Slide 1: Healthy Growth: Fiscal 2014 1st Quarter Results
Healthy Growth General Mills Fiscal 2014 1 st Quarter Results September 18, 2013 6162-1
Slide 2: Forward-looking statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s current expectations and assumptions. These forward-looking statements are subject to certain risks and uncertainties that could cause actua
Slide 3: Q1 Financial Review
Q1 Financial Review Don Mulligan Executive Vice President; Chief Financial Officer 6162-3 3
Slide 4: First Quarter Fiscal 2014 Financial Summary
First Quarter Fiscal 2014 Financial Summary ($ in Millions, Except per Share) $ % Change Net Sales $4,373 +8% Segment Operating Profit* 812 +6 Net Earnings Attributable to 459 -16 General Mills Diluted EPS .70 -15 Certain Items Affecting Comparability --- EPS Excluding Certain Items .70 +6% Affectin
Slide 5: First Quarter Fiscal 2014 Components of Net Sales Growth
First Quarter Fiscal 2014 Components of Net Sales Growth As Reported +8pts +8pts +1pts -1pts Volume Price & Foreign Total Mix Exchange Net Sales 6162-5
Slide 6: First Quarter 2014 U.S. Retail Net Sales
First Quarter 2014 U.S. Retail Net Sales First Quarter Net Sales (Change vs. LY) Total U.S. Retail Segment +4% Snacks +10 Small Planet Foods +9 Baking Products +5 Big G Cereals +4 Yoplait Flat Frozen Foods Flat Meals -1 6162-6 6
Slide 7: First Quarter 2014 Convenience Stores & Foodservice Net Sales
First Quarter 2014 Convenience Stores & Foodservice Net Sales Total Segment -1% vs. LY Q1 Highlights • Product Mix Focus on Higher Margin Products • Sales Growth in Cereal, Frozen Breakfast, and Yogurt 6162-7 7
Slide 8: First Quarter 2014 International Net Sales Growth at Constant-currency
First Quarter 2014 International Net Sales Growth at Constant-currency* Total Segment: +25% vs. LY Canada Asia +21% Pacific +13% Europe -3% Cereal Häagen-Dazs Wanchai Ferry Nature Valley Shops Yogurt Latina Fresh Old El Paso Yoplait Latin America +196% Diablitos La Salteña *Non-GAAP Measure. See App
Slide 9: First Quarter 2014 Gross Margin Performance
First Quarter 2014 Gross Margin Performance As Reported Underlying* 2014 Input Costs 40.2% • 60% Covered 36.9% 38.2% 36.9% • Inflation Weighted Towards 1st Half • 3% Inflation for Year in Total Q1 F13 Q1 F14 Q1 F13 Q1 F14 * Non-GAAP Measure. See Appendix for Reconciliation.. 6162-9 9
Slide 10: First Quarter 2014 Global Media Spending
First Quarter 2014 Global Media Spending General Mills Media Spending ($ in Millions) +7% Q1 F13 Q1 F14 6162-10
Slide 11: First Quarter 2014 Segment Operating Profit
First Quarter 2014 Segment Operating Profit ($ in Millions) $ % Change Total Segment Operating Profit* $812 +6% U.S. Retail 612 +6 International 126 Flat Convenience Stores & Foodservice 74 +10 * Non-GAAP Measure. See Appendix for Reconciliation. 6162-11 11
Slide 12: First Quarter 2014 Joint Ventures
First Quarter 2014 Joint Ventures After-tax Earnings: $24MM; +4% vs. LY Cereal Partners Worldwide Häagen-Dazs Japan • Net Sales +1%* • Net Sales Flat* *Constant-currency Basis. 6162-12 12
Slide 13: First Quarter 2014 Other Income Statement Items
First Quarter 2014 Other Income Statement Items • Unallocated Corporate Expense Increased Excluding Mark-to-market Effects • Tax Rate 32.2% Excluding Items Affecting Comparability Versus 31.4% a Year Ago* • Average Diluted Shares Outstanding Lower * Non-GAAP Measure. See Appendix for Reconciliation.
Slide 14: 2014 Core Working Capital
2014 Core Working Capital ($ in Millions) 1st Quarter F14 F13 Accounts Receivable $1,638 $1,474 Inventories 1,774 1,808 Accounts Payable 1,426 1,265 6162-14 14
Slide 15: Fiscal 2014 Financial Outlook
Fiscal 2014 Financial Outlook • Targeting Low Single-digit Net Sales Growth • Targeting Mid Single-digit Segment Operating Profit Growth • Expected Diluted EPS of $2.87 - $2.90 Before Items Affecting Comparability 6162-15 15
Slide 16: U.S. Cereal Business Update
U.S. Cereal Business Update Jim Murphy Senior Vice President; President – Big G Cereals 6162-16 16
Slide 17: The Benefits of Cereal
The Benefits of Cereal • Great Taste and Variety • Convenient • $0.50 a Bowl – Including Milk • High in Nutrition • Low in Calories 6162-17
Slide 18: Guilt-free Taste and Nutrition
Guilt-free Taste and Nutrition ¾ Cup Cocoa Puffs w/ ½ Cup Skim Milk 6162-18 18
Slide 19: U.S. Consumers Love Cereal
U.S. Consumers Love Cereal Hispanic Households General Population Household Penetration Buy Rate 93 91 25 24 Annual Retail Category Sales: $9.4 Billion Sources: Household Penetration and Buy Rate: Nielsen Panel Data Fiscal 2012; Retail Sales: Nielsen XAOC 12 Month Period Ended 5.25.13 6162-19
Slide 20: Cereal is the Top Choice for Breakfast
Cereal is the Top Choice for Breakfast % of Breakfast Meals RTE Cereal is the #1 Food Consumed In-home Consumed for Breakfast In-home % of In-Home Breakfasts that Include: RTE Cereal 32.1 80 Bread 17.9 79 79 Eggs / Omellettes 16.5 78 78 Fresh Fruit 14.8 77 Hot Cereal 9.1 76 Frz. Pancakes/Waff/Fr Tst
Slide 21: General Mills U.S. Cereal Performance
General Mills U.S. Cereal Performance General Mills Cereal Dollar Share 2014 Q1 Highlights 29.7 30.7 • Net Sales +4% • Dollar Share +0.2 Points • Media Spending +LSD 2008 2013 Fiscal Years Sources: 2008 Nielsen All Outlet; 2013 Nielsen XAOC; 2014 Q1 Nielsen XAOC, Period Ended 8.24.13 6162-21 21
Slide 22: Recent Cereal Category Unit Volume Trends
Recent Cereal Category Unit Volume Trends Cereal Category (millions of units) Factors -1.9% -2.9% • Subpar Branded Innovation vs. LY -2.1% vs. LY vs. LY • Insufficient Product News on Established Brands • Declining Levels of Media Investment F10 F11 F12 F13 Source: Nielsen XAOC 6162-22 22
Slide 23: General Mills Plans for Cereal Growth in 2014
General Mills Plans for Cereal Growth in 2014 • Renovate Core Brands to Increase Relevance • Innovate With New Brands and Product News • Invest to Drive Distribution Gains and Consumer Awareness 6162-23 23
Slide 24: Chex Product News
Chex Product News Chex Retail Sales F05 F10 F13 Source: Nielsen Total U.S. Food 6162-24 24
Slide 25: Honey Nut Cheerios is America's Favorite Cereal
Honey Nut Cheerios is America’s Favorite Cereal #MustBeTheHoney F14 Q1 Retail Sales +4% Source: Nielsen XAOC, Period Ended 8.24.13 6162-25 25
Slide 26: The One and Only Cheerios
The One and Only Cheerios 6162-26 26
Slide 27: Happy 50th Birthday Lucky!
Happy 50th Birthday Lucky! F14 Q1 Retail Sales +11% Source: Nielsen XAOC Period Ended 8.24.13 6162-27 27
Slide 28: Wheaties – Breakfast of Champions
Wheaties – Breakfast of Champions 6162-28
Slide 29: Monsters Cereals – Back for Halloween
Monsters Cereals – Back for Halloween F10-F13 Retail Sales +12% CAGR Source: Nielsen XAOC 6162-29 29
Slide 30: New Product Innovation – Great Taste
New Product Innovation – Great Taste Top-selling New Item Top-turning New Cereal in in Calendar 2013 Chocolate Segment Source: Nielsen XAOC, Period Ended 8.24.13 Source: Nielsen XAOC, 13 Week Period Ended 8.24.13 6162-30 30
Slide 31: New Product Innovation
New Product Innovation Protein Convenience 6162-31 31
Slide 32: Cereal Category Advertising Trends
Cereal Category Advertising Trends (Measured Media $) Total U.S. Food/Bev Cereal Category Media Spending Media Spending ($ in Millions) ($ in Millions) +3% -7% $840 $10,650 $10,400 $780 F11 F13 F11 F13 Sources: Media Spending: Kantar, Latest 12 Month Period Ended May 2013 6162-32
Slide 33: General Mills – Increasing Share of Voice
General Mills – Increasing Share of Voice (Measured Media $) General Mills Cereal General Mills Share of Cereal Media Spending Category Sales and Spending ($ in Millions) +6% 41% 31% F11 F13 Dollar Share Share of Spending Sources: Media Spending: Kantar, Latest 12 Month Period Ended May 2013 Dollar
Slide 34: General Mills Expanding Cereal Distribution in 2014
General Mills Expanding Cereal Distribution in 2014 Fiscal 2013 Fiscal 2014 Q1 (Absolute and Change vs. LY) 31% 31% 23% 24% +0.2pts +0.8pts Share of Share of Share of Share of Category Distribution Category Distribution Dollars Points Dollars Points Source: Nielsen XAOC 6162-34
Slide 35: Cereal Category - Leading Sales Velocity
Cereal Category - Leading Sales Velocity $ Sales Velocity Index (Index: Category = 100) Fiscal 2013 Fiscal 2014 Q1 112 120 103 100 106 95 103 92 GIS Competitor Competitor Competitor GIS Competitor Competitor Competitor A B C A B C Source: Nielsen Scanner Data, Grocery + Supercenter; 52 weeks ended 0
Slide 36: 2014 U.S. Cereal Summary
2014 U.S. Cereal Summary • U.S. Consumers Love Cereal – For Good Reasons • Category Needs More Product News and Consumer Marketing Support • Targeting Sales and Profit Growth for Our Cereal Business in F14 6162-36 36
Slide 37: Operating Highlights and Outlook
Operating Highlights and Outlook Ken Powell Chairman of the Board; Chief Executive Officer 6162-37 37
Slide 38: Food Industry Input Cost Trends
Food Industry Input Cost Trends • Short-term Input Cost Trend is a Mixed Bag • Our F14 Supply Chain Inflation Estimate is 3% • Long-term Trend Will be Inflationary, Driven by Rising Global Demand for Food and Energy 6162-38 38
Slide 39: U.S. Categories - Balanced Growth
U.S. Categories - Balanced Growth Aggregate General Mills Categories (Change vs. LY) Fiscal 2013 Annual Fiscal 2014 Q1 +1.1% +0.8% +0.8% +0.8% Unit Volume Pricing Unit Volume Pricing Source: Nielsen XAOC 6162-39 39
Slide 40: U.S. Yogurt
U.S. Yogurt $150MM in Year 1 L12 Months Retail Sales Distribution +DD% Source: Nielsen XAOC, Period Ended 8.24.13 6162-40
Slide 41: U.S. Snacks
U.S. Snacks Grain Natural & Organic Hot Snacks 6162-41
Slide 42: Other U.S. Retail Highlights
Other U.S. Retail Highlights Dry Dinners Soup Refrigerated Dough 6162-42 42
Slide 43: Strong Levels of U.S. Retail New Product Innovation
Strong Levels of U.S. Retail New Product Innovation 100+ New Items in First Half F14 6162-43 43
Slide 44: Second Quarter 2014 U.S. Media Investment
Second Quarter 2014 U.S. Media Investment 6162-44 44
Slide 45: Second Quarter 2014 U.S. Retail Marketing / Merchandising Events
Second Quarter 2014 U.S. Retail Marketing / Merchandising Events Breast Cancer K-8 Fundraising 6162-45 45
Slide 46: Convenience Stores & Foodservice 1st Quarter Net Sales Growth
Convenience Stores & Foodservice 1st Quarter Net Sales Growth Snacks Yogurt +HSD +LSD Cereal Frozen Breakfast +HSD +DD 6162-46
Slide 47: International Highlights - Canada
International Highlights - Canada Dollar Share +1.7 Points Since Sept 2012 Acquisition of Yoplait License Source: Nielsen, Period Ended 8.24.13 6162-47 47
Slide 48: International Highlights - Europe
International Highlights - Europe New in Q2 6162-48
Slide 49: International Highlights – Asia Pacific
International Highlights – Asia Pacific Greater China 1st Quarter Highlights • Häagen-Dazs Sales +DD • Wanchai Ferry Sales +DD • Geographic Expansion Efforts Underway • Häagen-Dazs Shops • Häagen-Dazs Retail 6162-49
Slide 50: International Highlights – Latin America
International Highlights – Latin America Brazil L12 Month Retail Sales +DD Source: Nielsen Period Ended July 2013 6162-50
Slide 51: Today's General Mills 2014 Update
Today’s General Mills 2014 Update • Solid Start in Q1, Reaffirming Annual Guidance • Stronger Product Innovation, Stronger Advertising • Inflation Manageable, Categories Growing • Our Categories, and Our Brand Strength, are Competitive Advantages 6162-51 51
Slide 52: Healthy Growth: Fiscal 2014 1st Quarter Results
Healthy Growth General Mills Fiscal 2014 1 st Quarter Results September 18, 2013 6162-52
Slide 53: Reconciliation of Segment Operating Profit
Reconciliation of Segment Operating Profit ($ in Millions) Q1 2014 2013 USRO $612 $575 International 126 126 CS&F 74 68 Segment Operating Profit $812 $769 Unallocated Corporate Items 74 (21) Restructuring, Impairment and Other 3 9 Operating Profit $735 $780 Table does not foot due to rounding 6162-5
Slide 54: Reconciliation of Adjusted Diluted EPS
Reconciliation of Adjusted Diluted EPS Q1 2014 2013 Diluted EPS $0.70 $0.82 Mark-to-market Effects -- (.07) Restructuring -- .01 Tax Item -- (.10) Diluted EPS Excluding Certain $0.70 $0.66 Items Affecting Comparability 6162-54 54
Slide 55: Reconciliation of Constant Currency Net Sales Growth
Reconciliation of Constant Currency Net Sales Growth Q1 2014 % Change in Net % Change in Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange Currency Basis Europe Flat 3 -3 Canada 18 -3 21 Asia/Pacific 15 2 13 Latin America 159 -37 196 Total International 22% -3 pts 25% 61
Slide 56: Reconciliation of Gross Margin
Reconciliation of Gross Margin ($ in Millions) 2014 Q1 2013 Q1 % of % of $ Net Sales $ Net Sales Net Sales $4,373 $4,051 Gross Margin as Reported 1,613 36.9% 1,628 40.2% Mark-to-market Effects 1 (82) Gross Margin Excluding Mark-to-market Effects $1,614 36.9% $1,547 38.2% Table does not foot due to r
Slide 57: Reconciliation of Effective Income Tax Rate
Reconciliation of Effective Income Tax Rate ($ in Millions) Q1 2014 Q1 2013 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $656 $212 $697 $158 Mark-to-market effects 1 -- (82) (30) Restructuring Costs 3 -- 9 1 Tax Item -- 67 As Adjusted $660 $213 $624 $196 Effective Tax Ra