General Mills recently released its annual report, and guess what? It had a great year.

With so many companies releasing disastrous results due to COVID-19, it was refreshing to read a financial report that wasn’t full of red ink.

General Mills has been manufacturing packaged foods since 1928, so the company’s seen its fair share of crises.  General Mills made it through the Great Depression, World War II, and the stagflation of the 1970’s.

But this crisis actually helped the company.

With restaurants forcibly closed, consumers shifted toward meals that could be prepared at home.  People ate so much cereal for breakfast that General Mills couldn’t keep up with demand.  Its forty-seven production plants were unable to fulfill orders as consumers stockpiled food not only for themselves but for their pets.  Sales surged 18% for General Mills’s pet food segment, and by 8% for the North America retail segment.

Many of these products were sold to Walmart, which never closed during the pandemic.  Walmart is General Mills’s largest customer and was responsible for 21% of its $17.6 billion in sales in fiscal year 2020.

And people who thought General Mills’s higher sales might have been offset by higher costs were way off base.  The company’s operating margin increased from 14.9% to 16.8%.  It was truly a banner year for General Mills and its 35,000 employees, who are getting plenty of overtime at the production plants.

With free cash flow increasing by nearly 50%, General Mills used its good fortune to pay down $1 billion of debt.  But the company still owes $13 billion to creditors, so it had better hope people keep eating cereal after the pandemic is over.

General Mills’ 10-K