General Mills' full-year profit forecast on Wednesday came in largely below analysts' estimates as the US packaged food maker battles with slow demand for its ready-to-eat cereals and meal kits due to higher prices.
Shares of the Cheerios cereal maker fell 4% in premarket trading after General Mills reported a 6 point fall in sales volumes in the fourth quarter.
Price hikes to offset inflation in labour, raw materials and transportation has aided top-line growth at US packaged food makers.
But volumes have fallen in recent quarters, signalling that inflation-hit customers were pushing back against price increases.
Net sales growth across North America retail - General Mills' largest segment comprising Betty Crocker and Pillsbury brands, fell 8 points in the reported quarter amid sticky inflation and headwind from a retailer inventory cut.
Increasing caution on part of consumers also impacted their at-home versus away-from-home food choices, and the brands they choose, General Mills said.
'Main Source Of Ongoing Inflation'
The company flagged labour as the 'main source of ongoing inflation' and said it expects inflation to temper slightly in fiscal 2024.
General Mills forecast fiscal 2024 organic net sales to rise 3% to 4%, while it reported growth of 5% in fiscal 2023.
It expects adjusted per-share profit growth for fiscal 2024 to range between 4% and 6%. Analysts polled by Refinitiv were expecting a 5.9% rise to $4.49 per share.