Slide 1: General Mills Fiscal 2016 Third Quarter Results
General Mills Fiscal 2016 Third Quarter Results 8400-1
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: Third Quarter 2016 Financial Review
Third Quarter 2016 Financial Review Don Mulligan Executive Vice President; Chief Financial Officer 8400-3
Slide 4: Third Quarter Fiscal 2016 Summary
Third Quarter Fiscal 2016 Summary • Third Quarter Results in Line with Expectations • Foreign Exchange and Green Giant Divestiture Impacting Reported Results • 5th Consecutive Quarter of Adjusted Operating Profit Margin* Expansion • Reaffirming Fiscal 2016 Growth Targets *Non-GAAP measure. 8400-4
Slide 5: Third Quarter Fiscal 2016 Financial Summary
Third Quarter Fiscal 2016 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $4,002 -8% -4% Segment Operating Profit* 679 -3 -1 Net Earnings Attributable to General Mills 362 +5 Diluted EPS $0.59 +5 Certain Items Affecting Comparability 0.06 Adjuste
Slide 6: Third Quarter Fiscal 2016 Components of Net Sales Growth
Third Quarter Fiscal 2016 Components of Net Sales Growth (As Reported) +1pt -4pts -5pts -8pts Price & Foreign Total Volume Mix Exchange Net Sales Divestiture: -4 Points of Volume Growth, -3 Points of Net Sales Growth 8400-6
Slide 7: Third Quarter Fiscal 2016 U.S. Retail Segment
Third Quarter Fiscal 2016 U.S. Retail Segment Net Sales Growth Q3 YTD Cereal -2% Flat Snacks -2 Flat Baking Products -3 -1 Yogurt -10 -4 Meals -14 -5 Total U.S. Retail -7% -2% Acquisition / Divestiture: -5 Points of Net Sales Growth in Q3, -1 Point YTD 8400-7
Slide 8: Third Quarter Fiscal 2016 Convenience Stores & Foodservice Segment
Third Quarter Fiscal 2016 Convenience Stores & Foodservice Segment Net Sales Growth Q3 YTD 6 Focus Platforms +8% +6% Other -12 -10 Total CS&F -2% -2% 8400-8
Slide 9: Third Quarter Fiscal 2016 International Segment
Third Quarter Fiscal 2016 International Segment Constant-currency Net Sales Growth* Q3 YTD Latin America +16% +11% Asia / Pacific +4 +3 Europe -2 +1 Canada -14 -2 Total International Flat +2% Divestiture: -2 Points of Net Sales Growth in Q3, -1 Point YTD As Reported *Non-GAAP measure. See appendix f
Slide 10: Third Quarter Fiscal 2016 Adjusted Gross Margin Results
Third Quarter Fiscal 2016 Adjusted Gross Margin* Results Q3 • Cost Savings Offsetting Modest Input Cost Inflation 34.8% 33.2% • Expect 1% Inflation for Full Year • ~85% Covered for Full Year F15 F16 *Non-GAAP measure. See appendix for reconciliation. 8400-10
Slide 11: Third Quarter Fiscal 2016 Segment Operating Profit
Third Quarter Fiscal 2016 Segment Operating Profit ($ in Millions) Constant- currency $ % Change % Change* Total Segment Operating Profit* $679 -3% -1% U.S. Retail 518 Flat International 70 -35 -24 Convenience Stores & Foodservice 91 +31 *Non-GAAP measure. See appendix for reconciliation. 8400-11
Slide 12: Third Quarter Fiscal 2016 Joint Venture Results
Third Quarter Fiscal 2016 Joint Venture Results After-tax Earnings: $16MM; +19% vs. LY in Constant Currency* Cereal Partners Worldwide Häagen-Dazs Japan Net Sales -1%** Net Sales +22%** *Non-GAAP measure. See appendix for reconciliation. **Growth rates in constant currency. 8400-12
Slide 13: Third Quarter Fiscal 2016 Other Income Statement Items
Third Quarter Fiscal 2016 Other Income Statement Items • Unallocated Corporate Expense Increased Excluding Certain Items • Restructuring & Project-related Charges of $44MM Pretax (Includes $27MM in Cost of Sales) • Net Interest Expense $3MM Below Last Year • Adjusted Effective Tax Rate* 30.8%, Compa
Slide 14: Nine-month Fiscal 2016 Financial Summary
Nine-month Fiscal 2016 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $12,635 -5% -1% Segment Operating Profit* 2,345 +5 +8 Net Earnings Attributable to General Mills 1,318 +27 Diluted EPS $2.15 +29 Certain Items Affecting Comparability 0.11 Adj
Slide 15: Core Working Capital
Core Working Capital ($ in Millions) Q3 F16 F15 % Change Accounts Receivable $1,391 $1,585 Inventories 1,350 1,585 Accounts Payable 1,726 1,481 Total Core Working Capital $1,015 $1,689 -40% 8400-15
Slide 16: Update On Free Cash Flow Conversion and Cash Return to Shareholders
Update On Free Cash Flow Conversion* and Cash Return to Shareholders • On Track to Deliver F16 Nine-month Free Cash Flow* FCF Conversion ≥ 95% ($ in Millions) • Nine-month Share $1,384 Repurchases = $602MM $1,071 • Nine-month Dividends Paid = $795MM • 4.5% Dividend Increase Effective May 2nd, 2016 •
Slide 17: Update on Cost Savings Initiatives
Update on Cost Savings Initiatives • Targeting $400MM in F16 COGS HMM Savings • Remain on Track to Deliver $500MM in Additional Savings − Includes Project Catalyst, Project Century, Project Compass, and Policies and Practices Updates (ZBB) 8400-17
Slide 18: Fiscal 2016 Outlook
Fiscal 2016 Outlook Annual Expectations in Constant Currency*: • LSD Decline in Net Sales • Total Segment Operating Profit in Line with Last Year • LSD Growth in Adjusted Diluted EPS Q4 Expectations: • Comparable Net Sales Growth +LSD • Reported Net Sales and Earnings Impacted by Currency, Green Gia
Slide 19: Third Quarter 2016 U.S. Retail Highlights
Third Quarter 2016 U.S. Retail Highlights Jeff Harmening Executive Vice President; Chief Operating Officer – U.S. Retail 8400-19
Slide 20: Today's U.S. Retail Key Messages
Today’s U.S. Retail Key Messages • Strong Year-to-date Profit and Margin Performance • Continued Headwinds in Yogurt and Display Merchandising • Consumer First Efforts Gaining Traction in Key Businesses 8400-20
Slide 21: U.S. Retail Nine-month Fiscal 2016 Financial Summary
U.S. Retail Nine-month Fiscal 2016 Financial Summary ($ in Millions) $ % Change Net Sales $7,770 -2% Segment Operating Profit 1,748 10% Acquisition / Divestiture: -1 Point of Net Sales Growth YTD 8400-21
Slide 22: U.S. Retail Categories Growing
U.S. Retail Categories Growing General Mills Categories Retail Sales (% vs. LY) 1.2% 1.0% 0.6% 0.5% 0.1% -0.1% -0.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 F15 F16 Source: Nielsen XAOC 8400-22
Slide 23: U.S. Retail Nine-month Fiscal 2016 Net Sales Summary
U.S. Retail Nine-month Fiscal 2016 Net Sales Summary U.S. Retail Net Sales (% vs. LY) Cereal Flat Snacks Flat Baking Products -1 Yogurt -4 Meals -5 Total U.S. Retail -2% Acquisition / Divestiture: -1 Point of Net Sales Growth YTD 8400-23
Slide 24: U.S. Retail Sales Headwinds
U.S. Retail Sales Headwinds • Higher Yogurt Competitive Investment • Merchandising Up Double Digits • Advertising Spending Doubled • Lower Display Merchandising • Display Reductions >30% at Key Customer • Cereal and Snacks Particularly Impacted Q3 Impact = -2 Points of Aggregate U.S. Retail Sales Gr
Slide 25: Resuming Cereal Share Gains in Third Quarter
Resuming Cereal Share Gains in Third Quarter General Mills Cereal Dollar Share (Change vs. LY) 0.3 0.3 0.3 0.1 (0.3) (0.7) F14 F15 1H Dec Jan Feb F16 Source: Nielsen XAOC F16 YTD Ended 2.27.16 8400-25
Slide 26: Renovation News Driving Improved Cereal Performance
Renovation News Driving Improved Cereal Performance (Retail Sales Growth vs. LY) +2% +6% +8% F16 Aug-Feb F16 Jan-Feb F16 YTD (F15 = -8%) (F15 = -6%) (F15 = +8%) Source: Nielsen XAOC F16 YTD Ended 2.27.16 8400-26
Slide 27: Nature Valley Cereal Innovation
Nature Valley Cereal Innovation Nature Valley Cereal Retail Sales Nature Valley Portfolio ($ in Millions, % vs. LY) RTE Cereal Granola Crunch Protein Granola +44% +35% 5 Varieties 3 Varieties 2 Varieties Muesli Granola Bites Protein Oatmeal F14 F15 F16 YTD Source: Nielsen XAOC F16 YTD Ended 2.27.16;
Slide 28: Yogurt Growth Initiatives
Yogurt Growth Initiatives Natural & Organic Attracting Snacking Message New Shoppers Expanding Occasions 8400-28
Slide 29: Renovation and Innovation on Nature Valley Grain Snacks
Renovation and Innovation on Nature Valley Grain Snacks • F16 YTD Retail Sales +MSD in Grocery Channel Source: Nielsen U.S. Food, F16 YTD Ended 2.27.16 8400-29
Slide 30: Lärabar Posting Exceptional Growth Behind First TV Campaign
Lärabar Posting Exceptional Growth Behind First TV Campaign Lärabar F16 Retail Sales (% vs. LY) 45% 9% 9% 10% 3% Q1 Q2 Dec Jan Feb Source: Nielsen XAOC 8400-30
Slide 31: Annie's Performance Accelerating
Annie’s Performance Accelerating Annie’s • Growing Distribution F16 Retail Sales Double Digits (% vs. LY) 14% • Launching New Platforms 8% 1H Q3 Soup Cereal Yogurt Source: Nielsen XAOC + Natural Supermarkets + Whole Foods; Three Months Ending 1.31.16 8400-31
Slide 32: Soup and Baking Season Update
Soup and Baking Season Update (Dollar Share Growth vs. LY) Ready-to-serve Soup Refrigerated Dough Dessert Mixes F16 Oct-Feb F16 Sep-Dec F16 Sep-Dec +2.0 Points +1.8 Points +0.1 Points Source: Nielsen XAOC 8400-32
Slide 33: Fourth Quarter Fiscal 2016 Performance Drivers
Fourth Quarter Fiscal 2016 Performance Drivers • Renovation Continuing To Gain Traction • Increased Media Investment • Beginning to Lap Display Merchandising Reductions • Yogurt Headwinds Remain, but Moderating • Green Giant Sale and 53rd Week Comparison Will Impact Reported Results 8400-33
Slide 34: U.S. Retail Summary
U.S. Retail Summary • Strong Year-to-date Profit and Margin Performance • Continued Headwinds in Yogurt and Display Merchandising • Consumer First Efforts Gaining Traction in Key Businesses 8400-34
Slide 35: Third Quarter 2016 Operating Highlights
Third Quarter 2016 Operating Highlights Ken Powell Chairman and CEO 8400-35
Slide 36: Convenience Stores & Foodservice Nine-month Fiscal 2016 Financial Summary
Convenience Stores & Foodservice Nine-month Fiscal 2016 Financial Summary ($ in Millions) $ % Change Net Sales $ 1,437 -2% 6 Focus Platforms 6% Segment Operating Profit 273 8% 8400-36
Slide 37: Convenience Stores & Foodservice Nine-month Fiscal 2016 Highlights
Convenience Stores & Foodservice Nine-month Fiscal 2016 Highlights Frozen Meals Cereal Yogurt 8400-37
Slide 38: International Segment Nine-month Fiscal 2016 Financial Summary
International Segment Nine-month Fiscal 2016 Financial Summary ($ in Millions) Constant- currency $ % Change % Change* Net Sales $3,428 -12% 2% Segment Operating Profit 324 -17% -1% Divestiture: -1 Point of Net Sales Growth YTD *Non-GAAP measures. See appendix for reconciliation. 8400-38
Slide 39: Canada Highlights
Canada Highlights F16 Nine-month Constant-currency Net Sales Growth: -2%* Snacks Old El Paso F16 YTD Retail Sales: +11% F16 YTD Retail Sales: +2% *Non-GAAP measure. See appendix for reconciliation. Source: Nielsen FYTD through 1.23.16. 8400-39
Slide 40: Europe Highlights
Europe Highlights F16 Nine-month Constant-currency Net Sales Growth: +1%* Häagen-Dazs Old El Paso F16 YTD Retail Sales: +13% F16 YTD Retail Sales: +1% Yogurt F16 YTD Retail Sales: -2% *Non-GAAP measure. See appendix for reconciliation. Source: Nielsen FYTD through January 2016. 8400-40
Slide 41: Latin America Highlights
Latin America Highlights F16 Nine-month Constant-currency Net Sales Growth: +11%* Brazil • Q3 Net Sales: +HSD** • Posting Sequential Sales Improvement • Carolina Integration Underway Mexico • Q3 Net Sales: +DD** *Non-GAAP measure. See appendix for reconciliation. **Actual net sales in local currency
Slide 42: Asia/Pacific Highlights
Asia/Pacific Highlights Asia/Pacific F16 Nine-month Constant-currency Net Sales Growth: +3%* Wanchai Ferry in China Yoplait in China Q3 Net Sales: +LSD ** Q3 Market Share = 10% *Non-GAAP measure. See appendix for reconciliation. **Actual net sales in local currency translated to USD at a fixed excha
Slide 43: Asia/Pacific Highlights - AMEA
Asia/Pacific Highlights - AMEA Häagen-Dazs Ice Cream Betty Crocker Snacks F16 Nine-month Net Sales: +9%* F16 Nine-month Net Sales: +15%* India F16 Nine-month Net Sales: +20%* *Actual net sales in local currency translated to USD at a fixed exchange rate 8400-43
Slide 44: Third Quarter Fiscal 2016 Summary
Third Quarter Fiscal 2016 Summary • Third Quarter Results in Line with Expectations • Foreign Exchange and Green Giant Divestiture Impacting Reported Results • 5th Consecutive Quarter of Adjusted Operating Profit Margin* Expansion • Reaffirming Fiscal 2016 Growth Targets *Non-GAAP measure. 8400-44
Slide 45: General Mills Fiscal 2016 Third Quarter Results
General Mills Fiscal 2016 Third Quarter Results 8400-45
Slide 46: Reconciliation of Third Quarter Constant-currency Net Sales Growth
Reconciliation of Third Quarter Constant-currency Net Sales Growth (Fiscal Year) Q3 2016 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Europe -9% -7 pts -2% Canada -26 -12 -14 Asia/Pacific -1 -5 4 Latin America -22 -38 16 To
Slide 47: Reconciliation of Total Segment Operating Profit
Reconciliation of Total Segment Operating Profit (Fiscal Years, $ in Millions) Q3 Nine-Month 2016 2015 2016 2015 U.S. Retail $518 $521 $1,749 $1,594 International 70 108 324 389 Convenience Stores & Foodservice 91 69 273 253 Total Segment Operating Profit $679 $698 $2,345 $2,235 Unallocated Corporat
Slide 48: Reconciliation of Constant-currency Total Segment Operating Profit Growth
Reconciliation of Constant-currency Total Segment Operating Profit Growth (Fiscal Year) 2016 % Change in % Change in Total Segment Total Segment Operating Profit Operating Profit Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Q3 -3% -2 pts -1% Nine Months 5% -3 pts 8%
Slide 49: Reconciliation of Third Quarter Adjusted Diluted EPS and Constant-currency Growth
Reconciliation of Third Quarter Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Q3 2016 2015 Change Diluted EPS $0.59 $0.56 5% Mark-to-market Effects -- 0.05 Restructuring 0.05 0.07 Project-related costs 0.01 -- Venezuela Currency Devaluation -- 0.01 Integration Costs -
Slide 50: Reconciliation of Nine-month Constant-currency Net Sales Growth
Reconciliation of Nine-month Constant-currency Net Sales Growth (Fiscal Year) Nine Months 2016 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Europe -11% -12pts 1% Canada -17 -15 -2 Asia/Pacific -1 -4 3 Latin America -23 -34
Slide 51: Reconciliation of Adjusted Gross Margin
Reconciliation of Adjusted Gross Margin (Fiscal Years, $ in Millions) Q3 2016 Q3 2015 % of % of $ Net Sales $ Net Sales Net Sales $4,002 $4,351 Gross Margin as Reported $1,358 33.9% $1,376 31.6% Mark-to-market Effects 7 44 Restructuring 17 22 Project-related costs 10 3 Venezuela Currency Devaluation
Slide 52: Reconciliation of Constant-currency International Segment Operating Profit Growth
Reconciliation of Constant-currency International Segment Operating Profit Growth (Fiscal Year) 2016 % Change in % Change in International International Segment Segment Operating Operating Profit Impact of Foreign Profit on a Constant- as Reported Currency Exchange currency Basis Q3 -35% -11 pts -24
Slide 53: Reconciliation of Third Quarter Constant-currency After-tax JV Earnings
Reconciliation of Third Quarter Constant-currency After-tax JV Earnings (Fiscal Year) Q3 2016 % Change in % Change in After-tax After-tax JV Earnings JV Earnings Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis 24% 5 pts 19% 8400-53
Slide 54: Reconciliation of Tax Rate Excluding Items
Reconciliation of Tax Rate Excluding Items (Fiscal Years, $ in Millions) Q3 2016 Q3 2015 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $509 $158 $457 $116 Mark-to-market effects 7 3 44 16 Restructuring 34 8 71 26 Project-related costs 10 4 3 1 Venezuela Currency Devaluati
Slide 55: Reconciliation of Nine-month Adjusted Diluted EPS and Constant-currency Growth
Reconciliation of Nine-month Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Nine-month 2016 2015 Change Diluted EPS $2.15 $1.67 29% Mark-to-market Effects (0.01) 0.10 Restructuring 0.22 0.32 Project-related costs 0.04 -- Divestiture (gain) (0.14) -- Venezuela Currency
Slide 56: Reconciliation of Nine-month Free Cash Flow
Reconciliation of Nine-month Free Cash Flow Nine Nine Months Months 2016 2015 Net Cash Provided by Operating Activities, As Reported $1,862 $1,561 Purchases of Land, Building and Equipment (478) (491) Free Cash Flow $1,384 $1,071 Table does not foot due to rounding. 8400-56