Stepping back, we've driven tremendous growth on Pillsbury refrigerated dough over the past five years. Getting this business back on track will be key to improving our North America retail growth prospects. We're confident that the actions we're taking to increase remarkability will improve our momentum going forward.

We're launching new cookie varieties, including Monster Cookie and Double Chocolate flavors, as well as Grinch Holiday shapes to accelerate the strong growth we've been delivering since we unlocked new capacity earlier this year. We're significantly increasing our media support in Q3 to ensure Pillsbury has greater visibility through the remainder of the key baking season. The return of the Doughboy and our new campaign is working, and we expect media investment to be up more than 40% on our canned dough line in Q3. Stepping back, we've driven tremendous growth on Pillsbury refrigerated dough over the past five years. Getting this business back on track will be key to improving our North America retail growth prospects. We're confident that the actions we're taking to increase remarkability will improve our momentum going forward.

Jeff Harmening: Slide seven shows our pound and dollar share performance through the first half of fiscal 2025.

Jeff Harmening: We strengthen our competitiveness in Q2 with 56% of our priority businesses growing or holding pound share and 38% growing or holding dollar share both of which were significant improvements from Q1 and fiscal 2024 levels.

Speaker Change: And our strategy and the investments, we're making to further improve our momentum in the back half of the year and while stepping up our investment is impacting our profit outlook for the back half of the year.

Speaker Change: I am very confident that it's the right choice to position us for stronger growth in fiscal 2006, and beyond and so with that Jeff I'll turn it back to you and let's get started on the Q&A.

Jeff Harmening: Importantly, all four segments drove improved pound and dollar share trends in Q2, and we saw our U S. Pet food business returned to pound share growth and held dollar share for the first time in more than two years.

Julian: Okay sounds good Julian I think we can go ahead and get started with the first question. Please.

Jeff Harmening: We will look to build on this positive share momentum as we move through the second half of fiscal 'twenty five.

Speaker Change: Certainly just as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.

Jeff Harmening: We're seeing encouraging broad based improvements and our competitiveness across North America retail as well North America, Retail's pound and dollar trends strengthened in Q2 and seven of our top 10 U S retail categories, nearly 60% of our U S retail priority businesses grew or held pound share in Q2.

Speaker Change: Our first question today will come from Andrew Lazar from Barclays. Please go ahead. Your line is open.

Jeff Harmening: Turning to North America pet, I'm proud of the continued progress we've made to restore this business to growth by focusing on Blue Buffalo's ingredient superiority and executing our improvement plans across the portfolio. While we're not all the way to where we want to be, we've continued to drive sequential improvement in our market share, with our pound share growing and dollar share flat in the US in Q2, and we like the positive momentum we're seeing across our key product lines. We drove high single-digit retail sales growth on our Life Protection Formula dry dog food business in Q2, leveraging compelling advertising focused on ingredient superiority. We've dramatically reduced the retail sales declines on our Wilderness dry dog food line by addressing a few key challenges. We launched new comparison advertising highlighting Wilderness's higher protein content versus a key competitor.

Turning to North America pet, I'm proud of the continued progress we've made to restore this business to growth by focusing on Blue Buffalo's ingredient superiority and executing our improvement plans across the portfolio. While we're not all the way to where we want to be, we've continued to drive sequential improvement in our market share, with our pound share growing and dollar share flat in the US in Q2, and we like the positive momentum we're seeing across our key product lines. We drove high single-digit retail sales growth on our Life Protection Formula dry dog food business in Q2, leveraging compelling advertising focused on ingredient superiority. We've dramatically reduced the retail sales declines on our Wilderness dry dog food line by addressing a few key challenges. We launched new comparison advertising highlighting Wilderness's higher protein content versus a key competitor.

Andrew Lazar: Thanks, so much good morning, and happy holidays everybody.

Speaker Change: Good morning, Good morning, Andrew.

Speaker Change: I'm, Jeff as you mentioned this fiscal year. It was always meant to be about sort of improving in market competitiveness across the portfolio and I guess now that we're halfway through I still have to get a better sense on sort of what learnings you've taken away from maybe the initial efforts and how those learnings are kind of informing your back half expectations, particularly in light of sort of the planned decree.

Jeff Harmening: And our results on dollar share moved up to 50% growing or holding share over the past month as we returned to our U S cereal business to dollar share growth behind great consumer news advertising and merchandising execution, including successful campaigns with the Kelsey brothers and checks holiday season.

Speaker Change: Spend is it.

Speaker Change: You can ask the consumer is just more ready to engage than before and maybe better adjusting their reference price points or simply just realizing that it requires more spend than it originally anticipated to drive sort of a requisite volume even even outside of refrigerated dough. So I guess I'm just trying to get a better sense on sort of where the consumer is at this point and maybe how.

Jeff Harmening: These share improvements have translated into strengthened retail sales growth across most of our U S portfolio from Q1 to Q2.

Jeff Harmening: Those gains have been largely offset however by a step back on refrigerated dough.

Jeff Harmening: Just had a disappointing start to the key baking season, as we move to the second half we will build on our improving momentum on businesses like cereal fruit snacks, Mexican food and soup, and we'll step up our plans and reinvest to improve our trends on refrigerated dough.

Speaker Change: Of the incremental investment specific to go versus some of the other brands in the portfolio.

Jeff Harmening: We introduced smaller bag sizes to provide lower absolute price points for pet parents, and we reintroduced grain-free varieties that are driving incremental household penetration gains. On wet food, we adjusted our price points on targeted offerings to get below key price cliffs, and we're seeing positive returns. Our treats portfolio is where we have the most work still to do, but even here, we're seeing green shoots with better shelf visibility and good merchandising execution, driving improved turns at key customers. We continue to strengthen our pet portfolio earlier this quarter with the announcement of our proposed acquisition of Whitebridge Pet Brands, North American premium cat feeding and pet treating business, which includes the Tiki Pet and Cloud Star portfolio brands. The jewel of this acquisition is the Tiki Cat brand, which has a strong presence in wet cat food, the fastest growing segment within the US.

We introduced smaller bag sizes to provide lower absolute price points for pet parents, and we reintroduced grain-free varieties that are driving incremental household penetration gains. On wet food, we adjusted our price points on targeted offerings to get below key price cliffs, and we're seeing positive returns. Our treats portfolio is where we have the most work still to do, but even here, we're seeing green shoots with better shelf visibility and good merchandising execution, driving improved turns at key customers. We continue to strengthen our pet portfolio earlier this quarter with the announcement of our proposed acquisition of Whitebridge Pet Brands, North American premium cat feeding and pet treating business, which includes the Tiki Pet and Cloud Star portfolio brands. The jewel of this acquisition is the Tiki Cat brand, which has a strong presence in wet cat food, the fastest growing segment within the US.

Speaker Change: Yeah. Thanks, Andrew I think we've learned we've learned a couple of things there. So we'll start with the consumer as you said I mean, it's.

Speaker Change: It's clear that from the beginning of the year to now the.

Jeff Harmening: Our plan for refrigerated, though this year included product renovation news stronger marketing behind the Pillsbury doughboy and targeted investments in value as we move through the second quarter. It became clear that our product news and media support we're not breaking through because we didn't have the right value for consumers at the shelf we've.

Speaker Change: The consumer is we've seen more prolonged value seeking behavior than we anticipated back in June and that manifests itself in a couple of ways. I mean wanted to consumers eating more at home, which is which is good to see our categories are growing and you see at home consumption being about 87% of total consumption wishes, which is quite high and that's because eating away from home is about <unk>.

Jeff Harmening: We've taken a number of actions recently to reverse the trends on refrigerated dough.

Our times more expensive than eating at home. So so we've seen this increase value behavior and so in a sense it benefits the growth of our categories and Youll see our categories are growing but what it also does it means within our categories consumers are seeking behavior in that that takes a lot of different forms and certainly price is one of those things and so what we have seen this year on our businesses.

Jeff Harmening: Already brought more value to consumers in December by adding investment to narrow price gaps across a broader range of items where.

Jeff Harmening: We're stepping up our tastes renovation news in the second half across 30% of our portfolio with new more cinnamon news on Pillsbury cinnamon rolls and continued support behind our more flaky layers news on biscuits.

Jeff Harmening: Pet food category and an area where Blue Buffalo is underdeveloped. Retail sales for Tiki Cat were up more than 20% over the past year, and with household penetration still below 2%, we see tremendous runway for future growth. We expect the transaction to close shortly, and we're looking forward to welcoming the Whitebridge team to General Mills and working with them to expand our mission of loving and feeding more pets like family. In North America food service, we continue to deliver strong market share growth across the segment, with more than 70% of our priority businesses growing or holding share in Q2. Our world-class R&D team is providing category-leading renovations and service of our operators, leveraging the remarkable experience framework.

Pet food category and an area where Blue Buffalo is underdeveloped. Retail sales for Tiki Cat were up more than 20% over the past year, and with household penetration still below 2%, we see tremendous runway for future growth. We expect the transaction to close shortly, and we're looking forward to welcoming the Whitebridge team to General Mills and working with them to expand our mission of loving and feeding more pets like family. In North America food service, we continue to deliver strong market share growth across the segment, with more than 70% of our priority businesses growing or holding share in Q2. Our world-class R&D team is providing category-leading renovations and service of our operators, leveraging the remarkable experience framework.

Speaker Change: We have increased our investments broadly speaking whether that's in renovation adverts.

Jeff Harmening: We're launching new cookie varieties, including Monster Cookie and double chocolate flavors as well as grants holiday shapes to accelerate the strong growth we've been delivering since we unlocked new capacity earlier this year.

Speaker Change: Advertising, whether that's in promotional activity and the things that we're doing are working and so we feel good about that it's just going to take a little bit honestly, it's just going to take a little bit more than we had anticipated and I think the you know what I would say Andrew you asked about how we see it on DAU versus other things what I would say is that we have.

Jeff Harmening: And we're significantly increasing our media support in the third quarter to ensure pillsbury has greater visibility through the remainder of the key baking season. The return of the Doughboy and our new campaign is working and we expect media investment to be up more than 40% on our can do line in Q3.

Speaker Change: As we look across the different categories. We've seen we've made investments across a wide variety of categories, including in value, but within those categories. We've done it in some pretty specific and targeted ways.

Jeff Harmening: Stepping back we've driven tremendous growth on pillsbury refrigerated dough over the past five years getting this business back on track will be key to improving our North America retail growth prospects. We're confident that the actions, we're taking to increase for marketability will improve our momentum going forward.

Speaker Change: And I think maybe it might be good at this point just to maybe jump in one and then Dana share a little bit on pads, and then North America retail a couple of categories. You can get a flavor of what those what those kind of targeted investments look like so John why don't we start with you and then pass over to Dana.

Jeff Harmening: In Q2, we launched a product renovation on our baked biscuit line, delivering improved product quality while also doubling the hold time, which helps operators better manage labor shortages and minimize product waste. We're already seeing strong excitement and sell-in with key distributor partners on the back of this news. We also continue to drive strong share results in non-commercial channels, including continued share growth in K through 12 schools. We've built our leading position in cereal thanks to our ongoing commitment to nutritional leadership, leveraging our two equivalent grain packaging innovations and our reduced sugar offerings. In international, we made progress, stepping up our market share performance on our global platforms while continuing to navigate challenging macro headwinds in China. We grew or maintained share on 45% of our priority businesses in Q2, driven by improving share performance in our distributor markets, Europe, and Australia regions.

In Q2, we launched a product renovation on our baked biscuit line, delivering improved product quality while also doubling the hold time, which helps operators better manage labor shortages and minimize product waste. We're already seeing strong excitement and sell-in with key distributor partners on the back of this news. We also continue to drive strong share results in non-commercial channels, including continued share growth in K through 12 schools. We've built our leading position in cereal thanks to our ongoing commitment to nutritional leadership, leveraging our two equivalent grain packaging innovations and our reduced sugar offerings. In international, we made progress, stepping up our market share performance on our global platforms while continuing to navigate challenging macro headwinds in China. We grew or maintained share on 45% of our priority businesses in Q2, driven by improving share performance in our distributor markets, Europe, and Australia regions.

Jeff Harmening: Turning to North America pet.

Jeff Harmening: Out of the continued progress we've made to restore this business to growth by focusing on blue Buffalo's ingredient superiority and executing our improvement plans across the portfolio.

Andrew Lazar: Yeah, absolutely Hi, Andrew.

Speaker Change: So we're really pleased with progress, we're making pet if you think about our biggest businesses at Sun life protection Formula as well as water is really it's not price investments advertising investment that's driving our business is.

While we're not all the way to where we want to be we've continued to drive sequential improvement in our market share with our pound share growing and dollar share flat in the U S. In Q2.

Speaker Change: It's growing high single digits Love, what we're seeing is we've gotten back to ingredient superiority advertising.

Jeff Harmening: And we liked the positive momentum, we're seeing across our key product lines.

Speaker Change: It really works for us and on Wilderness, we're not all the way home, but at this time last year Q2, we were down 18%. This year were down mid single digits. In every single week, we make progress we really believe that we've done to try to get back to growth in the back half of the year and Thats really about a protein messaging, it's about bringing back great free skus and really making sure that we have sizes.

We drove high single digit retail sales growth on our life protection Formula dry dog food business in Q2, leveraging compelling advertising focus on ingredient superiority.

Jeff Harmening: We've dramatically reduced retail sales declines on our wilderness dry dog food line by addressing a few key challenges, we launched new comparison advertising highlighting wilderness as higher protein content versus a key competitor we can.

Speaker Change: These steps for consumers if anything from a price standpoint, it's really been in dog wet as well as dog treats where we've got adjusted a few price points, we're actually seeing that pay off for us in terms of pound volume coming back at the same time, making progress from a dollar standpoint, so for us in blue really proud of the team really proud of the progress was probably more about.

Jeff Harmening: Introduce smaller bag sizes to provide lower absolute price points for pet parents, and we reintroduced green free varieties that are driving incremental household penetration gains.

Jeff Harmening: This includes strong performance on Häagen-Dazs, which delivered share growth in retail outlets in Q2, fueled by increased distribution on core flavors like Belgian chocolate and strawberry. Our China business continued to see double-digit traffic declines in our Häagen-Dazs shops in Q2, but we're working to mitigate those headwinds by expanding distribution in retail, food service, and e-commerce channels. Our second enterprise priority for fiscal 2025 is to create fuel for reinvestment back into our business through industry-leading cost savings. Even as we have added incremental investment to support stronger volume and share growth, the midpoint of our updated guidance ranges still translates into an adjusted operating margin profile in fiscal 2025 that is higher than our pre-pandemic margin. We've done that by delivering record levels of including a forecast for 5% savings in our cost of goods sold this year, which is ahead of our long-term trend.

This includes strong performance on Häagen-Dazs, which delivered share growth in retail outlets in Q2, fueled by increased distribution on core flavors like Belgian chocolate and strawberry. Our China business continued to see double-digit traffic declines in our Häagen-Dazs shops in Q2, but we're working to mitigate those headwinds by expanding distribution in retail, food service, and e-commerce channels. Our second enterprise priority for fiscal 2025 is to create fuel for reinvestment back into our business through industry-leading cost savings. Even as we have added incremental investment to support stronger volume and share growth, the midpoint of our updated guidance ranges still translates into an adjusted operating margin profile in fiscal 2025 that is higher than our pre-pandemic margin. We've done that by delivering record levels of including a forecast for 5% savings in our cost of goods sold this year, which is ahead of our long-term trend.

Jeff Harmening: On wet food, we adjusted our price points on targeted offerings to get below key price cliffs.

Speaker Change: <unk>.

Speaker Change: It's about price investment at this point.

Jeff Harmening: And we're seeing positive returns our treaty portfolio is where we have the most work still to do but even here, we're seeing green shoots with better shelf visibility and good merchandising execution driving improved turns at key customers.

Speaker Change: And from the North America retail perspective, good morning, Andrew what I would say, it's similar to what John said, we look at investment as broader than just price value.

He is a framework called the remarkable experience framework to try to assess where we are at relative to the competition across our total product offering whether that's product packaging communications price from.

Jeff Harmening: And we continue to strengthen our portfolio earlier this quarter with the announcement of our proposed acquisition of White Bridge Pet brands, North America premium cat feeding and pet treating business, which includes the tychy pet and clouds to our portfolio of brands.

Speaker Change: From a price standpoint, we have had to make a few targeted investments, but it is not everywhere. It's on the refrigerated baked goods business as we've talked about a little bit fruit snacks, a little bit on our totino business, but I want to reiterate that this is again more than just investment in price.

Jeff Harmening: The jewel of this acquisition is a tiki cab brand, which has a strong presence in wet cat food the fastest growing segment within the U S pet food category and an area, where blue Buffalo is underdeveloped retail sales for Tiki GAAP were up more than 20% over the past year and with household penetration still below 2%, we see tremendous.

Speaker Change: We look at other areas in refrigerated baked goods, where we're investing we're really seen them work look at our Cookie line. That's about a third of our business is up high single digits behind new capacity that we've added are.

Jeff Harmening: This elevated delivery continues to provide fuel to invest in our brands and capabilities for the long term. For our third priority, continuing to drive strong cash generation, we expect to deliver at least 95% free cash flow conversion in fiscal 2025, consistent with the guidance we provided at the start of the year. We remain committed to our long-standing record of deploying our cash in a disciplined and shareholder-friendly manner through capital investments, dividend growth, M&A, and share repurchases. On M&A, we continue to advance our portfolio reshaping ambitions and improve the growth profile of our business. Once our North American yogurt divestitures and Whitebridge pet acquisition are closed, General Mills will have turned over approximately 30% of our net sales base since fiscal 2018.

This elevated delivery continues to provide fuel to invest in our brands and capabilities for the long term. For our third priority, continuing to drive strong cash generation, we expect to deliver at least 95% free cash flow conversion in fiscal 2025, consistent with the guidance we provided at the start of the year. We remain committed to our long-standing record of deploying our cash in a disciplined and shareholder-friendly manner through capital investments, dividend growth, M&A, and share repurchases. On M&A, we continue to advance our portfolio reshaping ambitions and improve the growth profile of our business. Once our North American yogurt divestitures and Whitebridge pet acquisition are closed, General Mills will have turned over approximately 30% of our net sales base since fiscal 2018.

Jeff Harmening: Indus runway for future growth, we expect the transaction to close shortly and we're looking forward to welcoming the whitebread team to general Mills, and working with them to expand our mission of loving and feeding more pets like family.

Speaker Change: Our campaign, where we brought back the doughboy really resonating with consumers our new products are up 10%, we're seeing our cereal campaigns work really well. So yes, we're having to invest in price in targeted areas, but we're also lean in on areas that are really resonating with the consumer and we believe this investment will return for us in the back half of the air.

In North America Foodservice, we continue to deliver strong market share growth across the segment with more than 70% of our priority businesses growing or holding share in Q2.

Speaker Change: Thanks, so much have a good holiday everybody.

Jeff Harmening: Our World Class R&D team is providing category leading renovations in service of our operators leveraging the remarkable experience framework in Q2, we launched a product renovation on our baked biscuit line delivering improved product quality, while also doubling the whole time, which helps operators better manage labor shortages and minimize product.

Andrew Lazar: Thank you Andrew Thank you.

Speaker Change: Our next question comes from Peter Galbo from Bank of America. Please go ahead. Your line is open.

Peter Galbo: Hey, guys. Good morning happy holidays. Thanks, Thanks for the question.

Speaker Change: Dana maybe just to pick up on the back of Andrew's question there.

Speaker Change: I think I heard you say that the.

Jeff Harmening: In terms of future M&A, our near-term focus is on ensuring our organization is set up to deliver seamless transitions for each of those three transactions. As we look further out, we remain focused on bolt-on acquisitions as our most likely opportunities for M&A. Before transitioning to Kofi, I'll highlight our updated fiscal 2025 guidance on slide 17. We reaffirmed our organic net sales guidance with our current expectations toward the lower end of the range. Adjusted operating profit and adjusted diluted EPS growth are each expected to be two points below our prior ranges, reflecting the incremental investments we're making to support our volume and market share gains. We remain on track to deliver free cash flow conversion in line with our previous expectation.

In terms of future M&A, our near-term focus is on ensuring our organization is set up to deliver seamless transitions for each of those three transactions. As we look further out, we remain focused on bolt-on acquisitions as our most likely opportunities for M&A. Before transitioning to Kofi, I'll highlight our updated fiscal 2025 guidance on slide 17. We reaffirmed our organic net sales guidance with our current expectations toward the lower end of the range. Adjusted operating profit and adjusted diluted EPS growth are each expected to be two points below our prior ranges, reflecting the incremental investments we're making to support our volume and market share gains. We remain on track to deliver free cash flow conversion in line with our previous expectation.

Waste.

Jeff Harmening: We're already seeing strong excitement and sell them a key distributor partners on the back of this news.

Speaker Change: The incremental investment in the back half is targeted I do think there is some concern. This morning, just said it that it's more broad based so just wanted to clarify on that and just the part B of that question is really how do you think about it is this enough you know obviously you came into the year you had certain plans youre now accelerating that.

We also continued to drive strong share results and noncommercial channels, including continued share growth in K through 12 schools, we've built our leading position in cereal. Thanks to our ongoing commitment to nutritional leadership, leveraging our two equivalent grain packaging innovation and our reduced sugar offerings.

Speaker Change: How do we how do you get confidence around the fact that the investments you're making now are going to be enough such that in 369 months, we're not necessarily revisiting. This again, thanks very much.

Jeff Harmening: In International we made progress stepping up our market share performance on our global platforms, while continuing to navigate challenging macro headwinds in China, we grew or maintained share on 45% of our priority businesses in Q2, driven by improving share performance in our distributor markets and in Europe and Australia.

Speaker Change: Yeah. So let me let me use per Dana start let me, let me kind of provide a little context, and then have Dan and maybe provide some specifics. So there's this question about is it broad based or is it targeted what I would say is that we're investing in value across different categories. So in that sense. It's broad, but then within particular categories. It's not as if were.

Jeff Harmening: With that, let me turn it over to Kofi to go into more details on our second quarter results and the assumptions behind our updated outlook for the year. Thanks, Jeff, and hello everyone. Our second quarter financial results are summarized on slide 19. Reported net sales of $5.2 billion were up 2%, and organic net sales were up 1%. Adjusted operating profit of $1.1 billion was up 7% in constant currency, driven by cost savings and higher volume, partially offset by input cost inflation, unfavorable price mix, and higher SG&A expenses. Adjusted diluted earnings per share totaled $1.40 in the quarter and were up 12% in constant currency, driven by higher adjusted operating profit and lower share count.

With that, let me turn it over to Kofi to go into more details on our second quarter results and the assumptions behind our updated outlook for the year.

Jeff Harmening: This includes strong performance on Hagen Dazs, we've delivered share growth and retail outlets in Q2 fueled by increased distribution on core flavors like Belgian chocolate and strawberry.

Speaker Change: Increasing value on every single thing that we do which is really targeted with that in categories and.

Kofi Bruce: Thanks, Jeff, and hello everyone. Our second quarter financial results are summarized on slide 19. Reported net sales of $5.2 billion were up 2%, and organic net sales were up 1%. Adjusted operating profit of $1.1 billion was up 7% in constant currency, driven by cost savings and higher volume, partially offset by input cost inflation, unfavorable price mix, and higher SG&A expenses. Adjusted diluted earnings per share totaled $1.40 in the quarter and were up 12% in constant currency, driven by higher adjusted operating profit and lower share count.

Jeff Harmening: Our China business continues to see double digit traffic declines in our Hagen dazs shops in Q2, but we're working to mitigate those headwinds by expanding distribution and retail foodservice and e-commerce channels.

Speaker Change: And increasing investments in the places that matter. Most so I know there's this question about targeted versus broad I would say there is across a few different categories, we're making investments, but within those categories are very targeted.

I think Dana started already with Pillsbury, which was a good example on cookies, whereas it's really average its really advertising in and capacity, but in some other places it's more price. So Dana but you may want to give a couple of examples of of investments yeah. Good morning Pete.

Jeff Harmening: Our second enterprise priority for fiscal 'twenty five is to create fuel for reinvestment back into our business through industry, leading HSM cost savings.

Jeff Harmening: Even as we have added incremental investment to support stronger volume and share growth the midpoint of our updated guidance ranges still translates into an adjusted operating margin profile in fiscal 'twenty five that is higher than our pre pandemic margin.

Speaker Change: I mean, my answer is similar to what we just talked about with Andrew in the sense that the the price investments are targeted there in areas like we talked about with refrigerated baked goods, a little bit totino, there's a little bit fruit snacks, but again not everywhere and in terms of is it enough I do believe that we put investments into the areas that our analytics show.

We've done that by delivering record levels of H M M, including our forecast for 5% savings in our cost of goods sold this year, which is ahead of our long term trend. This elevated ATM delivery continues to provide fuel to invest in our brands and capabilities for the long term.

Jeff Harmening: As Jeff mentioned, our Q2 results were impacted by certain favorable timing items, including an increase in retailer inventory in NAR, due in part to the Thanksgiving holiday shifting from the final week of Q2 last year to the first week of Q3 this year, as well as favorable trade and other expense timing. These items represented approximately a one and a half point benefit to net sales and a six point benefit to operating profit, and EPS in the quarter. We expect these timing items to reverse in the second half, with most of the impact in Q3. Slide 20 summarizes the components of total company net sales growth. Organic net sales increased 1% in the quarter, driven by higher organic pound volume, partially offset by lower price mix. Foreign exchange and the net impact of acquisitions and divestitures were not material to net sales in Q2.

As Jeff mentioned, our Q2 results were impacted by certain favorable timing items, including an increase in retailer inventory in NAR, due in part to the Thanksgiving holiday shifting from the final week of Q2 last year to the first week of Q3 this year, as well as favorable trade and other expense timing. These items represented approximately a one and a half point benefit to net sales and a six point benefit to operating profit, and EPS in the quarter. We expect these timing items to reverse in the second half, with most of the impact in Q3. Slide 20 summarizes the components of total company net sales growth. Organic net sales increased 1% in the quarter, driven by higher organic pound volume, partially offset by lower price mix. Foreign exchange and the net impact of acquisitions and divestitures were not material to net sales in Q2.

We'll provide the best return and we'll watch the response and then we'll pivot as we learn more.

Speaker Change: Okay. No that's helpful. Thank you.

Jeff Harmening: For our third priority continuing to drive strong cash generation, we expect to deliver at least 95% free cash flow conversion in fiscal 'twenty five consistent with the guidance. We provided at the start of the year, we remain committed to our long standing record of deploying our cash in a disciplined and shareholder friendly manner through capital investments dividend.

Speaker Change: Maybe just a follow up on on pet as well I think if you kind of remove the retailer lap from last year.

Speaker Change: You're probably still would've been up on an organic basis in pet sales, which is encouraging and just curious kind of how you think about the.

Speaker Change: The context of that underlying momentum into the back half. Thanks again.

<unk> M&A and share repurchases on.

Speaker Change: Okay.

Speaker Change: John why don't you take that one.

On M&A, we continue to advance our portfolio reshaping ambitions and improve the growth profile of our business once our north American yogurt divestitures, and White bridge pet acquisition or closed general Mills will have turned over approximately 30% of our net sales base since fiscal 2018.

Speaker Change: Yeah, absolutely so Pete Youre exactly right. So we did see.

Speaker Change: Sales exceed moved by about four points in the quarter.

Speaker Change: Youre right about fiscal 'twenty for Q2, and really fiscal 'twenty three Q2 as well we saw the opposite so we're really just getting back to average inventory levels and importantly, as we really look at our key customers' inventory levels are right, where we would expect them to be so again, we don't expect any inventory issues as we head into the back half of the year and overall, we really like the.

Jeff Harmening: Shifting to segment results, second quarter organic net sales for North America Retail were up 1%. Our organic net sales outpaced Nielsen-measured US retail sales by roughly two points, driven by an increase in retailer inventory due in part to the impact of the later Thanksgiving timing. We expect this retailer inventory build to reverse in the third quarter. Organic net sales in Q2 also benefited from faster growth in non-measured channels. At the operating unit level, net sales for US morning foods increased 4%, and US snacks were up 1%. Net sales for US meals and baking solutions were down 1%, and Canada net sales declined 4% in constant currency. As Jeff noted, we strengthened our competitiveness in NAR, with our pound and dollar trends improving in seven of our top 10 US categories from Q1 to Q2.

Shifting to segment results, second quarter organic net sales for North America Retail were up 1%. Our organic net sales outpaced Nielsen-measured US retail sales by roughly two points, driven by an increase in retailer inventory due in part to the impact of the later Thanksgiving timing. We expect this retailer inventory build to reverse in the third quarter. Organic net sales in Q2 also benefited from faster growth in non-measured channels. At the operating unit level, net sales for US morning foods increased 4%, and US snacks were up 1%. Net sales for US meals and baking solutions were down 1%, and Canada net sales declined 4% in constant currency. As Jeff noted, we strengthened our competitiveness in NAR, with our pound and dollar trends improving in seven of our top 10 US categories from Q1 to Q2.

Jeff Harmening: In terms of future M&A, our near term focus is on ensuring our organization is set up to deliver seamless transitions for each of those three transactions as.

Jeff Harmening: As we look further out we remain focused on bolt on acquisitions as our most likely opportunities for M&A.

Speaker Change: The trends, we're seeing on the business the first quarter that we've been able to hold dollar share in 11 quarters, we're back to pound share growth for the year. Our biggest businesses are performing well like I said I feel like we've got really strong plans to get treats performing better in the back half of the year, that's probably the last business, we want to see that inflection on as we move so we feel really good about where we're trending.

Jeff Harmening: Before transitioning to coffee I will highlight our updated fiscal 2025 guidance on slide 17.

Jeff Harmening: We reaffirmed our organic net sales guidance with our current expectations for the lower end of the range adjusted operating profit and adjusted diluted EPS growth are each expected to be two points below our prior ranges, reflecting the incremental investments, we're making to support our volume and market share gains.

Speaker Change: And don't anticipate any big inventory issues, we had in the back half of the year as well.

Speaker Change: Thanks very much.

Speaker Change: Our next question comes from Ken Goldman from Jpmorgan. Please go ahead. Your line is open.

Jeff Harmening: And we remain on track to deliver free cash flow conversion in line with our previous expectation.

Speaker Change: Alright, thanks very much.

Speaker Change: With that let me turn it over to Kofi to go into more details on our second quarter results and the assumptions behind our updated outlook for the year.

Speaker Change: Wanted to ask a little bit just in light of the of coffee your comments about I think the most of the.

Jeff Harmening: On the bottom line, constant currency segment operating profit in NAR essentially matched year-ago results, driven by cost savings and favorable price mix, offset by input cost inflation, higher other supply chain costs, and lower volume. Moving on to slide 22, second quarter organic net sales for our North America pet segment were up 5%. This result outpaced our Nielsen-measured retail sales performance by roughly four points. The difference reflected a rebuild of retailer inventory after significant reductions in second quarters of fiscal 2023 and fiscal 2024. We do not expect to see a material change in retailer inventory in the second half. Net sales were up high single digits for dry food, up mid single digits for wet food, and up low single digits for treats. Q2 represented our fifth consecutive quarter of sequential market share improvement for our US.

On the bottom line, constant currency segment operating profit in NAR essentially matched year-ago results, driven by cost savings and favorable price mix, offset by input cost inflation, higher other supply chain costs, and lower volume. Moving on to slide 22, second quarter organic net sales for our North America pet segment were up 5%. This result outpaced our Nielsen-measured retail sales performance by roughly four points. The difference reflected a rebuild of retailer inventory after significant reductions in second quarters of fiscal 2023 and fiscal 2024. We do not expect to see a material change in retailer inventory in the second half. Net sales were up high single digits for dry food, up mid single digits for wet food, and up low single digits for treats. Q2 represented our fifth consecutive quarter of sequential market share improvement for our US.

Speaker Change: The benefits of the onetime benefits in terms of trade inventory and the timing of spend in <unk>.

Kofi Bruce: Thanks, Jeff and Hello, everyone. Our second quarter financial results are summarized on slide 19 reported net sales of $5 $2 billion were up 2% and organic net sales were up 1% adjusted operating profit of $1 1 billion was up 7% in constant currency driven.

Speaker Change: Is that flipping into a reversal in <unk>.

Speaker Change: Is there any more color you can provide us on kind of how you want us to think about the shape of the third quarter relative to last year relative to <unk>, obviously, we can.

Speaker Change: Do some of the math, but just wanted to get a better sense for how that all flows into the bottom line.

Kofi Bruce: <unk> cost savings and higher volume, partially offset by input cost inflation unfavorable price mix and higher SG&A expenses adjusted diluted earnings per share totaled $1 40 in the quarter and were up 12% in constant currency driven by higher adjusted operating profit and the lower share.

Speaker Change: Sure.

Speaker Change: Ill answer probably mostly two lines of the second half and give you a little bit of shading and perspective on how that how that weight in Q3.

Speaker Change: As I mentioned in my remarks, Theres, probably about a <unk>.

Speaker Change: <unk> profit about a six point benefit in the quarter for a variety of timing items. Thanks.

Kofi Bruce: Our counts.

Speaker Change: As Jeff mentioned, our Q2 results were impacted by certain favorable timing items, including an increase in retailer inventory in our due in part to the Thanksgiving holiday shifting from the final week of Q2 last year to the first week of Q3, this year as well as favorable trade in other expense timing.

Speaker Change: Thanks, giving holiday sitting in Q3 this year versus in the last week of Q2 last year.

Jeff Harmening: pet food business, with our pound share growing and our dollar share flat in the quarter. On the bottom line, second quarter North America pet segment operating profit was up 36% in constant currency, driven by cost savings, higher volume, and lower other supply chain costs, partially offset by unfavorable price mix, and higher SG&A expenses, including an increase in media investment. North America food service organic net sales were up 8% in the quarter, driven by a mid single digit increase in organic pound volume, and positive price mix. Net sales results were led by strong growth on breads, cereal, and frozen meals. We continue to drive strong market share gains year-to-date across key channels, including K through 12 schools, healthcare, and colleges and universities. On the bottom line, second quarter North America food service segment operating profit was up 24% in constant currency, driven by favorable price mix.

pet food business, with our pound share growing and our dollar share flat in the quarter. On the bottom line, second quarter North America pet segment operating profit was up 36% in constant currency, driven by cost savings, higher volume, and lower other supply chain costs, partially offset by unfavorable price mix, and higher SG&A expenses, including an increase in media investment. North America food service organic net sales were up 8% in the quarter, driven by a mid single digit increase in organic pound volume, and positive price mix. Net sales results were led by strong growth on breads, cereal, and frozen meals. We continue to drive strong market share gains year-to-date across key channels, including K through 12 schools, healthcare, and colleges and universities. On the bottom line, second quarter North America food service segment operating profit was up 24% in constant currency, driven by favorable price mix.

Speaker Change: Additional pipeline build outside of Thanksgiving and seasonal businesses.

Speaker Change: And then phasing on trade an H M M that fell into the quarter and benefited provided a tailwind in Q2. So the combination of those things are about six point benefit and as you as you move into the into the into the back half right and if you take our guidance.

Speaker Change: These items represented approximately a one and a half point benefit to net sales and a six point benefit to operating profit and EPS in the quarter. We expect these timing items to reverse in the second half with most of the impact in Q3.

Implied guidance midpoint will give you about an eight point.

Speaker Change: Slide 20 summarizes the components of total company net sales growth.

Speaker Change: Decline in operating profit in the back half.

<unk> net sales increased 1% in the quarter driven by higher organic pound volume, partially offset by lower price mix foreign exchange and the net impact of acquisitions and divestitures were not material to net sales in Q2.

Speaker Change: About three points of that comes from the reversal of those timing benefits most of which is going to hit in Q3.

Speaker Change: And then you've got we've got about two points from the incentive reset, which we expected and flagged at the beginning of the year.

Speaker Change: Shifting to segment results second quarter organic net sales for North America retail were up 1%.

Speaker Change: And then there is about three points from additional investment as we as we layer in spending in the back half to.

Speaker Change: Our organic net sales outpaced Nielsen measured U S retail sales by roughly two points driven by an increase in retailer inventory due in part to the impact of the later Thanksgiving timing.

Speaker Change: To show our competitiveness as we as we've mentioned earlier so that gives you roughly the structure.

Jeff Harmening: Moving to slide 24, second quarter organic net sales for our international segment were down 3%, driven by declines in China and Brazil, partially offset by continued growth in our distributor markets, as well as Europe, and Australia. As Jeff mentioned, continued macroeconomic consumer headwinds in China drove double-digit declines for our Häagen-Dazs shop traffic in the market. We are working to mitigate those headwinds by expanding Häagen-Dazs distribution across retail, food service, and e-commerce channels. Within our retail outlets, we've continued to drive sequential improvement in market share on Häagen-Dazs, reaching share growth in Q2. Second quarter segment operating profit totaled $24 million compared to $35 million a year ago, driven by unfavorable price mix, and higher SG&A expenses, partially offset by cost savings. Slide 25 summarizes our joint venture results.

Moving to slide 24, second quarter organic net sales for our international segment were down 3%, driven by declines in China and Brazil, partially offset by continued growth in our distributor markets, as well as Europe, and Australia. As Jeff mentioned, continued macroeconomic consumer headwinds in China drove double-digit declines for our Häagen-Dazs shop traffic in the market. We are working to mitigate those headwinds by expanding Häagen-Dazs distribution across retail, food service, and e-commerce channels. Within our retail outlets, we've continued to drive sequential improvement in market share on Häagen-Dazs, reaching share growth in Q2. Second quarter segment operating profit totaled $24 million compared to $35 million a year ago, driven by unfavorable price mix, and higher SG&A expenses, partially offset by cost savings. Slide 25 summarizes our joint venture results.

Speaker Change: Hopefully that answered your question Ken.

Speaker Change: We expect this retailer inventory build to reverse in the third quarter.

Speaker Change: Okay. Thank you for that.

Speaker Change: And then a little more of a random question, but just seeing double digit declines in your Uh huh.

Speaker Change: Organic net sales in Q2 also benefited from faster growth in non measured channels at.

Hagen Dazs business in China in stores.

Speaker Change: At the operating unit level net sales for U S morning Foods increased 4% in U S. Snacks were up 1% net sales for U S meals and baking solutions were down 1% and Canada net sales declined 4% in constant currency.

Speaker Change: I appreciate that you are looking to sort of diversify the channels that you work with there, but how sustainable do you see that double digit decline.

Speaker Change: Or does your outlook there and is there any chance I guess I'm getting at but youll consider kind of the broader footprint of that retail store business that you have there.

Speaker Change: As Jeff noted, we strengthened our competitiveness and our with our pound and dollar trends improving in seven of our top 10 U S categories from Q1 to Q2.

Speaker Change: Yeah, Ken This is John I'll take that.

Absolutely Jeff.

Speaker Change: On the bottom line constant currency segment operating profit in our essentially matched year ago results driven by <unk> cost savings and favorable price mix offset by input cost inflation higher other supply chain costs and lower volume.

Speaker Change: So we're absolutely looking at our footprint of stores in China talked over the last couple of years, we've actually closed quite a few underperforming stores and clearly our focus is really on retail as well as foodservice, where we see better margins and really the better opportunity for growth looking forward. So the macroeconomic backdrop is tough right now.

Speaker Change: Moving on to slide 22 second quarter organic net sales for our North America Pet segment were up 5%.

Jeff Harmening: In Q2, Cereal Partners Worldwide net sales were up 2% in constant currency, with growth in Latin America partially offset by declines in France, and the UK. Häagen-Dazs Japan net sales were up 1% in constant currency, reflecting growth on our handheld formats, partially offset by lower contributions from the timing of new product launches in cup formats. Second quarter combined after-tax earnings from joint ventures of $30 million were up 23% in constant currency, driven by lower input costs and favorable price mix at CPW, partially offset by higher SG&A expenses, a decrease in volume at CPW, and higher input costs at Häagen-Dazs Japan. Turning to margin results, our second quarter adjusted gross margin increased 130 basis points to 36.3% of net sales, driven by cost savings, partially offset by input cost inflation and unfavorable price mix.

In Q2, Cereal Partners Worldwide net sales were up 2% in constant currency, with growth in Latin America partially offset by declines in France, and the UK. Häagen-Dazs Japan net sales were up 1% in constant currency, reflecting growth on our handheld formats, partially offset by lower contributions from the timing of new product launches in cup formats. Second quarter combined after-tax earnings from joint ventures of $30 million were up 23% in constant currency, driven by lower input costs and favorable price mix at CPW, partially offset by higher SG&A expenses, a decrease in volume at CPW, and higher input costs at Häagen-Dazs Japan. Turning to margin results, our second quarter adjusted gross margin increased 130 basis points to 36.3% of net sales, driven by cost savings, partially offset by input cost inflation and unfavorable price mix.

Speaker Change: Traffic is down which is a challenge but at the same time, we're actually growing our retail business in China. So you don't want to make that switch really focus on really where our most profitable source moving forward and that's something that we'd be working onshore for a period of time here.

Speaker Change: This result, outpaced our Nielsen measured retail sales performance by roughly four points. The difference reflected a rebuild of retailer inventory after significant reductions and second quarters of fiscal 'twenty, three and fiscal 'twenty four.

Speaker Change: Profit standpoint, Youll note that international was down quite a bit this quarter that was really awful first of all small number and then second what we're lapping.

Speaker Change: We do not expect to see a material change in retailer inventory in the second half net.

Speaker Change: Net sales were up high single digits for dry food up mid single digits for west food and up low single digits for treats.

Speaker Change: Once recovery on Hagen Dazs last year, so what the top line is down a bit I would say that.

Speaker Change: Profit isn't as bad as what we're pretty at this point and so we're very clearly focused on improving our trends coming out of China as well.

Speaker Change: Q2 represented our fifth consecutive quarter of sequential market share improvement for our U S pet food business with our pound share growing and our dollar share flat in the quarter on the bottom line second quarter in North America Pet segment operating profit was up 36% in constant currency driven by H M M costs.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jordan <unk> from Goldman Sachs. Please go ahead. Your line is open.

Speaker Change: Thank you Sydney.

Speaker Change: Savings higher volume and lower other supply chain costs, partially offset by unfavorable price mix and higher SG&A expenses, including an increase in media investment.

Speaker Change: Great question.

Speaker Change: Thank you.

Speaker Change: Food cost inflation for the year to 4% from 3% to 4% quarter. You just see if you could provide more color on the drivers behind that where you're seeing the most.

Jeff Harmening: Our second quarter adjusted operating profit margin increased 100 basis points to 20.3%, with benefits from higher adjusted gross margin, partially offset by higher SG&A expenses as a percent of net sales. The timing benefit I referenced earlier added roughly 100 basis points to our Q2 adjusted operating profit margin, and we expect that to reverse largely in Q3. Moving on to other noteworthy Q2 income statement items. Adjusted unallocated corporate expenses decreased $23 million in the quarter, driven by certain favorable one-time items. Second quarter net interest expense was up $7 million, driven by higher average long-term debt balances. The adjusted effective tax rate of 20.1%, compared to 20.8% a year ago, driven by favorable earnings mix by jurisdiction compared to last year. Finally, average diluted shares outstanding in the quarter were down 4% to $560 million, reflecting our continued net share repurchase activity.

Our second quarter adjusted operating profit margin increased 100 basis points to 20.3%, with benefits from higher adjusted gross margin, partially offset by higher SG&A expenses as a percent of net sales. The timing benefit I referenced earlier added roughly 100 basis points to our Q2 adjusted operating profit margin, and we expect that to reverse largely in Q3. Moving on to other noteworthy Q2 income statement items. Adjusted unallocated corporate expenses decreased $23 million in the quarter, driven by certain favorable one-time items. Second quarter net interest expense was up $7 million, driven by higher average long-term debt balances. The adjusted effective tax rate of 20.1%, compared to 20.8% a year ago, driven by favorable earnings mix by jurisdiction compared to last year. Finally, average diluted shares outstanding in the quarter were down 4% to $560 million, reflecting our continued net share repurchase activity.

Speaker Change: North America Foodservice organic net sales were up 8% in the quarter driven by a mid single digit increase in organic pound volume and positive price mix.

Speaker Change: Your across your portfolio and how do you think about your ability.

Speaker Change: To mitigate some of that going forward.

Speaker Change: Okay. So thank you for the question.

Speaker Change: Net sales results were led by strong growth in our brands cereal and frozen meals.

Speaker Change: So that is absolutely a fair assessment of how we read the year couple a couple of things that I'd give you just this is framing.

Speaker Change: We continued to drive strong market share gains year to date across key channels, including K 12 schools healthcare and colleges and universities on the bottom line second quarter North America Foodservice segment operating profit was up 24% in constant currency driven by favorable price mix.

Speaker Change: As we think about input costs in particular, our ingredient costs and some of our toll manufacturing where theres a high conversion cost.

Speaker Change: Linked to labor.

Speaker Change: That is passed through and that is actually still remains sticky and a little bit more inflationary than we said we would expect.

Speaker Change: Moving to slide 24 second quarter organic net sales for our international segment were down 3% driven by declines in China, and Brazil, partially offset by continued growth in our distributor markets as well as Europe, and Australia as Jeff mentioned continued macroeconomic consumer headwinds in China drove double digit declines for <unk>.

Speaker Change: In addition, we are lapping.

Speaker Change: Several large contracts packaging Darien.

Speaker Change: Dairy in our EU business sugar, where we had advantage prices.

Speaker Change: <unk> shops to traffic in the market.

Speaker Change: We're kind of locked in right before the inflationary period, and so as we step off those.

Speaker Change: And we are working to mitigate those headwinds by expanding Hagen dazs distribution across retail foodservice and e-commerce channels within our retail outlets. We've continued to drive sequential improvement in market share on Hagen dazs, reaching share growth in Q2.

Jeff Harmening: Our first half financial results are summarized on slide 28. Net sales of $10.1 billion essentially matched year-ago results on an organic basis. Adjusted operating profit of $1.9 billion was up 2% in constant currency, while adjusted diluted earnings per share totaled $2.47 and were up 6% in constant currency. Turning to the balance sheet and cash flow on slide 29, first half operating cash flow increased 19% to $1.8 billion, driven primarily by change in accounts payable, partially offset by changes in inventory and other current assets. Capital investments in the first half totaled $301 million, and we returned $1.2 billion in cash to shareholders in the first six months of the year through dividends and net share repurchases. On slide 30, we provided a few updates to our key financial assumptions for fiscal 2025.

Our first half financial results are summarized on slide 28. Net sales of $10.1 billion essentially matched year-ago results on an organic basis. Adjusted operating profit of $1.9 billion was up 2% in constant currency, while adjusted diluted earnings per share totaled $2.47 and were up 6% in constant currency. Turning to the balance sheet and cash flow on slide 29, first half operating cash flow increased 19% to $1.8 billion, driven primarily by change in accounts payable, partially offset by changes in inventory and other current assets. Capital investments in the first half totaled $301 million, and we returned $1.2 billion in cash to shareholders in the first six months of the year through dividends and net share repurchases. On slide 30, we provided a few updates to our key financial assumptions for fiscal 2025.

Speaker Change: We're seeing some some pressure points there.

Speaker Change: So so those are those kind of the big ones and then in addition to that we do have a smaller exposure to items, which have been much in the news in particular cocoa and fashion.

Speaker Change: Second quarter segment operating profit totaled $24 million compared.

Speaker Change: Fats and oils that remain pressure points.

Speaker Change: Compared to $35 million, a year ago, driven by unfavorable price mix and higher SG&A expenses, partially offset by <unk> cost savings.

Speaker Change: And then as you think about the second part of your question how do we feel okay. I think we're driving 5% H M. M. This year.

Speaker Change: We continue to have confidence in our ability to drive it at least to 4% historical run rate, we've been driving we're getting benefits from digitization in our supply chain.

Speaker Change: Slide 25 summarizes our joint venture results in Q2 cereal partners worldwide net sales were up 2% in constant currency with growth in Latin America, partially offset by declines in France and the UK.

Speaker Change: Providing benefits in manufacturing and logistics, reducing waste.

Speaker Change: Hagen Dazs, Japan net sales were up 1% in constant currency, reflecting growth on our handheld formats, partially offset by lower contributions from the timing of new product launches and cup formats.

Speaker Change: And providing better service. So I think we feel pretty good about our prospects of addressing inflation in roughly this range.

Okay.

Speaker Change: Second quarter combined after tax earnings from joint ventures of $30 million were up 23% in constant currency.

Speaker Change: Alright.

Speaker Change: Yep.

Speaker Change: And just talk about the.

Jeff Harmening: As Jeff stated earlier, our improvement in volume and market share is requiring higher promotional investment than we initially planned. A portion of that incremental investment fell in the first half, and we expect a greater portion to hit in the second half. Within cost of goods sold, we continue to expect cost savings to outpace input cost inflation for the full year. We now expect to generate savings of 5% of COGS, and input cost inflation is now expected to be 4% of COGS in fiscal 2025. As we look to the second half of fiscal 25, the midpoint of our revised guidance implies adjusted operating profit would be down roughly 8% in constant currency. This reflects a three-point headwind from the reversal of favorable timing items in the first half, a three-point headwind from incremental growth investments, and a two-point headwind from a partial reset of incentive compensation.

As Jeff stated earlier, our improvement in volume and market share is requiring higher promotional investment than we initially planned. A portion of that incremental investment fell in the first half, and we expect a greater portion to hit in the second half. Within cost of goods sold, we continue to expect cost savings to outpace input cost inflation for the full year. We now expect to generate savings of 5% of COGS, and input cost inflation is now expected to be 4% of COGS in fiscal 2025. As we look to the second half of fiscal 25, the midpoint of our revised guidance implies adjusted operating profit would be down roughly 8% in constant currency. This reflects a three-point headwind from the reversal of favorable timing items in the first half, a three-point headwind from incremental growth investments, and a two-point headwind from a partial reset of incentive compensation.

Speaker Change: Thank you.

Speaker Change: Or do we have how many know.

Speaker Change: By lower input costs and favorable price mix at CPW, partially offset by higher SG&A expenses and a decrease in volume at CPW and higher input costs and Hagen Dazs, Japan.

Speaker Change: H.

Speaker Change: You're right.

Speaker Change: Matt just discussed.

Speaker Change: Back to you.

Speaker Change: Sure.

No.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: Turning to margin results, our second quarter adjusted gross margin increased 130 basis points to 36, 3% of net sales driven by H M. M cost savings, partially offset by input cost inflation and unfavorable price mix, our second quarter adjusted operating profit margin.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay, I'm, sorry, there was a bit of a bad connection there I think what I heard was question on a regulatory environment in any any potential impact you see to the business.

Speaker Change: So with that hopefully I got that question right, where you've got about about one every two words. So if I don't answer that question, just though without trying to get around it just didnt hear all of it clearly.

Speaker Change: <unk> 100 basis points to 23% with benefits from higher adjusted gross margin, partially offset by higher SG&A expenses as a percent of net sales.

Speaker Change: Look I do appreciate the question.

Speaker Change: First it is pretty early to talk about broadly whats going to happen in the regulatory environment.

Speaker Change: Timing benefit I referenced earlier added roughly 100 basis points to our Q2 adjusted operating profit margin and we expect that to reverse largely in Q3.

Speaker Change: I can tell you is that we have and we always will follow whatever you brake shims are in place, whether they're state regulations or what other federal regulations.

Speaker Change: The other thing I can tell you is that we've got a great R&D team and very agile and we've been we've been navigating regulatory environments for nearly 160 years and doing so really effectively and let me give you. Let me give you a couple of examples that I think might be helpful. As you think about our foodservice business, which you saw this quarter and for the last many.

Jeff Harmening: With these assumptions in mind, our updated annual fiscal 2025 financial outlook can be seen on slide 31. Organic net sales are still expected to range between flat and up 1%, with our current outlook targeting the lower end of that range. Adjusted operating profit is now expected to be down 4% to down 2% in constant currency. Adjusted diluted earnings per share are now expected to be down 3% to down 1% in constant currency, and we continue to expect free cash flow conversion to be at least 95% of adjusted after-tax earnings. Note that our outlook does not include the impact of the North American yogurt divestitures nor the Whitebridge Pet Brands acquisition, as those transactions have yet to close. With that, let me turn it back to Jeff for some closing remarks. Thanks, Kofi. I'll close out with a few thoughts.

With these assumptions in mind, our updated annual fiscal 2025 financial outlook can be seen on slide 31. Organic net sales are still expected to range between flat and up 1%, with our current outlook targeting the lower end of that range. Adjusted operating profit is now expected to be down 4% to down 2% in constant currency. Adjusted diluted earnings per share are now expected to be down 3% to down 1% in constant currency, and we continue to expect free cash flow conversion to be at least 95% of adjusted after-tax earnings. Note that our outlook does not include the impact of the North American yogurt divestitures nor the Whitebridge Pet Brands acquisition, as those transactions have yet to close. With that, let me turn it back to Jeff for some closing remarks. Thanks, Kofi. I'll close out with a few thoughts.

Speaker Change: Moving on to other noteworthy Q2 income statement items adjusted unallocated corporate expenses decreased $23 million in the quarter drill.

Speaker Change: Driven by certain favorable one time items.

Speaker Change: Second quarter net interest expense was up $7 million driven by higher average long term debt balances.

Speaker Change: Quarters has been doing really well.

Speaker Change: You know a lot of that business is through K through 12 schools and the USDA.

Speaker Change: The adjusted effective tax rate of 21% compared to 28% a year ago, driven by favorable earnings mix by jurisdiction compared to last year.

Speaker Change: Nationwide nutrition standards, which they change every five to 10 years or so.

Speaker Change: Finally average diluted shares outstanding in the quarter were down 4% to $560 million, reflecting our continued net share repurchase activity.

Speaker Change: And coincidentally, there theyre going to change in the next school year, and 25 or 26 and <unk>.

Speaker Change: In that environment, when those have changed general mills has grown and grown share and it's not an accident and because we're able to reformulate, our products frankly, better and more effectively than our competitors and provide nutritional value as well as great taste and values and brands are the brands that the kids love and that the school operators like them.

Speaker Change: Our first half financial results are summarized on slide 28.

Speaker Change: Net sales of $10 1 billion essentially matched year ago results on an organic basis adjusted operating profit of $1 9 billion was up 2% in constant currency, while adjusted diluted earnings per share totaled $2 47.

Jeff Harmening: We're encouraged by our progress, we've made to accelerate our volume growth and improve our market share trends, driven by our continued focus on delivering remarkable experiences to consumers across the total product offering. To deliver those gains and build on them going forward, we've made incremental investments to bring consumers greater value amid a challenging macroeconomic backdrop. I'm confident in our teams who are operating with agility and doing what's right for our consumers. I'm confident that the actions we're taking will better position General Mills for sustained growth in fiscal 2026 and beyond.

Jeff Harmening: We're encouraged by our progress, we've made to accelerate our volume growth and improve our market share trends, driven by our continued focus on delivering remarkable experiences to consumers across the total product offering. To deliver those gains and build on them going forward, we've made incremental investments to bring consumers greater value amid a challenging macroeconomic backdrop. I'm confident in our teams who are operating with agility and doing what's right for our consumers. I'm confident that the actions we're taking will better position General Mills for sustained growth in fiscal 2026 and beyond.

Speaker Change: As a result for example, our cereal share in schools is more than twice what it is in retail.

Speaker Change: And were up 6% in constant currency.

Speaker Change: And so as we think about the regulatory environment and our ability to navigate it just know that we have been navigating regulatory environments and even though it's tough to predict what's going to come I'm confident in our ability to navigate through these things either the last thing I think it might be helpful. As we think about what might come to pass just kind of what already is and that is what's happening in California.

Speaker Change: Turning to the balance sheet and cash flow on slide 29, first half operating cash flow increased 19% to $1 8 billion.

Speaker Change: Driven primarily by a change in accounts payable, partially offset by changes in inventory and other current assets.

Speaker Change: Capital investments in the first half totaled $301 million.

Speaker Change: Ware.

Speaker Change: And we returned $1 $2 billion in cash to shareholders in the first six months of the year through dividends and net share repurchases.

Speaker Change: There's legislation that's been passed about certified colors and food that goes into effect in 2027 and end with that about 85% of our cereal portfolio is already compliant and the rest of it will be compliant by by 2027, and so as we as we think about the regulatory environment I mean, obviously, we take it.

Speaker Change: On slide 30, we've provided a few updates to our key financial assumptions for fiscal 2025.

Speaker Change: As Jeff stated earlier, our improvement in volume and market share is requiring higher promotional investment than we initially planned a portion of that incremental investment on the first half and we expect a greater portion of hit in the second half.

Speaker Change: Food safety, we take very seriously and we are going to follow all the regulations, but know that I'm I'm wildly confident in our ability to pivot because we have been able to do that historically.

Speaker Change: Within cost of goods sold we continue to expect to EQM cost savings to outpace input cost inflation for the full year.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Speaker Change: We now expect to generate <unk> savings of 5% of Cogs and input cost inflation is now expected to be 4% of Cogs in fiscal 2025.

Speaker Change: Hum.

Speaker Change: Yeah.

Speaker Change: Alright from BNP Paribas. Please go ahead your line is open.

Speaker Change: Hey, Thanks for the question, it's nice to see the progress in your own pet food results with the return to growth in the.

Speaker Change: As we look to the second half of fiscal 'twenty five the midpoint of our revised guidance implies adjusted operating profit would be down roughly 8% in constant currency.

Speaker Change: Continued progress in market share and I think this is suggestive of the success you are having with the action plans that you've laid out and improving your own competitiveness I'm curious for any updated thoughts you have on the broader food industry, particularly given pet population growth appears to be muted right now maybe.

Speaker Change: This reflects a three point headwind from the reversal of favorable timing items in the first half.

Speaker Change: Three point headwind from incremental growth investments and a two point headwind from a partial reset of incentive compensation.

Speaker Change: Maybe following some normalization post Covid and then more recently, there's been news in New York State regarding spanning the retail sales of dogs and cats, but just curious your broader thoughts on the pet food industry beyond your own success on competitiveness, thanks very much.

Speaker Change: With these assumptions in mind, our updated annual fiscal 2025 financial outlook can be seen on slide 31 organic net sales are still expected to range between flat and up 1% with our current outlook targeting the lower end of that range.

Speaker Change: Adjusted operating profit is now expected to be down four to down 2% in constant currency.

Speaker Change: No.

Speaker Change: Once you take that one and the comment on all that New York State. So that's that's the stubborn, but all of them.

Speaker Change: Adjusted diluted earnings per share are now expected to be down three to down 1% in constant currency and we continue to expect free cash flow conversion to be at least 95% of adjusted after tax earnings.

Speaker Change: To answer the rest of it.

You got it so I think what we're seeing in the categories that really turned more pre pandemic type of trends.

Speaker Change: Youre seeing dollars come back to the category, you're seeing segments like treats would have been.

Speaker Change: Note that our outlook does not include the impact of the North American yogurt divestitures, nor the White bridge pet brands acquisition as those transactions have yet to close.

A bit more challenged to get a bit better over time as well. So I think we're getting back to more normal levels of growth in the category.

Jeff Harmening: With that let me turn it back to Jeff for some closing remarks.

Speaker Change: Will we see a surge in adoption like we did a couple but likely not but again I don't think we need to see a lot of pet population growth over time, I think getting back to where we were pre pandemic led to a healthy category and healthy healthy dynamics. Unfortunately for us, Russia say premium bounce back a bit that you all more recently so it does feel like we're getting back to some of the trends.

Jeff Harmening: Thanks, Kofi I'll close out with a few thoughts we are encouraged by our progress we've made to accelerate our volume growth and improve our market share trends driven by our continued focus on delivering remarkable experiences to consumers across the total product offering to deliver those gains and build on them going forward, we've made incremental investments to bring consume.

Speaker Change: Fall pre pandemic with Humanization of previous issue really leading the way and we like where we sit the blue Buffalo brand is incredibly strong and secure where we announced the acquisition acquisition of White Bridge.

<unk> greater value amid a challenging macroeconomic backdrop.

Jeff Harmening: And our teams who are operating with agility and doing what's right for our consumers and I'm confident that the actions, we're taking will better position general mills for sustained growth in fiscal 2026 and beyond.

Speaker Change: Brands, we're excited about getting bigger in cat, one which is the fastest growing segment in the category. So we like the category a lot and we like our position as we move forward.

Speaker Change: Great and then a follow up on the U S cereal business. So you called it out in the prepared remarks.

Last couple of Quad weeks, you've definitely seen some improvement in trends in terms of your sales growth and particularly your euro dollar share. It sounds like you would attribute it to consumer news advertising and merchandising execution, but just any more color on what youre seeing in cereal.

Speaker Change: And the competitive environment and what you think about your Youre.

Speaker Change: Your back half expectations, there, thanks, very much I'll leave it there.

Speaker Change: Great. Thanks for the question as you noted we did see an improvement in our retail sales trends on both dollar and pound we grew pound share and we've really been focused on bringing excitement back to the category and reminding people about our big brands and two big Activations that works very well for us in Q2, where the Kelsey brothers.

Speaker Change: His promotion this is where the Kelsey brothers spontaneously mentioned on their part her favorite cereals, where our reese's puffs cinnamon toast Crunch Lucky charms. So we launched a new campaign with them to bring awareness to the brand that worked really well to improve unit growth. We also launched a new calcium mix new product and we got great in store activation from.

Speaker Change: Both and four times the media impressions that we did this time last year. So we're really encouraged by how it worked and then this is the time of year, where we also have our checks party next promotion where checks I felt a lot of cereal to make party Max and we focused on the style, Jeff We had a peanuts comic strip promotion a pre tend on the pack big surround campaign and that also draw.

Speaker Change: Sure. So what we're learning is that when we get on our front foot and do what we're good at we see growth as we look to the back half of the year, we intend to take the same principles forward. We're the leader of the category. So we have to behave like the leader we will bring our new game day campaign, we have cheerios protein law change here I was heart health news.

Speaker Change: So we will keep progressing with from a marketability across the mix.

Speaker Change: We will continue to see progress in our market share.

Speaker Change: Yeah.

Speaker Change: Great. Thanks very much.

Speaker Change: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.

Speaker Change: Okay.

Speaker Change: Hi, good morning, everyone.

Speaker Change: Have a.

Speaker Change: Hello, Good M&A quick question then.

Speaker Change: Bigger picture follow up.

Speaker Change: I know the guidance does not include the.

Speaker Change: The yogurt divestiture, nor white bridge.

Speaker Change: But how do you see that two of these.

Speaker Change: Or perhaps can you provide any color on how the.

Speaker Change: Two of these deals together and may impact the dilution.

Speaker Change: Yogurt was seen low single digit percentage dilutive.

Speaker Change: White bridge fairly de Minimis.

Speaker Change: Is it will you be using any of the proceeds from yogurt the fund.

Speaker Change: White Bridge, how did these two deals work together to inform implications for the model over the next 12 to 18 months. If you have any incremental color on that I'd I'd be curious then I have a quick follow up.

Speaker Change: Nope I think all very fair I think I think your read of the dilution impact on both those.

Speaker Change: And roughly the right range, what I would tell you is obviously white bridge just closed.

So where we are.

Speaker Change: Right on on that today.

Speaker Change: We are still and it's an important point.

Waiting closure of both legs of the yogurt divestiture and so.

Speaker Change: And then.

Speaker Change: My expectation, though is that there will still be substantial amount of proceeds going back into share repurchase activity.

Speaker Change: We are we are Jeff with.

Speaker Change: Generally comfortable with the leverage range, we're running in which isn't kind of a low three.

Speaker Change: Time's net debt to EBITDA area. So I think that's going to give us flexibility to both return cash to shareholders as well as accommodate the modest amount of financing necessary for wide bridge.

Speaker Change: We'll obviously provide you guidance, which we have.

Speaker Change: Started closing either in both legs of the divestitures, which will have a much more material impact obviously on dilution expectations.

Speaker Change: I'll just add.

Jeff: This is Jeff.

Speaker Change: Kobe was able to give you the first glimpse. So we did actually good news that we were closing why brands. This morning, So youll see a release coming out later today.

Speaker Change: That news so that's that's good news for that deal.

Speaker Change: Okay, Okay great.

Speaker Change: A bigger picture question.

Speaker Change: If we go back over the I don't know.

Speaker Change: Many months at this point.

Speaker Change: Sustained normalization in the broader packaged food space, Jeff has been.

Speaker Change: Vocal about the various things that would need to happen to drive an uptick in promotional activity. If you think about.

Speaker Change: I don't know how far that commentary goes back at this point.

Speaker Change: And anyway and here, we are with the sector.

Speaker Change: Trends getting getting better, but but clearly.

Speaker Change: Based on today, not not getting better fast enough and I realize there are caveats.

Speaker Change: Yeah.

Speaker Change: With Pillsbury and some other dynamics.

Speaker Change: But.

Speaker Change: What do you think is your I guess bigger picture assessment of.

Speaker Change: No just the slow pace of recovery here.

<unk> wasn't all these other things I mentioned, which sometimes pass tangible but.

Speaker Change: Is it simply as simple as simple as the consumers are seeking value our private label operators, becoming a lot more aggressive in going after consumers. How does this all kind of fit together to where we are today with clearly things taking longer.

Speaker Change: If we can diagnose that maybe there's a chance to build a bit more confidence over the next 12 months I noticed that are overly specific question, but if that insights any any thoughts I'd be curious thanks, so much.

Speaker Change: Yeah, Let me, let me take a step back and answer that a little bit as we.

Speaker Change: As we look at it over the line I'm just going to take over the last five years or so and what I would say is we're getting back were getting back to an environment that is more normal.

Speaker Change: That is normalizing, but not yet all the way back to normal and you see that in the promotional environment, where the levels of promotion or whether it is frequency of discounting or depth of discounting is is about back to where it was in 2019.

Speaker Change: And I would say the same for our margin structure. So if you look at our margins, whether gross margins or operating margins.

Speaker Change: The guidance that we just gave there they're at the same level.

Speaker Change: Maybe a little higher than they were.

Speaker Change: In 2019, and there are ups and downs as there always are but if you look versus five years ago to the margin structure is about the same and our business is actually quite a bit larger.

So the question where do we go from here.

Speaker Change: Answer is really where we go from here is making sure we're responsive to consumer needs and Dana I talked a little bit about that through the remark ability framework.

Speaker Change: That's driving consumer do through through promotional activity or whether it's through new products, which are up 10% or more bulk.

Speaker Change: While campaigns, which you just highlighted in cereal or Jon highlighted and pet food.

Speaker Change: As.

Speaker Change: Back to what consumers are looking for and so.

I think the environment, but we think the environment will continue to normalize as you say there is no inflation or inflation, we said, 3% to 4% is about four so it was slightly higher than it was before and our productivity as we said four to five years now five so our productivity is actually slightly higher than it was and so.

Speaker Change: We feel good about our increasing level of competitiveness and what we've done in the middle of our P&L to get its ability to maintain margins and.

Speaker Change: To accelerate our growth at the same time the tale of the tape really is about growth at the other day its about dollar growth.

Speaker Change: Our pound growth is growing slightly faster than our market share growth at the moment, but one of the things we see is that tenant.

Speaker Change: The catch up over time, if we're taking the right activities and we feel great about the activities, we're taking and the things we're doing.

Speaker Change: To drive.

Speaker Change: To drive increased consumption by the way it started in the second quarter doesn't start in the back half of it actually started in the second quarter look at our market share gains in the second quarter, 60% volume gains and 40% on dollar significant increase from where we were in Q1. So we don't have to wait until the back half for our competitiveness to improve it's already started.

And Thats, what gives us confidence in that metric, yes. The investments are a little bit higher. So that has that is acknowledged but but it is investments which is to say, there's not just spending as investments and with investments you get a return and the return for US is our market share results, which are broad and we're very encouraged by that even after the investment levels are slightly higher than what we.

Speaker Change: Anticipated at the beginning of the year.

Speaker Change: Okay.

Speaker Change: Thanks for entertaining that good luck.

Speaker Change: Mhm.

Our next question comes from Steve Powers from Deutsche Bank. Please go ahead. Your line is open.

Steve Powers: Yes, hey, everybody good morning too.

Steve Powers: Two quick ones from me.

Steve Powers: The first one just focusing on north American retail if I, if we look at the consumption data this quarter.

Steve Powers: The yogurt business is actually been doing well.

Steve Powers: Well in terms of accelerating growth, it's actually I think that's contributed about 50 basis points to the.

Speaker Change: Growth in the consumption data I'm just curious if that's.

Speaker Change: Consistent with the impact on our reported results just as we think about the underlying kind of run rate of the business with that with that.

That business set for divestment.

Speaker Change: Number one my question number two is actually for coffee you mentioned the incentive comp reset in the back half and as you said that that was contemplated from the start but the language changed a little bit this quarter I think it said something like partial partial.

Speaker Change: Reset I'm, assuming because of the the guidance change today, then the incentive comp bill may not be 100%.

Speaker Change: Any is there any kind of quantification of that.

Speaker Change: The relative change versus prior that'd be helpful. Thank you.

Speaker Change: Okay, all right I'll, let Dana start and then I'll pick up the second part of the question. So as you've rightly pointed out the yogurt category is growing in Q2, it's up about 10% year to date, but its in categories that we don't compete in but we're seeing it in a way.

Speaker Change: Management line and greet protein line the premium lines the lines that we compete in we're actually losing Sharon So when I look at what Youre seeing in terms of broad based performance for North America retail overall, they're in our big businesses like cereal, improving soup, improving fruit snacks, improving I can't improve.

Speaker Change: So that's how we look at the total portfolio and consider the divestiture to come.

Speaker Change: And on your second question on the impact of the <unk>.

Speaker Change: <unk> comp.

Speaker Change: The partial reset is exactly the right read on that which is where we would have expected going into the year that we reset this to 100% with the guidance adjustment.

Speaker Change: We now expect that we'll pay out a little less than 100%, but above last year's rate. So that's what the the two points of drag I referenced it is.

Speaker Change: Okay, great. Thank you very much for both.

You bet.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Tom Palmer from Citi. Please go ahead. Your line is open.

Speaker Change: Hi, good morning, Thanks for the question.

Speaker Change: Past quarters, you've highlighted that your categories are growing 1% to 2%.

Speaker Change: And I think share losses was really the focus that needs to be mitigated you gave some helpful commentary on the share loss side.

Speaker Change: But I wonder what youre seeing for aggregate category growth is that holding into the extent that you anticipated are there things you can do especially in categories, where you are.

Speaker Change: I'm quite large share to kind of stimulate the category as a whole.

Speaker Change: Yes from a north American retail perspective, great question, what I would say is that the commentary. We've provided is still consistent we're seeing our categories normalize to pre pandemic levels. They are still in that 1% growth range and so the onus is on us to improve our competitiveness and make sure that we're bringing a total <unk>.

Speaker Change: <unk> offering that is more remarkable than the competition across our product packaging.

In store execution and communication.

Speaker Change: And John you want to comment on pet, maybe maybe foodservice and international a little bit.

Speaker Change: Yes, so on <unk> as I mentioned earlier, we're seeing the category improve and start looking a lot more like it did pre pandemic in terms of.

Speaker Change: Two months with <unk> growing in the category getting back to growth overall, which is terrific.

Speaker Change: Obviously, it's a huge role we play in a pretty small part of it.

Speaker Change: We really like the place that we play in we're seeing a lot of growth really end.

Speaker Change: Non restaurant types of outlets screams like schools as well as away from home and airports things like that so that's growing nicely for us were growing a lot of share and as Jeff mentioned, we've got a quite a large share position in schools and like how that stuff that's trying to wrestle with big frozen breads and there's also we've got a couple of key retailers that.

Speaker Change: Driving a lot of growth for us with double digits.

Speaker Change: Growth so the area that we play in the foodservice is probably different than what most folks are seeing in terms of trends that's quite advantaged, we like our share positions there.

Speaker Change: So obviously, a big world and we have parts of the world that we really like what we're seeing in Europe. Our team continues.

Speaker Change: Deliver the categories are starting to get back to pre pandemic levels similar to the U S and we're growing share.

Speaker Change: <unk> is our distributor markets as our fastest growing and most profitable part of our international business and that team is doing a great job driving mid single digit top line growth and grow share in most of our markets as well so again a bit of a mixed picture around the world. The channel we like the way we're performing ex some of the headwinds that we're seeing in China from Hagen Dazs shops standpoint.

Speaker Change: Alright, thanks for all that color.

Speaker Change: I also wanted to ask on expected margin trajectory for the pet segment.

Speaker Change: I know there were some timing benefit you called out in North America retail it sounded like the inventory benefit that you had this year were less so about this year, having an unusual sales level and more prior year's being maybe artificially low with inventory cuts. So.

Speaker Change: I guess with that if I look at kind of the margin base that we've seen in the past couple of quarters has been more favorable year on year is that something that can continue as we move through the back half of the year.

Speaker Change: Are there timing or invested considerations for pet in addition in North America.

Speaker Change: And maybe I'll take that one as well so I think two things are happening in patent both of them are really positive and the teams.

Great job on the margin side, one do you think about Blue Buffalo, It's only been a part of general Mills for six years, we're starting to fully integrate all of our integrate Oliver HTML tools, we're seeing outsized H M. M. As a result of that so again the team has done a really nice job, taking our knowhow and experience from each member creates a practice and in blue.

Speaker Change: See the full effects of that I think that will continue as we move towards the back half.

Speaker Change: Walmart is that we try and internalize quite a bit of volume over the last year and we started doing that in the back half of last year. So we start lapping that so I do believe that we'll continue to make good margin progress over time I don't think you should expect to see the kind of margin case, we've made more recently, but again, we're doing all the right things to keep tracking our margins as we go forward.

Speaker Change: Alright, thank you.

Speaker Change: Okay. Unfortunately.

Speaker Change: We're going to have to cut it off there I know, we didn't get to nearly as many people as we normally would like I think our conversations probably went winter deaths per questions. So sorry for everyone's still in the queue.

Speaker Change: Obviously, we will follow up later today to make sure that we get everyone's questions answered.

Speaker Change: So much for the good engagements and for the time. This morning happy holidays to everyone and we'll see you again in the new year.

Speaker Change #100: This will conclude today's conference call. Thank you for your participation you may now disconnect.

Speaker Change #100: Yeah.

Speaker Change #100:

Speaker Change #100:

Speaker Change #100:

Speaker Change #100:

Speaker Change #100: Yeah.