If there's a growth slowdown coming for General Mills (NYSE:GIS), it won't strike for at least another quarter. That was the key takeaway from the snack and cereal giant's recent earnings report that paired strong revenue gains with increased profitability.

In a conference call with Wall Street analysts last week, the owner of hit brands like Cheerios and Pillsbury predicted that elevated demand related to COVID-19 will support higher sales for the business through at least the end of the next quarter. But General Mills warned about a likely drop occurring in the next quarter as the company goes up against a prior-year period that saw spiking sales at the start of the pandemic.

Still, management is bullish about the outlook, both for earnings and for broader global growth trends. Let's take a look at some highlights.

A woman eating a cereal bar.

Image source: Getty Images.

1. Inside that growth number

Executives provided context for the 7% organic sales growth figure they reported, which marked just a modest slowdown from the 10% increase in the previous quarter. Sales gains were almost evenly balanced between rising volumes and higher prices, but some parts of the portfolio performed much better than others.

Chart breaking down organic sales growth.

Image source: General Mills' investor presentation.

The U.S. segment was a standout performer. General Mills gained market share in almost all of its category niches on robust sales in its snack and meal products, yogurts and cereals, and baking ingredients. The pet food business chipped in huge growth, too, as the Blue Buffalo brand continued rolling out to more retailing locations.

General Mills' on-the-go segment shrank, falling 14%, but the company continues to see a net benefit from reduced consumer eating in places like restaurants, cafeterias, schools, and convenience stores.

2. Profits trends are improving

General Mills' profit margins are rising, rather than falling as management had warned in late September. The biggest factors supporting that bounce are innovative product launches, rising prices, and reduced manufacturing expenses. These issues combined to push adjusted operating margin up to 18.4% of sales from 18.3% a year ago.

CEO Jeff Harmening and his team see further gains ahead. Bottom-line profitability for fiscal 2021 is "now expected to be in line or better" than last year, executives said in an investor presentation.

GIS Operating Margin (Quarterly) Chart

GIS Operating Margin (Quarterly) data by YCharts

3. Hard landing

Management issued a bullish short-term sales outlook, saying they expect fiscal third-quarter growth to roughly match the 7% rate investors saw in the second. But year-over-year comparisons get much harder from there.

GIS Operating Revenue (Quarterly YoY Growth) Chart

GIS Operating Revenue (Quarterly YoY Growth) data by YCharts. YoY = year-over-year.

General Mills' fiscal fourth quarter of 2020 captured the beginning of the COVID-19 pandemic, and the 16% organic sales spike from that period will set an extremely high bar. As a result, investors should brace for modest revenue declines following the current quarter.

The good news is that the drop will still reflect higher sales than General Mills was notching before COVID-19. Management is expecting that favorable situation to last while eating-out demand remains depressed by social distancing efforts.

Between now and then, General Mills will be reinvesting in the business, cutting costs, and delivering innovative snack and meal solutions to its biggest platform of consumers to date. Even modest successes in those areas would lay the groundwork for significantly faster growth ahead than the flat results the company was notching just before the pandemic struck.

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