Forward Looking Statement

Transcription

1 Forward Looking Statement This presentation contains, or incorporates by reference, forward looking statements with projections concerning, among other things, the Company s global growth and efficiency program (Project K), the integration of acquired businesses, the Company s strategy, zero based budgeting, and the Company s sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, charges, rates of return, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, workforce reductions, savings, and competitive pressures. Forward looking statements include predictions of future results or activities and may contain the words expects, believes, should, will, anticipates, projects, estimates, implies, can, or words or phrases of similar meaning. The Company s actual results or activities may differ materially from these predictions. The Company s future results could also be affected by a variety of factors, including the ability to implement Project K as planned, whether the expected amount of costs associated with Project K will differ from forecasts, whether the Company will be able to realize the anticipated benefits from Project K in the amounts and times expected, the ability to realize the anticipated benefits and synergies from the acquisitions in the amounts and at the times expected, the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices; labor costs; disruptions or inefficiencies in supply chain; the availability of and interest rates on short term and long term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items. Forward looking statements speak only as of the date they were made, and the Company undertakes no obligation to update them publicly. Non GAAP Financial Measures. This presentation includes non GAAP financial measures. Please refer to the Appendices for a reconciliation of these non GAAP financial measures to the most directly comparable GAAP financial measures. Management believes that the use of such non GAAP measures assists investors in understanding the underlying operating performance of the company and its segments. Strategy 2 1

2 Agenda Strategy and Overview Financial Overview John Bryant, CEO Ron Dissinger, CFO North America U.S. Morning Foods U.S. Snacks U.S. Frozen Foods U.S. Specialty Channels Kashi Europe Asia Pacific Latin America Paul Norman, Kellogg North America Craig Bahner, U.S. Morning Foods Deanie Elsner, U.S. Snacks Andrew Loucks, U.S. Frozen Foods Wendy Davidson, U.S. Specialty Channels David Denholm, CEO, Kashi Company Chris Hood, Kellogg Europe Amit Banati, Asia Pacific Maria Fernanda Mejia, Kellogg Latin America Break Lunch Summary John Bryant, CEO Strategy 3 2

3 Committed to Profitable Growth 1. Transformational Changes 2. Talented Management Team 3. Strategy for Growth 4. Earnings Visibility Strategy 5 Transformation U.S. Natural & Frozen North America Frozen & Specialty Channels North America Retail Cereal U.S. Convenience International Convenience U.S. Cereal 2000 Net Sales $6 billion North America Retail Snacks 2014 Net Sales $14.6 billion International Cereal International Snacks International Cereal Strategy 6 3

4 Transformation Acquired Pringles Entered biscuits, cookies, crackers with Keebler acquisition China joint venture Tolaram Africa joint venture, investment in Multipro Acquired MASS Food Group Acquired United Bakers Group in Russia Acquired Bisco Misr Strategy 7 Transformation Management Team John Bryant Chairman of the Board & Chief Executive Officer, Kellogg Company Ron Dissinger Senior Vice Kellogg Company Chief Financial Officer Amit Banati Asia Pacific Chris Hood Europe Maria Fernanda Mejia Latin America Paul Norman North America Craig Bahner U.S. Morning Foods Wendy Davidson U.S. Specialty Channels David Denholm Chief Executive Officer, Kashi Deanie Elsner U.S. Snacks Andrew Loucks U.S. Frozen Foods Carol Stewart Canada Strategy 8 4

5 Change Creates Significant Opportunity Millennials The Next Billion Consumers in Emerging Markets Health, Wellness, & Transparency Food Anytime, Anywhere Blended Retail Reality New Science of Marketing Taste Is King Strategy 9 The New Science of Marketing Investment in Brand Building Advertising, % of Net Sales (a) Kellogg Digital Media (a) Total Brand Building 31% 8% 4% (b) (a) FY 2014 As a percent of media spending, Kellogg North America Strategy 10 5

6 Health, Wellness, and Transparency Investment in Innovation and Renovation Multi year investment program: granolas, mueslis, packaging, and more Built global category teams and regional teams as well Invested in the new Kashi business Largest renovation plan in the company s history Strategy 11 Kellogg Company Global Growth Strategy Strategy 12 6

7 Strategy 2020 Vision Win in Breakfast Developed Cereal Emerging Markets Natural & Organic Consumption Opportunities Global Snacking Powerhouse Salty Wholesome Regional Opportunities Double Our Emerging Market Engine Asia/Africa Arabia/Russia Latin America Win Where the Shopper Shops Developed market sales capabilities High frequency stores E commerce Strategy 13 Win in Breakfast Developed Cereal Investing in our food Brands that matter Shopping experiences that inspire Results improving Strategy 14 7

8 Win in Breakfast Natural and Organic #1 IN NATURAL &ORGANIC by a wide margin KEY ENTRY POINT into Natural & Organic LEADING household penetration NATURAL & ORGANIC granola is fastest growing cereal category BEAR NAKED #1 share Retailers ADDING SPACE 29% category share 26% enter through Kashi/BN 9% HH penetration 12% Y O Y growth 15% share 12% growth in dedicated sets Source: Nielsen Homescan Panel, TUS, 52 week ending 10/3/15; Nielsen Scantrack, xaoc, 52 week ending 10/17/15 Strategy 15 Win in Breakfast Consumption Opportunities +30% of cereal is currently consumed outside of breakfast in the U.S. (a) One third of out of breakfast consumption happens at / after dinner (b) More than half of consumers believe that cereals are a great snack (c) (a) Kellogg Demand Landscape, 2015; TCG analysis, 2015 (b) NPD Group, Consumption Study, 2014; (c) TCG Analysis, 2015 Strategy 16 8

9 Win in Breakfast U.S. Cereal Consumption Kellogg Cold Cereal Dollar Change Trends (a) YTD Last 4 Weeks 0.5% 0.1% 3.8% 3.1% 2.2% 1.1% 7.8% 6.7% Total Kellogg's Kellogg's (less Kashi) (a) Nielsen Scantrack, xaoc, full years, 2015 through week ending 10/3/15 Strategy 17 Strategy 2020 Vision Win in Breakfast Developed Cereal Emerging markets Natural & Organic Consumption Opportunities Global Snacking Powerhouse Salty Wholesome Regional Opportunities Double Our Emerging Market Engine Asia/Africa Arabia/Russia Latin America Win Where the Shopper Shops Developed market sales capabilities High frequency stores E commerce Strategy 18 9

10 Global Snacks Powerhouse Pringles High single digit net sales (a) growth since the acquisition Expanding the network Expansion into new regions Improved economics (a) Currency neutral comparable net sales Strategy 19 Global Snacks Powerhouse Wholesome Snacks Global business Significant investment in the food everywhere Huge opportunity for growth Strategy 20 10

11 Global Snacks Powerhouse Regional Opportunities 19 Consecutive Years of Growth E Strategy 21 Strategy 2020 Vision Win in Breakfast Developed Cereal Emerging Markets Natural & Organic Consumption Opportunities Global Snacking Powerhouse Salty Wholesome Regional Opportunities Double Our Emerging Market Engine Asia/Africa Arabia/Russia Latin America Win Where the Shopper Shops Developed market sales capabilities High frequency stores E commerce Strategy 22 11

12 Double Our Emerging Market Business Accelerate the Latin American business Double the Asian business Double the Arabian business Transform the African business Strategy 23 Strategy 2020 Vision Win in Breakfast Developed Cereal Emerging Markets Natural & Organic Consumption Opportunities Global Snacking Powerhouse Salty Wholesome Regional Opportunities Double Our Emerging Market Engine Asia/Africa Arabia/Russia Latin America Win Where the Shopper Shops Developed market sales capabilities High frequency stores E commerce Strategy 24 12

13 Win Where the Shopper Shops Sales Capabilities in Developed Markets Invested in warehouse sales capabilities Invested in the DSD network Driving growth in growth channels Strategy 25 Win Where the Shopper Shops High Frequency Stores +30m +38% Stores Worldwide of Global Retail Sales +50% of Breakfasts Sold in EM are in HFS +70% of Snacks Sold in EMs are in HFS (a) High Frequency Stores (HFS) refers to a group of retail environments that share similar shopper missions, are visited multiple times a day/week, with a low outlay of cash at each visit. Data from Euromonitor Strategy 26 13

14 Win Where the Shopper Shops E Commerce Digital shelf exposure now influences 35% of U.S. in store sales Online shoppers are brand loyal and spending is high E Commerce is expected to account for half of grocery value growth over the next five years (a) Online purchases are +25% incremental for Kellogg s Kellogg s is one of the top five FMCG brands bought online in the highly developed U.K. market (a) Kantar Worldpanel report 2015; other data Kellogg estimates Strategy 27 Kellogg Company Strategy Goals Deliver top line growth Drive efficiency and savings Reinvest in the business Execute financial model and drive strong shareholder returns Strategy 28 14

15 Long Term Guidance Comparable Net Sales (a) Comparable Operating Profit (a) +1% to 3% +4% to 6% Currency Neutral Comparable EPS (b) +7% to 9% (a) Excludes the impact of acquisitions, dispositions, currency translation, differences in the number of shipping days, mark to market adjustments, integration costs, costs related to Project K, and other items affecting comparability. (b) Excludes the impact of currency translation, differences in the number of shipping days, mark to market adjustments, integration costs, costs related to Project K, and other items impacting comparability. Strategy 29 Confidence in 2016 and Beyond 1. Transformational Changes 2. Talented Management Team 3. Strategy for Growth 4. Earnings Visibility, and Strategy 30 15

16 Confidence in 2016 and Beyond Committed to Profitable Growth Strategy 31 16