General Mills (NYSE:GIS) is back to growing again. Just one quarter after announcing a sales slump, compared to a pantry-stocking period a year ago, the cereal and snack-food giant said that revenue is now rising.

In an investor presentation this week, the company described a challenging operating environment, with supply bottlenecks and rising prices. But CEO Jeff Harmening and his team see faster growth and accelerating profit gains overall, thanks to fundamental changes in demand and in General Mills' portfolio.

A young child pours milk into an overflowing bowl of cereal.

Image source: Getty Images.

Let's look at the highlights from that shareholder report.

1. Winning in a tough environment

A chart showing rising inflation.

Image source: General Mills.

General Mills reported just a 2% organic sales uptick after adjusting for currency exchange-rate shifts. But the bigger picture is brighter than that one metric suggests.

Global organic revenue is rising at a 6% annual pace over the past two years, thanks to a mix of rising prices and increased volumes. The company held or extended its market share in most of its core categories, too, including cereal and pet food.

These wins came despite some historic inflation and manufacturing challenges brought on by an understaffed supply chain. "I'm proud of the way our team is performing in a dynamic and challenging operating environment," Harmening said.

2. The brighter profit picture

A chart showing profit margin chances over the past two years.

Image source: General Mills.

Gross profitability declined, thanks mainly to soaring input costs. General Mills offset that slump with cost cuts, though, so that adjusted operating margin is still higher today (at 18% of sales) than it was before the pandemic struck (17% of sales).

Investors can also see that success by following profits on a two-year track. Earnings are up 9% on that basis, compared to General Mills' 6% sales growth in the period.

The pet-food business has been a big contributor here. Consumers are increasingly reaching for premium dog food and treats, helping the pet segment notch a 20% annual profit increase since 2019.

3. Portfolio changes ahead

A slide depicting portfolio brand changes.

Image source: General Mills.

General Mills isn't done tinkering with its portfolio, having just struck a deal to sell its European Yoplait business, even as it added several new brands to its pet-food category.

These moves are contributing to a brighter outlook for the fiscal year that just began. Sales should now barely decline compared to 2020's surge, executives said. Profits will be at the high end of their previous forecast, too.

The updates add weight to management's claim that there's a new normal in the consumer packaged-foods industry, with consumers prioritizing cooking and eating around the home. At the same time, General Mills is positioning its portfolio to capitalize on the niches with the most attractive earnings profiles, like pet food.

As a result, investors might want to take a closer look at this stock, which has sat out of the stock market rally in 2021. General Mills entered the pandemic period with weak operating and financial trends. However, it appears to be on a faster, more profitable growth path, which should reward patient shareholders over the long term.

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