General Mills, Inc. · NYSE:GIS
General Mills — Investor Day (July 2018)
60 slides from General Mills's investor day presentation, Jul 11, 2018
Slide 1: General Mills Fiscal 2019 Investor Day
GENERAL MILLS FISCAL 2019 INVESTOR DAY JULY 11, 2018
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: Plans Overview
GENERAL MILLS FISCAL 2019 INVESTOR DAY PLANS OVERVIEW Jeff Harmening Chairman and Chief Executive Officer 3
Slide 4: Operating in a Dynamic Marketplace
Operating in a Dynamic Marketplace 4
Slide 5: Our Strategic Framework is Grounded on the Consumer
Our Strategic Framework is Grounded on the Consumer 5
Slide 6: Consumer First is More Relevant Than Ever
Consumer First is More Relevant Than Ever 6
Slide 7: Our Shareholder Return Framework
Our Shareholder Return Framework Sales Margin Cash Cash Growth Expansion Conversion Returns Long-term Target: +LSD +MSD ≥ 95% ≥ 90% Organic Sales* Adj. Operating Profit* Adj. EAT to FCF* of FCF* *Non-GAAP measures. 7
Slide 8: Our Global Growth Priorities
Our Global Growth Priorities COMPETE 1 Effectively Across All Brands and All Geographies 2 ACCELERATE Our Differential Growth Platforms 3 RESHAPE the Portfolio for Growth 8
Slide 9: Increasing Innovation to Drive Growth
Increasing Innovation to Drive Growth NEW PRODUCT SALES CONTRIBUTION (% of General Mills Net Sales) Higher 4.4% 3.8% F17 F18 F19 Plan 9
Slide 10: Optimizing Brand Investment to Drive Growth
Optimizing Brand Investment to Drive Growth POINT OF SALE PACKAGING SPONSORSHIPS MEDIA 10
Slide 11: Strengthening Capabilities to Drive Growth
Strengthening Capabilities to Drive Growth STRATEGIC REVENUE MANAGEMENT E-COMMERCE Price Value Optimal Price Mix Management Price Pack Architecture Promotion Optimization Targeting $1B in Net Sales by F20 11
Slide 12: Reshaping the Portfolio to Drive Growth
Reshaping the Portfolio to Drive Growth ACQUISITIONS DIVESTITURES Business Characteristics • Declining Topline Trends • Lower Return on Investment Divestiture Scope • Approximately 5% of Company Sales 12
Slide 13: Continuing to Drive Efficiency and Support Margins
Continuing to Drive Efficiency and Support Margins COGS HMM SAVINGS • Accelerating HMM Savings ($ in Millions) $450 • SRM Driving Increased Price/Mix $391 $396 • Optimizing Distribution Network • Smart Spending Behind Brands F17 F18 F19 Plan 13
Slide 14: Our Fiscal 2019 Priorities
Our Fiscal 2019 Priorities Deliver Financial Grow The Core Transition Blue Buffalo Commitments Compete Effectively and Successfully Transition Blue Buffalo Achieve Profit and Accelerate Growth Platforms and Maintain Momentum Cash Flow Goals 14
Slide 15: Our Fiscal 2019 Targets
Our Fiscal 2019 Targets F18 BASE F19 TARGET $15.7 Billion Net Sales +9 to +10%3 Organic Net Sales² Flat to +1% $2.7 Billion¹ Adjusted Operating Profit² +6 to +9%3 $3.11¹ Adjusted Diluted EPS² -3% to Flat3 Free Cash Flow Conversion² >95% (1) Non-GAAP measure. See appendix for reconciliation. (2) Non-
Slide 16: Today's Agenda
Today’s Agenda Opening Remarks Jeff Harmening North America Retail Plans Jon Nudi Convenience Stores & Foodservice Plans Shawn O’Grady Q&A Discussion Europe & Australia Plans Bethany Quam Asia & Latin America Plans Christina Law Blue Buffalo Plans Billy Bishop JV Plans and Financial Summary Don Mull
Slide 17: North America Retail
GENERAL MILLS FISCAL 2019 INVESTOR DAY NORTH AMERICA RETAIL Jon Nudi Group President, North America Retail 17
Slide 18: Significant Progress, Work Remains
Significant Progress, Work Remains • Drove Significant Improvement in Topline Growth and In-market Competitiveness in F18 • Will Increase HMM and SRM to Protect Margins and Improve Profitability • Strong Focus on Balanced Top and Bottom Line Growth in F19 18
Slide 19: North America Retail Segment Overview
North America Retail Segment Overview F18 NET SALES = $10B 25 CATEGORIES LEADING BRANDS SERVE >95% HOUSEHOLDS Yogurt Canada Meals & Baking Snacks Cereal 19
Slide 20: Competing More Effectively
Competing More Effectively GENERAL MILLS U.S. DOLLAR SHARE (Change vs LY) -0.1 -0.5 -0.9 -1.4 F16 F17 1H F18 2H F18 Source: Nielsen XAOC 20
Slide 21: Growing Share Across Top Categories
Growing Share Across Top Categories GENERAL MILLS F18 U.S. DOLLAR SHARE (Change vs LY) 2.1 0.8 0.5 0.3 0.5 0.1 0.3 0.0 -0.6 -1.5 Cereal Bars Dough Yogurt Soup Hot Snacks Desserts Mexican Fruit Snacks N&O* Source: Nielsen XAOC *Natural & Organic products also included in other categories 21
Slide 22: North America Retail Fiscal 2019 Priorities
North America Retail Fiscal 2019 Priorities 1 Continue to Improve Sales Growth • Compete Effectively Everywhere We Play • Accelerate Growth on Snack Bars, Natural & Organic, and Old El Paso 2 Manage Costs to Protect Margins and Profitability 22
Slide 23: Stronger, Impactful Innovation in F19
Stronger, Impactful Innovation in F19 NEW PRODUCT SALES CONTRIBUTION FIRST-HALF LAUNCHES (% of North America Retail Net Sales) 8.0% Historical Levels 4.0% 0.0% F13 F14 F15 F16 F17 F18 F19 Plan 23
Slide 24: Winning at Point of Sale in F19
Winning at Point of Sale in F19 IMPROVED DISTRIBUTION E-COMMERCE LEADERSHIP IN-STORE SUPPORT (General Mills U.S. Share of Distribution) + -0.6 -1.2 F17 F18 F19 Plan Full Basket E-commerce Dollar Share Index = 120 Source: Nielsen XAOC Source: Nielsen, Retailer Data, and Internal Estimates 24
Slide 25: Breakthrough Creative Platforms in F19
Breakthrough Creative Platforms in F19 25
Slide 26: Cereal Consumer Integrations
CEREAL CONSUMER INTEGRATIONS
Slide 27: Leading Cereal Category Performance
Leading Cereal Category Performance STRENGTHENED SHARE POSITION CATEGORY GROWTH IMPROVING (GENERAL MILLS U.S. CEREAL DOLLAR SHARE) (U.S. CEREAL CATEGORY DOLLAR SALES) 31.6 31.2 -1.8% -1.7% 31.1 31.0 30.9 -2.8% 30.7 -2.9% -3.4% -3.6% F13 F14 F15 F16 F17 F18 Q3 Q4 Q1 Q2 Q3 Q4 F17 F18 Source: Nielsen X
Slide 28: Drive Cheerios Growth
Drive Cheerios Growth ACCELERATE HONEY NUT CHEERIOS HEART HEALTH WIN IN STORE 28
Slide 29: Cheerios Advertisement
CHEERIOS ADVERTISEMENT
Slide 30: Building on Taste Brand Momentum
Building on Taste Brand Momentum CINNAMON TOAST CRUNCH LUCKY CHARMS REESE’S PUFFS 30
Slide 31: Drive Growth Across Cereal Portfolio
Drive Growth Across Cereal Portfolio PRODUCT NEWS ACROSS CATEGORY-LEADING PORTFOLIO INNOVATION 31
Slide 32: Sequential Improvement in Yogurt
Sequential Improvement in Yogurt YOGURT SALES YOGURT SHARE (General Mills U.S. Yogurt Net Sales vs. LY) (General Mills U.S. Yogurt Retail Dollar Share vs. LY) F17 Q1 F18 Q2 F18 Q3 F18 Q4 F18 F17 Q1 F18 Q2 F18 Q3 F18 Q4 F18 0.1 -0.7 -5% -8% -2.0 -11% -3.5 -3.8 -18% -22% Source: Nielsen XAOC 32
Slide 33: Innovate To Restore Yogurt Growth
Innovate To Restore Yogurt Growth GROW CORE OUI IN YEAR 2 LAUNCH OUI PETITES 33
Slide 34: Launching YQ
Launching YQ HIGH PROTEIN, LESS SUGAR FOR TARGETED, MODERN MODERN HEALTH MANAGERS MARKETING PLAN 34
Slide 35: Strengthen Snack Bars Leadership
Strengthen Snack Bars Leadership LARGE & GROWING CATEGORY LEADING BARS PORTFOLIO (U.S. Snack Bars Retail Sales, $ in billions) (General Mills U.S. F18 Bars Net Sales) +2% Lärabar $5.3 B Fiber One Nature Valley • #1 Snack Bars Portfolio • 27.5% U.S. Dollar Share F17 F18 Source: Nielsen XAOC Source: N
Slide 36: Accelerate Nature Valley Growth
Accelerate Nature Valley Growth CATEGORY-LEADING INNOVATION INCREASED BRAND INVESTMENT 36
Slide 37: Nature Valley Advertisement
NATURE VALLEY ADVERTISEMENT
Slide 38: Expand Nutrition Bar Presence
Expand Nutrition Bar Presence CONTINUE TO DRIVE LARABAR EXPAND NUTRITION PORTFOLIO JUST 2-9 INGREDIENTS! 38
Slide 39: Increase Natural & Organic Presence
Increase Natural & Organic Presence LEADING PORTFOLIO OF BRANDS LARGE & GROWING BUSINESS (General Mills Natural & Organic U.S. Net Sales, $ Billions) >$1.0 ++ #2 Natural & Organic Food Producer in the U.S. F16 F17 F18 F19 Plan 39
Slide 40: Accelerate Annie's Growth
Accelerate Annie’s Growth GROW THE CORE MISSION-DRIVEN NEWS INNOVATION 40
Slide 41: Drive Growth Across Rest of Natural & Organic Portfolio
Drive Growth Across Rest of Natural & Organic Portfolio RETURNING TO TASTE NEWS EXPANDING INNOVATION OUR ROOTS & INNOVATION OUR PRESENCE 41
Slide 42: Growth Opportunity in Mexican
Growth Opportunity in Mexican LARGE & GROWING CATEGORY CONSUMERS LOVE MEXICAN! (U.S. Mexican Retail Sales, $ in Billions) +1.4% CGR $3.0 F15 F18 Source: Nielsen XAOC 42
Slide 43: Continue to Drive Old El Paso Growth
Continue to Drive Old El Paso Growth WIN IN STORE COMPELLING MESSAGING INNOVATION 43
Slide 44: Protect Margin and Profit
Protect Margin and Profit General Mills North America Retail Segment INFLATION COST HOLISTIC MARGIN STRATEGIC REVENUE PRESSURE MANAGEMENT MANAGEMENT (Input Cost Inflation, % of COGS) (COGS HMM Savings, $ in Millions) (Organic Price/Mix) +DD + -1 pt F17 F18 F19 Plan F18 F19 Plan F18 F19 Plan 44
Slide 45: North America Retail Summary
North America Retail Summary • Drove Significant Improvement in Topline Growth and In-market Competitiveness in F18 • Will Increase HMM and SRM to Protect Margins and Improve Profitability • Strong Focus on Balanced Top and Bottom Line Growth in F19 45
Slide 46: Convenience Stores & Foodservice
GENERAL MILLS FISCAL 2019 INVESTOR DAY CONVENIENCE STORES & FOODSERVICE Shawn O’Grady Group President, Convenience Stores & Foodservice; Chief Revenue Development Officer 46
Slide 47: Convenience Stores & Foodservice
Convenience Stores & Foodservice A LARGE MARKET OPPORTUNITY U.S. FOOD AND NON-ALCOHOLIC CHANNEL GROWTH BEVERAGE EXPENDITURES 2018 Est. 2018 Nominal Est. Sales Growth ($ in Billions) Total Foodservice $791 4.1% Away- At-Home From- Commercial $563 4.6% 48% Home 52% Non-Commercial $207 3.4% Convenience
Slide 48: Restaurants, Convenience Stores, Healthcare, Schools, Colleges
Restaurants Convenience Stores Healthcare K–12 Schools Colleges & Universities 48
Slide 49: Advantaged Business Model
Advantaged Business Model LEVERAGE GENERAL MILLS INNOVATE CREATE DEMAND INVESTMENT OPERATOR FIRST WITH DIRECT SALES 49
Slide 50: CS&F Growth Journey
CS&F Growth Journey F08 F13 F18 NET SALES $2B $2B $2B OPERATING PROFIT 8% 16% 20% MARGIN % of Net Sales 50
Slide 51: Focus Six Platforms
Focus Six Platforms Share Rank Cereal Yogurt Snacks Total Foodservice Cereal #1 Yogurt #1 Frozen Frozen Frozen Biscuits Baked Goods Meals Frozen Biscuits #1 Convenience Stores Snacks #2 Sources: Total US NPD SupplyTrack®, 12 months ending April 2018, in dollars; Nielsen AOD, 12 months ending May 201
Slide 52: Cereal Growth in Schools
Cereal Growth in Schools RELEVANT NEWS ON-THE-GO PORTABILITY 52
Slide 53: Yogurt Growth in Schools
Yogurt Growth in Schools RELEVANT NEWS ON-THE-GO PORTABILITY Yogurt Smoothies Coffee Coolers 53
Slide 54: Snacks Ubiquity
Snacks Ubiquity BARS EXPANSION SALTY INNOVATION 54
Slide 55: Hot Meals in Convenience Stores
Hot Meals in Convenience Stores 55
Slide 56: Frozen Biscuits & Baked Goods
Frozen Biscuits & Baked Goods 56
Slide 57: Partnering on Custom Innovation
Partnering on Custom Innovation 57
Slide 58: Annie's Bagels Video
ANNIE’S BAGELS VIDEO
Slide 59: Driving Efficiency to Protect Margins
Driving Efficiency to Protect Margins INTERNALIZATION PACKAGING REDUCTION 59
Slide 60: Convenience Stores & Foodservice Summary
Convenience Stores & Foodservice Summary • Away-from-home Growth Available • Advantaged Business Model • Relevant News & Innovation in Focus Six • Efficiency Efforts Help Protect Margins 60