Kellogg Company
November 20, 2015
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.
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Kellogg Company
November 20, 2015
Agenda Strategy and Overview Financial Overview
John Bryant, CEO Ron Dissinger, CFO
North America U.S. Morning Foods
Paul Norman, President, Kellogg North America Craig Bahner, President, U.S. Morning Foods
U.S. Snacks U.S. Frozen Foods U.S. Specialty Channels Kashi
Deanie Elsner, President, U.S. Snacks Andrew Loucks, President, U.S. Frozen Foods Wendy Davidson, President, U.S. Specialty Channels David Denholm, CEO, Kashi Company
Europe Asia Pacific Latin America
Chris Hood, President, Kellogg Europe Amit Banati, President, Asia Pacific Maria Fernanda Mejia, President, Kellogg Latin America
Summary
John Bryant, CEO
Break
Lunch
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Kellogg Company
November 20, 2015
Committed to Profitable Growth
1. Transformational Changes 2. Talented Management Team 3. Strategy for Growth 4. Earnings Visibility Kellogg Company | November 20, 2015
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Transformation North America Frozen & Specialty Channels
North America Retail Cereal
U.S. Natural & Frozen U.S. Convenience
U.S. Cereal
North America Retail Snacks
2000 Net Sales ≈$6 billion
International Convenience
2014 Net Sales ≈$14.6 billion
International Cereal
International Cereal International Snacks Kellogg Company | November 20, 2015
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Kellogg Company
November 20, 2015
Transformation Acquired Pringles Acquired MASS Food Group
China joint venture
Entered biscuits, cookies, crackers with Keebler acquisition
2000
2012
2013
Tolaram Africa joint venture, investment in Multipro
2014
2015
Acquired United Bakers Group in Russia Acquired Bisco Misr
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Transformation Management Team
John Bryant Chairman of the Board & Chief Executive Officer, Kellogg Company
Ron Dissinger Senior Vice President, Kellogg Company Chief Financial Officer
Amit Banati President, Asia Pacific
Chris Hood President, Europe
Maria Fernanda Mejia President, Latin America
Paul Norman President, North America
Craig Bahner President, U.S. Morning Foods
Wendy Davidson President, U.S. Specialty Channels
David Denholm Chief Executive Officer, Kashi
Deanie Elsner President, U.S. Snacks
Andrew Loucks President, U.S. Frozen Foods
Carol Stewart President, Canada
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Kellogg Company
November 20, 2015
Change Creates Significant Opportunity Millennials
Health, Wellness, & Transparency
The Next Billion Consumers in Emerging Markets
Blended Retail Reality
Food Anytime, Anywhere
New Science of Marketing
Taste Is King
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The New Science of Marketing Investment in Brand Building Advertising, % of Net Sales(a)
Kellogg – Digital Media(a) 31%
Total Brand Building
8%
4%
2006
2014 (a) FY 2014 (b) As a percent of media spending, Kellogg North America
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Kellogg Company
November 20, 2015
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
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Kellogg Company Global Growth Strategy
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Kellogg Company
November 20, 2015
Strategy – 2020 Vision
Win in Breakfast
Developed Cereal
Global Snacking Powerhouse
Salty
Natural & Organic
Emerging Markets
Consumption Opportunities
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
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Win in Breakfast Developed Cereal Investing in our food Brands that matter Shopping experiences that inspire Results improving
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Kellogg Company
November 20, 2015
Win in Breakfast Natural and Organic #1 IN NATURAL & ORGANIC by a wide margin
29% category share
KEY ENTRY POINT 26% enter through into Natural & Organic Kashi/BN LEADING household penetration
≈9% HH penetration
NATURAL & ORGANIC granola is fastest growing cereal category
Y‐O‐Y growth
BEAR NAKED #1 share
≈15% share
Retailers ADDING SPACE
12% growth in
12%
dedicated sets
Source: Nielsen Homescan Panel, TUS, 52‐week ending 10/3/15; Nielsen Scantrack, xAOC , 52‐week ending 10/17/15
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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
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Kellogg Company
November 20, 2015
Win in Breakfast U.S. Cereal Consumption Kellogg – Cold Cereal Dollar Change Trends(a) 2013
2014
2015 YTD
Last 4‐Weeks ‐0.5%
0.1%
‐1.1% ‐2.2% ‐3.8%
‐3.1%
‐6.7% ‐7.8%
Total Kellogg's
Kellogg's (less Kashi) (a) Nielsen Scantrack, xAOC, full years, 2015 through week ending 10/3/15
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Strategy – 2020 Vision
Win in Breakfast Global Snacking Powerhouse
Developed Cereal
Salty
Natural & Organic
Emerging markets
Consumption Opportunities
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
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Kellogg Company
November 20, 2015
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
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Global Snacks Powerhouse Wholesome Snacks Global business Significant investment in the food… everywhere Huge opportunity for growth
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Kellogg Company
November 20, 2015
Global Snacks Powerhouse Regional Opportunities
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Consecutive Years of Growth
1996
2015E
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Strategy – 2020 Vision
Win in Breakfast Global Snacking Powerhouse
Developed Cereal
Salty
Natural & Organic
Emerging Markets
Consumption Opportunities
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
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Kellogg Company
November 20, 2015
Double Our Emerging‐Market Business Accelerate the Latin American business Double the Asian business Double the Arabian business Transform the African business
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Strategy – 2020 Vision
Win in Breakfast Global Snacking Powerhouse
Developed Cereal
Salty
Natural & Organic
Emerging Markets
Consumption Opportunities
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
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Kellogg Company
November 20, 2015
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
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Win Where the Shopper Shops High‐Frequency Stores
+30m +50% Stores Worldwide
of Breakfasts Sold in EM are in HFS
+38% +70% of Global Retail Sales
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
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Kellogg Company
November 20, 2015
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
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Kellogg Company Strategy – Goals Deliver top‐line growth Drive efficiency and savings Reinvest in the business Execute financial model and drive strong shareholder returns Kellogg Company | November 20, 2015
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Kellogg Company
November 20, 2015
Long‐Term Guidance Comparable Net Sales(a)
+1% to 3%
Comparable Operating Profit(a)
+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.
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Confidence in 2016… and Beyond
1. Transformational Changes 2. Talented Management Team 3. Strategy for Growth 4. Earnings Visibility, and…
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Kellogg Company
November 20, 2015
Confidence in 2016… and Beyond
… Committed to Profitable Growth
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