General Mills shares sink 5% after issuing profit warning, Kraft Heinz bid for Unilever

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General Mills came under pressure in pre-market trading after the company behind Yoplait yoghurt said its full-year profits may rise less than it had previously forecast and after Kraft Heinz said it approached Unilever about a potential tie-up.

The group said that it expects its fiscal 2017 adjusted earnings per share to increase by 5 – 7 per cent, down from a previous guidance of a rise of 6 – 8 per cent. Organic net sales over the period are now expected to decline by 4 per cent, from a previous range of 3 – 4 per cent.

General Mills said that the less appetising outlook was “driven largely by recent sales performance on US yoghurt and soup.”

The profit warning came just as Kraft Heinz said it had made a £112bn approach for Unilever that was rejected. A merger between the two would create a food product heavyweight that would compete with General Mills.

Talks of the deal also lessen the odds that Kraft Heinz will acquire General Mills, said Christopher Growe, an analyst with Stifel Nicolaus.

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