Slide 1: General Mills Fiscal 2016 Second Quarter Results
General Mills Fiscal 2016 Second Quarter Results
Slide 2: A Reminder on Forward-looking Statements
A Reminder on 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
Slide 3: Second Quarter 2016 Financial Review
Second Quarter 2016 Financial Review Don Mulligan Executive Vice President; Chief Financial Officer
Slide 4: Second Quarter Fiscal 2016 Summary
Second Quarter Fiscal 2016 Summary • Net Sales Declined LSD* • Margin Expansion Drove MSD Growth in Adjusted Diluted EPS* • Increasing Cost Savings Target to $500MM by Fiscal 2018 • Updating Fiscal 2016 Guidance for Green Giant Divestiture ▬ On Track to Deliver Original 2016 Growth Goals Excluding G
Slide 5: Second Quarter Fiscal 2016 Financial Summary
Second Quarter Fiscal 2016 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $4,425 -6% -2% Segment Operating Profit* 839 -1 +2 Net Earnings Attributable to General Mills 530 +53 Diluted EPS $0.87 +55 Certain Items Affecting Comparability 0.05 Adju
Slide 6: Second Quarter Fiscal 2016 Components of Net Sales Growth
Second Quarter Fiscal 2016 Components of Net Sales Growth (As Reported) +1pt -3pts -4pts -6pts Price & Foreign Total Volume Mix Exchange Net Sales Acquisition & Divestiture: -2 Points of Volume Growth, -1 Point of Net Sales Growth 8173-6
Slide 7: Second Quarter Fiscal 2016 U.S. Retail Segment
Second Quarter Fiscal 2016 U.S. Retail Segment Net Sales Growth Q2 1H Snacks -1% +1% Baking Products -1 -1 Cereal -5 +1 Meals -5 -1 Yogurt -6 -1 Total U.S. Retail -4% Flat Acquisition & Divestiture: -1 Point of Net Sales Growth in Q2, +1 Point in 1H 8173-7
Slide 8: Second Quarter Fiscal 2016 Convenience Stores & Foodservice Segment
Second Quarter Fiscal 2016 Convenience Stores & Foodservice Segment Net Sales Growth Q2 1H 6 Focus Platforms +3% +5% Other -12 -9 Total CS&F -4% -2% 8173-8
Slide 9: Second Quarter Fiscal 2016 International Segment
Second Quarter Fiscal 2016 International Segment Constant-currency Net Sales Growth* Q2 1H Latin America +17% +9% Canada +3 +4 Asia / Pacific +2 +2 Europe -2 +2 Total International +3% +4% *Non-GAAP measure. See appendix for reconciliation. 8173-9
Slide 10: Adjusted Gross Margin Results
Adjusted Gross Margin* Results Q2 • Cost Savings Offsetting Low Input Cost Inflation 35.5% 34.9% • Expect 2% Inflation for Full Year F15 F16 *Non-GAAP measure. See appendix for reconciliation. 8173-10
Slide 11: Second Quarter Fiscal 2016 Segment Operating Profit
Second Quarter Fiscal 2016 Segment Operating Profit ($ in Millions) Constant- currency $ % Change % Change* Total Segment Operating Profit* $839 -1% +2% U.S. Retail 600 -3 International 136 +1 +19 Convenience Stores & Foodservice 103 +7 *Non-GAAP measure. See appendix for reconciliation. 8173-11
Slide 12: Second Quarter Fiscal 2016 Joint Venture Results
Second Quarter Fiscal 2016 Joint Venture Results After-tax Earnings: $23MM; -6% vs. LY in Constant Currency* Cereal Partners Worldwide Häagen-Dazs Japan Net Sales +1%** Net Sales -10%** *Non-GAAP measure. See appendix for reconciliation. **Growth rates in constant currency. 8173-12
Slide 13: Second Quarter Fiscal 2016 Other Income Statement Items
Second Quarter Fiscal 2016 Other Income Statement Items • Unallocated Corporate Expense Decreased Excluding Certain Items • One-Time Gain on Sale of Green Giant = $199MM • Restructuring & Project-related Charges of $99MM Pretax (Includes $38MM in Cost of Sales) • Net Interest Expense $4MM Below Last
Slide 14: First Half Fiscal 2016 Financial Summary
First Half Fiscal 2016 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $8,633 -4% +1% Segment Operating Profit* 1,666 +8 +12 Net Earnings Attributable to General Mills 956 +38 Diluted EPS $1.56 +40 Certain Items Affecting Comparability 0.05 Adjus
Slide 15: Core Working Capital
Core Working Capital ($ in Millions) Q2 F16 F15 % Change Accounts Receivable $1,461 $1,706 Inventories 1,455 1,893 Accounts Payable 1,704 1,657 Total Core Working Capital $1,212 $1,942 -38% 8173-15
Slide 16: First Half Fiscal 2016 Cash Flow Highlights
First Half Fiscal 2016 Cash Flow Highlights 1H Operating Cash Flow Uses of Cash ($ in Millions) • Fixed Asset Investment = $1,156 $294MM $863 • Dividends Paid = $531MM • Share Repurchases = $549MM F15 F16 8173-16
Slide 17: Update on Cost Savings Initiatives
Update on Cost Savings Initiatives • Targeting $400MM in F16 COGS HMM Savings • Remain on Track to Deliver $285 - $310MM of Additional F16 Cost Savings − Includes Savings From Project Century, Project Catalyst, Project Compass, and Policies & Practices Update (ZBB) • Updated Cost Savings Targets Ref
Slide 18: Green Giant Impact on Financial Performance
Green Giant Impact on Financial Performance Impact to Constant-currency Growth* Fiscal 2016 Fiscal 2017 Net Sales -2 pts -1 pts Segment Operating Profit -2 pts -1 pts Adjusted Diluted EPS -7 cents -3 cents *Non-GAAP measures. 8173-18
Slide 19: Fiscal 2016 Guidance Updated for Divestiture of Green Giant
Fiscal 2016 Guidance Updated for Divestiture of Green Giant Constant-currency Growth (52 vs 53 wks)* Prior Green Giant Updated Guidance Divestiture Guidance Net Sales Flat -2 pts -LSD Segment Operating Profit+LSD -2 pts Flat Adjusted Diluted EPS +MSD -7 cents +LSD *Non-GAAP measures. 8173-19
Slide 20: First Half 2016 International Update
First Half 2016 International Update Chris O’Leary Executive Vice President; Chief Operating Officer – International 8400-20
Slide 21: Strong Growth Performance
Strong Growth Performance International Segment International Segment Net Sales Operating Profit ($ in Billions) ($ in Millions) CGR = +14% CGR = +20% $5.1 $523 $2.7 $206 F10 F11 F12 F13 F14 F15 F10 F11 F12 F13 F14 F15 Profit : 7.7% 10.2% Margin 8400-21
Slide 22: International Segment – Developed and Emerging Markets
International Segment – Developed and Emerging Markets Emerging Markets 37% Developed Latin Markets America 63% Europe Asia/Pacific Canada F15 Net Sales: $5.1 Billion 8400-22
Slide 23: International Segment First Half Fiscal 2016 Financial Summary
International Segment First Half Fiscal 2016 Financial Summary ($ in Millions) Constant- currency $ % Change % Change* Net Sales $2,356 -12% +4% Segment Operating Profit 253 -10% +8% *Non-GAAP measures. See appendix for reconciliation. 8400-23
Slide 24: Renovation and Innovation Driving Growth in Canada
Renovation and Innovation Driving Growth in Canada 1H F16 Constant-currency Net Sales Growth: +4%* Cereal Snacks 1H F16 Retail Sales: +14% Yogurt 1H F16 Retail Sales: -1% 1H F16 Retail Sales: Flat Dollar Share: +0.3 pts. *Non-GAAP measure. See appendix for reconciliation. Source: Nielsen FYTD throug
Slide 25: Europe Highlights
Europe Highlights 1H F16 Constant-currency Net Sales Growth: +2%* Häagen-Dazs Old El Paso FYTD Retail Sales: +16% FYTD Retail Sales: Flat *Non-GAAP measure. See appendix for reconciliation. Source: Nielsen FYTD through October 2015. 8400-25
Slide 26: Latin America Highlights
Latin America Highlights 1H F16 Constant-currency Net Sales Growth: +9%* Brazil: • Q2 Net Sales Up LSD • Continued Macro Headwinds Mexico: • 1H Net Sales Up DD *Non-GAAP measure. See appendix for reconciliation. 8400-26
Slide 27: Asia/Pacific Highlights
Asia/Pacific Highlights Asia/Pacific 1H F16 Constant-currency Net Sales Growth: +2%* Wanchai Ferry in China Häagen-Dazs in China 1H F16 Net Sales -5%** 1H F16 Net Sales +2%** *Non-GAAP measure. See appendix for reconciliation. **Actual net sales in local currency translated to USD at a fixed exchang
Slide 28: Yoplait Off to a Good Start in China
Yoplait Off to a Good Start in China Gaining Share in Shanghai 8400-28
Slide 29: Sweet Snacking Driving Growth in AMEA
Sweet Snacking Driving Growth in AMEA Häagen-Dazs New Flavors Expanding Baked Goods 1H F16 Net Sales: +9%* Ready-to-eat Baked Treats New Products and Increasing Distribution in India 1H F16 Net Sales: +21%* *Actual net sales in local currency translated to USD at a fixed exchange rate 8400-29
Slide 30: International Restructuring Update
International Restructuring Update Project Compass • Streamlining International Organizational Structure • On Track for $45 - $50 Million Cost Savings Project Century • UK and New Zealand Plant Closures Actions subject to consultation where required. 8400-30
Slide 31: International Segment Summary
International Segment Summary • Good Growth in Developed Markets with Consumer-first Renovation and Innovation • Emerging Markets Delivering Growth; China and Brazil Remain Challenging • Funding our Future with Productivity; Additional Margin Expansion Ahead *In Constant Currency. 8400-31
Slide 32: First Half 2016 Operating Highlights
First Half 2016 Operating Highlights Ken Powell Chairman and CEO
Slide 33: U.S. Retail First-half Fiscal 2016 Financial Summary
U.S. Retail First-half Fiscal 2016 Financial Summary ($ in Millions) $ % Change Net Sales $5,293 Flat Segment Operating Profit 1,230 15% Acquisition and Divestiture: +1 Point of Net Sales Growth 8173-33
Slide 34: Our Categories Have Returned to Growth
Our Categories Have Returned to Growth U.S. Retail Segment Categories Dollar Volume Growth 1.0% 0.6% Flat F14 F15 F16 YTD Units: -0.3% -1.9% -1.0% Price: +0.8% +2.0% +2.1% Source: Nielsen XAOC, F16 YTD ended 11.21.15 8173-34
Slide 35: First-half Fiscal 2016 Retail Sales Trends
First-half Fiscal 2016 Retail Sales Trends • Snacks and Cereal Renovation Working, but Merchandising Lower than Expected • Yogurt Impacted by Significant Competitive Activity • Improved Performance in Meals and Baking 8173-35
Slide 36: U.S. Cereal First-half Highlights
U.S. Cereal First-half Highlights Gluten Free Cheerios Varieties Base Dollar Growth +3% +3% +2% -3% -5% F15 F16 Q1 Sep Oct Nov 1H F16 Retail Sales +7% Source: Nielsen Total U.S. Food, Source: Nielsen XAOC, November ended 11.21.15 FYTD ended 11.21.15 8173-36
Slide 37: U.S. Cereal Second-half News
U.S. Cereal Second-half News No Artificial Flavors and Expanding Nature Valley Colors News Cereal Franchise 8173-37
Slide 38: More U.S. Cereal Second-half News
More U.S. Cereal Second-half News Increased Media Promotions Leveraging Top Movie Equities Spending 8173-38
Slide 39: U.S. Grain Snacks Highlights
U.S. Grain Snacks Highlights Renovation Innovation New Marketing Campaigns 8173-39
Slide 40: U.S. Yogurt Second-half News
U.S. Yogurt Second-half News Merchandising and Consumer Support 2H F16 Innovation 8173-40
Slide 41: U.S. Natural and Organic Highlights
U.S. Natural and Organic Highlights 1H F16 Annie’s Retail Sales Growing +8% Core Expansion Cascadian Farm Grain Snacks Cascadian Farm Cereals 1H F16 Retail Sales: +18% 1H F16 Retail Sales: +8% Source: Nielsen XAOC FYTD ended 10.31.15, Natural Supermarkets FYTD ended 11.1.15, Whole Foods FYTD ended 1
Slide 42: Additional U.S. Retail Highlights
Additional U.S. Retail Highlights Soup Desserts Mexican Totino’s Hot Snacks 8173-42
Slide 43: Convenience Stores & Foodservice First-half Fiscal 2016 Financial Summary
Convenience Stores & Foodservice First-half Fiscal 2016 Financial Summary ($ in Millions) $ % Change Net Sales $984 -2% Segment Operating Profit 183 Flat 8173-43
Slide 44: Convenience Stores & Foodservice First-half Highlights
Convenience Stores & Foodservice First-half Highlights Frozen Meals Snacks Cereal Yogurt 8173-44
Slide 45: Today's General Mills Summary
Today’s General Mills Summary • First-half Growth in Constant-currency Net Sales, Segment Operating Profit, and Adjusted Diluted EPS* • Taking Actions to Strengthen Retail Sales Performance in the Second Half • Increasing Cost Savings Target to $500MM by Fiscal 2018 • On Track to Deliver Fiscal 2016
Slide 46: Reconciliation of Total Segment Operating Profit
Reconciliation of Total Segment Operating Profit (Fiscal Years, $ in Millions) Q2 2016 2015 U.S. Retail $600 $616 International 136 134 Convenience Stores & Foodservice 103 96 Total Segment Operating Profit $839 $847 Unallocated Corporate Items 71 73 Gain on Divestiture -199 -- Restructuring, Impair
Slide 47: Reconciliation of Second Quarter Adjusted Diluted EPS and Constant-currency Growth
Reconciliation of Second Quarter Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Q2 2016 2015 Change Diluted EPS $0.87 $0.56 55% Mark-to-market Effects (0.01) -- Divestiture (gain) (0.14) -- Restructuring 0.08 0.24 Project-related costs 0.02 -- Adjusted Diluted EPS $0.8
Slide 48: Reconciliation of First Half Adjusted Diluted EPS and Constant-currency Growth
Reconciliation of First Half Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) First Half 2016 2016 2015 Change Diluted EPS $1.56 $1.11 40% Mark-to-market Effects (0.01) 0.05 Divestiture (gain) (0.14) -- Restructuring 0.17 0.25 Project-related costs 0.03 -- Adjusted Dilut
Slide 49: Reconciliation of Second Quarter International Constant-currency Net Sales Growth
Reconciliation of Second Quarter International Constant-currency Net Sales Growth (Fiscal Year) Q2 2016 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Europe -13% -11 pts -2% Canada -13 -16 3 Asia/Pacific -3 -5 2 Latin Americ
Slide 50: Reconciliation of First Half International Constant-currency Net Sales Growth
Reconciliation of First Half International Constant-currency Net Sales Growth (Fiscal Year) First Half 2016 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Europe -12% -14 pts 2% Canada -12 -16 4 Asia/Pacific -1 -3 2 Latin Ame
Slide 51: Reconciliation of Adjusted Gross Margin
Reconciliation of Adjusted Gross Margin (Fiscal Years, $ in Millions) Q2 2016 Q2 2015 % of % of $ Net Sales $ Net Sales Net Sales $4,425 $4,712 Gross Margin as Reported 1,541 34.8% 1,619 34.4% Mark-to-market Effects (8) 5 Restructuring 22 19 Project-related costs 16 1 Adjusted Gross Margin $1,571 35
Slide 52: Reconciliation of Constant-currency International Segment Operating Profit Growth
Reconciliation of Constant-currency International Segment Operating Profit Growth (Fiscal 2016) International Segment Operating Profit % Change in % Change in Segment Segment Operating Profit Operating Profit Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Q2 1% -18 pts
Slide 53: Reconciliation of Constant-currency After-tax JV Earnings
Reconciliation of Constant-currency After-tax JV Earnings (Fiscal 2016) Total After-tax Earnings from Joint Ventures % Change in % Change in After-tax After-tax JV Earnings JV Earnings Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Q2 -15% -9 pts -6% 1H -8 -13 pts 5 81
Slide 54: Reconciliation of Tax Rate Excluding Items
Reconciliation of Tax Rate Excluding Items (Fiscal Years, $ in Millions) Q2 2016 Q2 2015 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $832 $312 $482 $153 Mark-to-market effects (8) (3) 5 2 Restructuring 83 30 233 86 Project-related costs 16 6 1 -- Divestiture (gain) (199
Slide 55: Reconciliation of Constant-currency Total Segment Operating Profit Growth
Reconciliation of Constant-currency Total Segment Operating Profit Growth (Fiscal 2016) Total Segment Operating Profit % Change in % Change in Total Segment Total Segment Operating Profit Operating Profit Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Q2 -1% -3 pts 2%