Greetings, and welcome to the General Mills Fiscal 2021 Q4 Earnings Call. As a reminder, this conference is being recorded on Wednesday, June 30, 2021.
I would now like to turn
the conference over to the VP of Investor Relations, Mr. Jeff Siemon. Please go ahead.
Thank you, Frank, and good morning. Thanks Thanks everyone for joining us today for our Q and A session on 4th quarter results. I hope you had time to review our press release, listen to our prepared remarks and view our presentation materials, which were made available this morning on
our Investor Relations website. Important to note that
in our Q and A session, We may make forward looking statements that are based on management's current views and assumptions, including facts and assumptions related to the potential impact of the COVID-nineteen pandemic on our results in fiscal 'twenty two. Please refer to this morning's press release for factors that could impact forward looking statements and for reconciliations of non GAAP information, which may be discussed on today's call. I'm here this morning with Jeff Harmening, our Chairman and CEO Kobi Bruce, our CFO and John Nudi, Group President of our North America Retail segment. Let's go ahead and get to the first question. Frank, can you get us started, please?
Thank
You will hear a 3 tone prompt to acknowledge your request. One moment please for the first question. Our first question comes from Ken Goldman with JPMorgan, please proceed.
Hey, good morning. Thank you. 2 from me. The first is can you give us a sense of what to expect for the cadence of the cost inflation this year? And then the second one is the Street, I think, is looking for maybe about 40 basis points in your gross margin in terms of the decline year on year in fiscal 'twenty So I know you're not guiding to this, but given what you've said about inflation, and pricing and nearly net pricing, is it kind of reasonable to Something in this range or is that far off from what you're looking for?
Thank you. Hey, Ken. This is Kofi. Thanks for the question. So as we look at the year, I think it's important for us to just give some perspective and I'll address it maybe through the lines of the flow of margin, we would expect our back half to deliver higher margins than the front half Particular pressure on Q1 where we would see the combination obviously of inflation and pricing that starts later in the quarter, the benefits of pricing flowing through later in the quarter.
So As for the flow of those that guidance on margins would reflect roughly Relatively balanced flow on our expectations for the full year for inflation. And then obviously with the pricing Really kicking in as we step into Q2. All right. Thank you. And then just the second question, is that 40 basis points for the year that the Street is looking for, is that far out of line with what you're thinking, Kofi?
Well, we're not going to give guidance at gross margin, but obviously our guidance on profit, on operating profit And sales would indicate something in the range of a modest decline in operating
Our next question comes from Andrew Lazar with Barclays.
Thanks for the question. Good morning, everybody.
Good morning, Andrew.
Jeff, I know you used the words dynamic and uncertain a bunch times in your prepared remarks. And even though the consumer side of things may be getting maybe a little bit more visible, obviously, the cost and comparison side of the equation still pretty challenging. So I guess my question is how much flexibility do you think you've left yourselves in the FY 'twenty two guidance in light of the industry challenges, also knowing how the timing of pricing and other actions tends to work to offset costs?
Yes, Andrew, I think your observation is a good one and we use dynamic and we use uncertain, I don't want to say volatile, so we can throw that one in too, right. And it is from a demand perspective, it still is volatile and even if mentally many consumers are getting beyond COVID, the demand environment is volatile, not only with respect to at home versus away from home But also what is the impact of pricing going to be and what does that mean for elasticity. So I would say the demand environment is still volatile and as is the cost environment. And so whether that's input costs on manufacturing or whether that's transportation or whether those are commodities, It is a pretty volatile environment. What I'm proud of is over the past year and we've been able to navigate that well and do what we said we're going to do.
In fact, each of the last 3 years we've done what we said we're going
to do
and now we still have to face this year. And but I feel good about our guidance. I don't think it is I I don't think it's so conservative and I don't think we're out over our skis. We're trying to tell you here's what we think we will do. And is it easy in this kind of environment?
No. But I feel good about our capabilities and how we're executing right now and we're very clear on our path forward. So all of those things give me confidence that we can do what we said we're going to do, but It's a tricky environment. I think that it will be.
Thanks for that. And then there was a survey done recently that we read about that one of the large CPG brokers and it showed how, guess manufacturers were more optimistic about sort of sales trends in the back half of this calendar year compared to retailer expectations. And I didn't know if you've encountered sort of this divide in expectations in your discussions with your key customers. And if you have, maybe why you think this gap exists with respect to the differential again in expectations around maybe sales and or stickiness between manufacturers and retailers?
Thank you.
Yes, Andrew, you know and this I want this to come off in the right way, but you thought I said just a second ago that it's volatile. I think this is Exhibit A, when you have a group of One group thinking one thing and another just shows that there is a level of uncertainty and volatility. That would be the first point. The second is that if you look at our guidance for the year, We said we'd be down modestly on sale minus 1% to minus 3%. I can tell you that We're locked up with our retail customers and we have good partnerships with them and we're pretty well aligned with What they think and so, but I can understand why there are differences because it is a volatile environment, it varies by category as well as geography.
So we're very All aligned with our customers, not only on the demand environment, but also the cost environment. They see the same cost pressures we do. And we've instituted pricing in the vast majority of our categories and markets throughout the world. And while no one wants to increase prices, We've had to do that because the cost environment is what it is and we have found them to be understanding because they're in the same kind of boat that we are.
Okay. Thanks so much.
Thank you.
Our next question comes from Robert Moskow with Credit Suisse, please proceed.
Hey, thanks. I was thinking about the terms that you're using, Jeff, to describe the environment as volatile, but I want to get a little tighter on it because I would say that the cost environment is very volatile and maybe the pricing as well. But your opening comments would indicate that demand has been fortuitously strong, it has stayed strong. So are you saying demand is volatile too or are you just saying it's uncertain? Because I would describe it as uncertain because you just don't know how their people will react in the fall when maybe they
go back to school and go back to offices.
Yes, I would Rob, I appreciate the distinction. I would say that what we have seen in the recent past is not very volatile. In fact, it's been pretty steady. And honestly, it's kind of playing out as we thought it would, which is our business was down in the last quarter versus where it was last year during the stock up. It's actually quite a bit higher than it was pre pandemic, as are our shares.
And we've been talking for quite some time that although in some corners people thought We kind of fall off a cliff when people started going back to the office and got a return to normal pre pandemic. We said we think actually some of these behaviors will be sticky and that's what I've seen. So it hasn't been volatile in the recent past. The question is what's going to happen for the remainder of the year As pricing kicks in, as we as kids go back to school, as we hit the fall, I think there'll be a volatile environment and we're calling it the best we can given our assumptions. But that you are correct.
It hasn't been volatile in the recent past, but as we look ahead 3 months 6 months, I think that'll be what we're going to be dealing with. Okay. And I would note during that period, Rob, we still expect at home food consumption to be above pre pandemic levels, Even if it's below slightly below a year ago.
Right. Okay. And this question might be more in the weeds, but The strategy and grow, I guess, division or organization that you're creating internally, is that just combining some corporate functions together like Corporate Insights and M and A together? Or are you expanding the role and taking some of the responsibilities of the business units like revenue growth management maybe and pulling it into this division? Like how is this how big of a change is this division you've developed?
Yes, it's a I would say it's a decent size change, but what we're not doing is taking operating responsibility out of the businesses. In fact, what we're doing is pushing operating responsibility for The near term and more closely aligned to the businesses, which is really important. So we are doing that. In terms of the strategy area itself, We are centralizing some of the capabilities because you don't want to do modeling for example on many You want to be able to do that in one central location, but then it's up to the businesses themselves to use that modeling and then to decide what's best for their businesses. So You want some centralized capabilities so you can develop scale and expertise, but then you want to use those models to be in the businesses who are So that's we're doing that.
The other thing we're doing I would say is that similar we've done with strategic revenue management over time where At one point in time, many years ago, it was something we did periodically was think about pricing and we turned into an always on kind of function. The same would be true of our strategy function. We're kind of beefing up our strategy function, as well as M and A as we look to the future and certainly what we need to do to hit our Sustainable top line growth targets is we need to keep competing effectively, but we also need to do more portfolio shaping. And so in that sense, We have an always on strategy group that is maybe different than what we have done in the recent past.
Okay. All right. Thank you.
Thanks.
Our next question comes from Laurent Grandet with Guggenheim. Please proceed.
Yes. Good morning, everyone. And maybe if I can come Backing on one of those questions. So when you say at home consumption would be more elevated than past pandemic, Postponed, Beni. I mean, I think that's probably what the assumption for everyone.
Now by how much, it's really a question. So Could you maybe help us understand your thinking process maybe by category how you see in those more elevated net assumption post pandemic and what is triggering this in your queue?
Yes, Laurent, I think for this call, it's probably not helpful for us to go category by category. I think if I can give you a case what's underlying the assumption as to why we think this is going to happen. In our human food business, and I'm going to separate Pet, Within our human food business, what I would say is that there are a couple of factors underlying our belief that we'll continue to see demand that's above pre pandemic levels. The first is that more people are going to work from home more often than go into the office every day. And we're fairly certain that that is here to stay.
So there will be a new normal and where people work. The second is that consumers, many millennials Have really gained cooking skills and baking skills and new found confidence in the kitchen and they can find that they can save money by doing it. And so While they we're not saying people won't want to still go out to eat, we believe that there's a younger generation that maybe not have done this before. Generation data would show this, especially in the U. S.
That we have a whole new group of consumers that have elevated demand. The third would be that our e commerce business Has grown rapidly over time. In fact, it's now 11% of our sales up from 5, 18 months ago. And while the continued growth may not be linear over the next period of time, Many people have found shopping at grocery stores become much easier than it was before and anytime you add convenience to someone's lives, it tends to stick. So for all of those reasons on our infant food business, believe even as people go out to restaurants more, even as kids start to go back to school, there will be some of the demand that is sticky for food at home.
The other thing I would say for pet is a little bit more straightforward and frankly, there are more pets than there were before. And that is certainly true here in the U. S, it's other parts of the world as well, but particularly in the U. S. And 85% of those new pets are in homes that already contained one pet.
And so these are people who are used to having pets. And so the amount of pet food that's going to be consumed over the next few years think it's going to be elevated in addition to the fact that the fastest growing part of pet continues to be the natural segment, which is where Blue Buffalo So we would anticipate that the category itself will be above what it has been the last couple of years And that natural will remain ahead of the category in terms of growth.
Thanks. And if I may, I got a second question. It's about plant based dairy. We have seen, I mean, the recently interest in plant based dairy from consumers and actually also from investors as well. So could you please update us where What's the plan with your Yoplait brand in the U.
S. And Canada as well as Agendas internationally? And potentially maybe update us about your cat? Yes, that's right as well. Thanks.
Hey, Laurent, it's John Nudi. Hope you're well. So the younger category in the U. S. Is really starting to accelerate.
So it was up 5% in April May, up 2 point And really what's driving that is the Simply Better Health segment, so that was up 31%. So that's products like ratio keto, which is one of our products, Q1 and triple 0. And we put plant based in there as well. So we're definitely seeing growth in that segment. In terms of the Yoplait, we launched a product several years ago that's continued to do quite well.
We're actually looking at launching a Yoplait plant based product in the coming year Well, so it's still relatively small in yogurt in the U. S, growing quickly. Really that's simply better health segment with the Dairy based products have ratio of keto or 2 good and 000 is what the bulk of the growth is. Since plant based remains an area of focus for us, I would tell you it's not the biggest segment and probably not with the bulk of the growth coming year.
Thanks. And internationally for Haagen Dazs, any plan there?
When it comes to plant based ice cream, I think it's just a very, very small part of the category. What I will say is our Haagen Dazs Business has been growing very, very nicely and continues to do well all over the world, particularly strong growth in China and in Europe this past year. And We've got some great innovation coming on Haagen Dazs. And so plant base is really small, but we are confident that we can continue to grow our Haagen Dazs business really well in key geographies and looking for a summer where more consumers are out and about.
Thank you.
Our next question comes from Jason English with Goldman Sachs. Please proceed. Good morning, Mr. English, you're kidding out. I don't know if you can reestablish the connection.
How about a switch headset, is this better? That's much better.
That's great. Thank you.
Awesome. So now that you've announced price increases, the vast majority of your categories and markets, can you give us some clarity on how much net price realization you back to realize in your down 1% to 3% full year organic sales outlook? This is Kobi. Appreciate the question. Let me give this a frame to think about this.
So as We gave guidance for inflation of about 7%. We would expect our holistic margin management to register about 4 percentage points of cost of goods sold. So that would offset a good portion of the inflation. And obviously in this environment, we would need some additional price realization. While we're not quantifying it, we would expect the combination of levers through Strategic revenue management both list pricing, price pack optimization, trade optimization, all of those things to yield us enough to cover our inflation expectations.
Okay. So take that remaining 3% of COGS and gross it up to revenue is probably a safe place to go right now.
I think I heard you say.
Switching gears, but still remaining kind of on the topic offsetting inflationary pressures. Your recent restructuring announcement, I thought you're going to
have a lot more meat on
the bone with it to give
us today on this, but there's not a lot. Can you give us more clarity around the initiatives, including the expected cost savings and how much you expect to reinvest? Well, I will give you a frame to think about this and let me sort of touch on what we're getting at. This is not Simply a cost savings exercise as Jeff kind of alluded to in some of his earlier answer. We are sort of aligning resources to growth Facing purposes, so there is in here an expectation that we will prioritize areas like digital and data and analytics, SRM strategy and M and A, as Jeff mentioned earlier, those things are all critical to sort of maintaining the growth engine.
Our expectation after this exercise is that our admin cost as a percent of net sales will be roughly in line with our fiscal 2021. So they will keep pace with the sales decline. That's helpful. Thank you. I'll pass it on.
Our next question comes from Brian Spillane with Bank of America. Please proceed.
Hey, good morning, everyone.
Hey, Brian. Good morning.
Hi. So My question is just around as we're working through our models and thinking about and trying to factor in inflation. Maybe Kofi, could you give us a little bit of some color on maybe which segments are going Feel more inflation than others and maybe just how we could think of how we should be thinking about the potential volatility of inflation Just within segments? And then I guess tied to that question is just as we're the revenue management Components covering inflation, is it more pronounced in some segments than others? Just trying to get a sense of how we should be looking at across segments or is it really generally the same across all of them?
No, I appreciate the question. And while I don't want to get Too specific at the segment level. What I will tell you is all of our segments are experiencing higher inflation. We are addressing in all of our segments with the mix of holistic margin management, in line with our historical levels and SRM, and the entirety of the SRM toolkit in all 5 of the segments.
Okay. And then maybe just to follow-up, as I know there's been a lot of talk about Pricing price increases as part of the way to combat inflation. We've heard that across our whole coverage universe. What do we expect on the backside of that, right? So as some of this inflation moderates hopefully, would the expectation be that this Pricing has stuck or would there be the potential that some of it would have to be dealt back as inflation moderates?
Just trying to understand just how unusual this environment is, how we should be thinking about the stickiness of those price increases if and when inflation rolls over?
What we'll probably usually we don't give forward looking views on pricing. And so I think that's probably the best To stick to that here, which is not to say your question is not a fair one. I just think for us to talk about future pricing is probably not something we should do too much. Other than to say, I think one of the keys to our success as we look ahead as it has been recently is our agility. And And we've proven ourselves pretty agile during that last year, including with recent pricing we've taken into the marketplace relatively quickly.
And I attribute that to the fact we have an always on capability. And so in a volatile market, trying to be certain is not a good place to be. What you need to be is thoughtful and you need to be fast. To be, what you need to be is thoughtful and you need to be fast. And I think we're both of those things and we're going to try to continue to do both of those things.
So Yuri is a good question. We're not going to answer directly because we usually don't talk about pricing, but I do believe that the key challenge in the volatile environment is to be clear and to be certainly endeavor to do that and we feel good about our ability to do that.
Okay, great. Thank you.
Our next question comes from David Palmer with Evercore ISI. Please proceed.
Thanks. Andrew mentioned that Mega Brokers survey and in that survey in the Q and A, they cited Consumer and category insights that the food companies have is a reason why the food companies were more bullish about demand than the retailer customers were. In other words, you had better level of understanding about where things have been more sticky and for good reason. What is your latest thinking about categories and brands that you think most benefited in a semi permanent way from COVID and perhaps because of consumers embracing new habits? And I have a quick follow-up.
Hey, David, it's John Udi.
As we look at our business,
we think our Meals and Baking businesses particularly benefited during the pandemic and it's all out in the sales numbers. As we really dig into our consumer insights, consumers changed their habits, obviously baked a lot more. We believe that some of that will Sticky, it's more than just food. It's really bringing joy to the family and bringing the family together, which is terrific. And then Jeff mentioned Well, audio is learning to cook and that's something that's going to stick as well.
So all of our research would say, certainly we're not going Yes, stay
in the elevated levels that we've seen in
the pandemic. But consumers will eat at home more than they did prior to the pandemic and they'll use these new to use our products more than prior to pandemic as well. So we're spending a lot
of time. We've got a lot
of new insights, really digital insights, really leveraging first We have with box office for education and pelsbury.com, bettycracker.com, that's really giving us some rich views into a consumer's day and their journey. And we think, Yes, that there's going to be some things to stick for the future.
One thanks for that answer. One category that I I'm really confused by is cereal. It's an at home category, but it's perhaps part that lives in that world of convenience, that compressed morning day part. In other words, cereal has really lost a lot of share of at home breakfast during COVID, if that's a way to think about it, At home breakfast getting the benefit of people being at home, but perhaps cereal not being as much of a part of that cut in other words, Cereal is up 1% over the last 2 years, not really that impressive. How are you thinking about cereal going forward?
Do you think it actually Has a bit of a rebrand as people get back to convenience or is this sort of just the new normal that or the existing normal, one of the few categories that really didn't get affected by COVID at all and it's just sort of low growth. Any thoughts there?
Yes, absolutely, David. So for sure,
I think as consumers were home, they had more time to prepare breakfast and you saw things like eggs Pancakes grow more quickly than cereal. We do believe cereal will continue to grow into the future. And again, as we look over that 2 year period, The category of Dincarelli grew even more aggressively than that. So again, we increased 60 basis points of share in fiscal 2021. That's 31 consecutive months Sure, growth, 10 consecutive quarters, 4 consecutive years.
And we believe that cereal is important. Today, it will be important in the future. I achieved obviously from this past this coming year. At the same time, we know that our marketing continues to Things like Cheerios and our cholesterol messaging, our KidFun messaging around Simmental's Crunch and Lucky Charms. We believe the category will continue to grow.
We hope Again, it's probably not going to be high single digits, but we think a little bit of growth in that category is in our future. And I think as things get back to normal to your point, a more normal, Consumers are back to school and back to the office. We'll see some of the convenience CIRTA provides providing them a tailwind of the category.
That's helpful. Thanks very much.
Thank you.
Our next question comes from Faiza Alwy with Deutsche Bank. Please proceed.
Yes. Hi. Thank you. Good morning. I wanted to first Just ask about your investments.
So I know you've increased media And you've also sent to build critical capabilities. And I'm curious how you're thinking about investments as we look at 'twenty two, essentially I'm asking like are you expecting media spending to continue to increase at that double Digit CAGR that we've seen over the last 2 years, and then where or should we stay at the level that we're at? And then how much more investment in capabilities do you need from here on out?
So let me take that one a little bit and then Kofi, if there's any background you want to give as well. We're not going to give specific guidance on our media Spending for next year, I would say when we talked at CAGNY before, we had talked about as we look into the future, we'd have media grow roughly in line with sales And we'll see what happens this coming year, but that's what we said we would do over time. In terms of investments, we're really pleased with what we've seen out of data and analytics capabilities and John Nudi touched on Box Tops a little while ago, we digitized that. In our opening remarks, we talked about some of the things we're doing You'll hear more a lot more about that this coming year. We've tied together an omni channel approach in China with our shops and our retail, which is yielding some good insights, Great results.
We like what we're seeing there. And even on the cost side, as we look at our global sourcing efforts, we've tied data and analytics into that to help us Our costing in and so you can see you'll see us continue to invest in our data and analytics capabilities because we really like what we have seen so far. And Some of that will be foundational and some of that will be on the analytics themselves to drive growth and other parts will be on analytics to help us save money. But No, I think that'll be a big area of investment as well our strategy and M and A area as we again look to further our accelerate strategy.
Okay, great. Thank you. And then just a second question on Blue Buffalo and the Pet segment generally. I know you talked about Growth in that segment. I'm curious, I mean, it sounds like category growth is going to be strong.
Are there any Specific plans beyond the connected commerce initiative that you talked about, is there any innovation that we Look out for. And I know at CAGNY, you talked about potentially taking Blue Buffalo to international Yes. So I wonder if there's any plans to do that this year?
So, first of all, we're really pleased with our Blue performance, including the 4th quarter where our retail sales grew in the mid teens. And so Even if it doesn't look like that on the P and L, you have to remember we're lapping 4 months from last year and the stock up from the year before. And so We're really pleased with Blue Buffalo. We see strong growth ahead. That would be my opening comment.
In terms of how we're going to grow, this digital capability will certainly be a big piece of that, So with innovation, what we really like what we've seen now this Tasteful launch and that we're literally selling everything we can make from this new Tasteful We under indexed in cat and the margins in that segment are good and we're highly confident Blue Buffalo can play a role in that. We recently launched some innovation into snacking and the Bone launch and we're excited about what that can be. In addition then to clearly bringing online This Tyson acquisition, which we hope to close shortly. And so we're going to grow Blue Buffalo organically, continue to do that. We're bullish about our opportunity to do that, As well as effectively bring on this new part of the portfolio, this Tyson Treat business where we under index and Tyson has done a nice job with that business, but we think Combining what we can do with our capabilities in that, we think there's good growth in that as well.
Great. Thank you so
much. Thank you.
Our next question comes from Michael Lavery with Piper Sandler, please proceed.
Good morning. Thank you.
Good morning. Can you give
us a sense I know you've Called out the uncertainty and I think that's all very clear. But can you give a sense around the elasticity, what kind of assumptions you're making for your planning process.
Sure. So as we built our plans this One of the benefits of our SRM capability is we actually have very detailed demand elasticity models. I would say that and also give a nod to the uncertainty of this environment and the fact that inflation in the market is broad spread Cross industry, it's global. And so those factors, all are potentially a setup for demand elasticity models that are by design backward looking to be perhaps overcall the elasticity of pricing in this environment. So I'd make that note because this is an environment where that becomes a relevant factor as we talk about demand elasticity.
And so does that net you out at greater elasticities than historical levels? Or do you expect to be pretty consistent with what you've seen before? What's that kind of net out to?
Yes. Well, our models are built on sort of Historical expectations, I think what I am also giving acknowledgment to is that the environment Is reason for us to be cautious about being certain on the call Demand elasticity, and that's certainly an environment where, I think demand elasticity models could be wrong, just because of the breadth of inflation in the market.
Okay, that's helpful. And just a follow-up on the C Store and Foodservice segment. You've called out how you expect the lift to volumes or sales from more demand or reopening. But Can you touch on the impact for pricing and specifically pass through pricing? How much of a factor do you expect that to be for The sales lift and should we look to be modeling an acceleration there, specifically on the pricing side because pass through costs?
So Michael, I would say that what we see with our Cost going up is very broad. I mean, it's brought across geographies, it's brought across product segments, it's brought across channels. That would include what we see in C and F. So our costs for our products and our convenience and foodservice segment are going up as well. So we would anticipate pricing in our Foodservice segment, because we see our costs going up.
And so in this environment, there's obviously not only inflation in food, but kind of everywhere. And so There's no different in CNF and so we would anticipate price going up. In fact, we've already increased prices in the foodservice segment because our Going up and so but what I will also say is that we're very confident in our convenience and foodservice business to return to growth this year As schools reopen and as people get out a little bit more, we're well positioned to capture growth and returning to that market.
Okay, great. Thanks so much.
Thanks.
Our next question comes from Chris Growe with Stifel. Please proceed.
Hi, good morning.
Good morning.
Hi, just had a couple of questions for you. When you gave your guidance for the year, like your constant currency EPS growth, I am just curious, it does not incorporate the acquisitions or divestitures. And I don't know if you have any kind of quick words on those. We've modeled or have estimated kind of 1% to 2% dilution for the yogurt business and then slight accretion for the pet treats business. Would that be in the realm of expectations?
Do you have any thoughts on that.
So Chris, this is Kobi. So we don't have new information that We changed the perspective we've already given. Obviously, we do expect the Pet Treats business to close shortly. And obviously, Until that point, we can't get too much more specific, but it is probably important to give some parameters around what's slightly accretive means. I think it's important to note, we will see a portion of earnings contribution for the year.
We will also see some of the purchase accounting related amortization, including inventory step up. And Those factors will lead us to expectations probably in the range of a $0.01 to $0.02 accretive for the year on the Pet Treats business.
Any comments, no changes then on your expectations for yogurt then when that closes, correct?
No. And that's further out and we'll give some more color as we get closer.
Okay. And I had just one other question if I could on the international segments. Asia, Latin America hit about a 5% operating margin for the year, Europe, Australia about 7.5%. Are these sustainable margins, could they grow from here? There was some pretty significant moves as we move through the year in terms of improvements and profitability.
I just want to get a sense how much of that was the benefit of COVID in some cases and the pandemic and how much of it is potential to kind of stick, if you will, based on changes you're making in those businesses?
Chris, that's a great question. I think we've been very pleased with the progress We've made in margins on both of those businesses in this environment. Obviously, some of that is related to the leverage benefits of Operating in elevated demand, but we've also been making and continue to make business model changes in both businesses that are driving margin improvements and actually we'll continue to make them even contemplated as part of the restructuring actions that we've already announced. So I would expect that we would hold on to portion these margin gains and continue to drive margin improvement and get to a much more competitive place on both of these businesses.
Okay. Thanks so much for your time.
You bet. Thanks, Chris. Thank you. I think we have time for one more question, Frank.
Our next question comes from Ken Azaslow with Bank of Montreal. Please proceed.
Hey, good morning, everyone.
I have two questions. One is, you guys have
been really early on the data analytics side. What are the specific new capabilities that you need? I mean, I'm just a little surprised that you're not there, I guess, is kind of what I think is guys were very, very early on that. So what is the new learnings that you are looking to explore and do more with? And what will be the returns on that?
And then I have a second question.
So we've been working on our data analyst capability for a couple of years now. I would note that the first thing we had was build a foundation and I won't get into details of that in this answer, but we had to build a foundation and then now we're building on top of that with some specific capabilities Around growth capabilities like strategic revenue management, growth capabilities like addressing consumers through things like box Jason and what we're doing in the pet personalization space as well as what we're doing omni channel in China. And then on the cost side, what we're doing with procurement, but there's a lot more there are a lot more things that we can do using data and analytics to drive our business. So we'll continue to invest in order to drive those parts of the business. So It may seem like a while, but we had to build a foundation at first, which is the right way to do it and now we're building on top of that with specific capabilities.
Great. My second question is, you put out the 3 year growth that you had, 2% sales, 2% operating Income in 5% EPS. When you think about the next 3 years beyond that, does that seem like
the right mix? Or do you
think the changes that you're having should Accelerate that by a certain amount of basis points? And how do you think about the next 3 years? And again, not next year, but just thinking about in 3 year clip, I think that's a good way of thinking about it and how you're positioning it. So I was just curious to see how you think about relative to the last 3 years and I'll leave it there and I appreciate it.
Ken, I'm going to make it through this year. On the what I will say though on the but I look, I do respect the question. As we look ahead, our goal is to get back to sustainable growth and to get to 2% to 3% growth. And I mean, I'll probably restate something I've said already That requires us to do 2 things. 1 is compete effectively and I think we've shown over the past couple of years we've really improved our game there to compete.
We're competing effectively pretty much everywhere around the world. So we'll continue to need to do that to get to 2% to 3% growth. And we'll continue to have to reshape our portfolio and you see that through the divestiture Your Yoplait and at least the proposed divestiture of Yoplait in Europe and you see that with the upcoming acquisition of Pluto. And so we look to continue to reshape our portfolio as well as compete effectively to get to that 2% to 3% growth rate. And so that'll be our plan after And we have got a group that's focused on that and we got another group that's focused on making sure we can deliver what we said we're going to do this coming 12 months.
Great. And these things that all these things that you're putting in place seems like it should fuel this growth. But I appreciate the answer and I look forward to seeing what you guys can Thank you.
All right.
Thank you.
Okay. I think that gets us to the end of our time here this morning. So you everyone for your time and attention and appreciate the good questions. Please reach out over the course of the day if you have any follow ups and look forward to talking to you again soon.