Mondelez International, Inc. · NASDAQ:MDLZ
Mondelez International — CAGNY Conference 2016
64 slides from Mondelez International's conference presentation, Feb 16, 2016
Slide 1: Mondelēz International CAGNY Conference
Mondelēz International CAGNY Conference February 16, 2016 Exhibit 99.2
Slide 2: Irene Rosenfeld, Chairman and CEO
Irene Rosenfeld Chairman and CEO
Slide 3: Forward-looking statements
This presentation contains a number of forward-looking statements. Words, and variations of words, such as “will,” “expect,” “intend,” “believe,” “should,” “deliver,” “drive,” “potential,” “opportunity,” “target,” “outlook” and similar expressions are intended to identify our forward-looking stateme
Slide 4: Mondelez International
Mondelez International ad
Slide 5: We start with an advantaged platform
We start with an advantaged platform Focused Snacks Portfolio Leading Snack Shares Favorite Snacks Brands Strong Routes-to- Market Advantaged Geographic Footprint World-Class Talent & Capabilities
Slide 6: Snacks are growing around the world
Snacks are growing around the world $1.2 trillion global snacking market1 High margin Expandable consumption Grows with GDP in emerging markets Source: Euromonitor.
Slide 7: Leading positions in fast-growing snacks categories
Biscuits #1 Chocolate #1 Leading positions in fast-growing snacks categories $27B in pro forma Adjusted Net Revenues in 20151 Snacks 85% Beverages 6% Cheese & Grocery 9% Gum #2 Candy #1 Global Market Share Ranking2 Pro forma Adjusted Net Revenues exclude Venezuela operations. See Form 8-K dated Febr
Slide 8: Favorite brands in each snacks category
Favorite brands in each snacks category
Slide 9: Advantaged global footprint
Advantaged global footprint $27B in pro forma Adjusted Net Revenues in 20151 Emerging Markets 37% Developed Markets 63% Latin America 14% Asia Pacific 16% EEMEA 10% Europe 34% North America 26% Pro forma Adjusted Net Revenues exclude Venezuela operations. See Form 8-K dated February 3, 2016. See GAA
Slide 10: Positioned to deliver sustainable top and bottom-line growth
One of few industry players positioned to deliver sustainable top and bottom-line growth Grow Revenue … at or above category growth rates Expand Margins … by reducing supply chain and overhead costs Top-Tier Shareholder Returns
Slide 11: Focused on what we can control to deliver top-tier performance
Focused on what we can control to deliver top-tier performance Areas of Focus Focus our portfolio on snacks Pure-play coffee transaction Bolt-on acquisitions for capability/footprint Revenue management Focus on Power Brands Eliminate underperforming SKUs Optimize trade support ~85% of revenue from s
Slide 12: Focusing on Power Brands to drive profitable growth
Focusing on Power Brands to drive profitable growth $27B in pro forma Adjusted Net Revenues in 20151 Power Brands 68% Non-Power Brands 32% Highest growth potential Grew 2x faster than overall company2 More profitable Operating income margins +100-200 bps vs. non-Power Brands Command 80%+ of A&C supp
Slide 13: Short-term focus on eliminating underperforming SKUs
Short-term focus on eliminating underperforming SKUs $27B in pro forma Adjusted Net Revenues in 20151 Strengthens revenue mix and improves margin Enables supply chain simplification Expect much smaller impact on growth going forward Pro forma Adjusted Net Revenues exclude Venezuela operations. See F
Slide 14: Optimizing trade support
Optimizing trade support Focus on increasing ROI of trade and promotional support Pacing driven by impact on volume/mix, share and customer relationships Short-term headwind to revenue growth, but accretive to margins 2015 Initiatives Longer Term Near Term Standardize KPIs, analytical tools and add
Slide 15: Focused on what we can control to deliver top-tier performance
Focused on what we can control to deliver top-tier performance Areas of Focus Impact on Results Improve our margins by reducing costs Supply chain reinvention Improve mix / simplify portfolio Overhead reduction Top-tier margin expansion Focus our portfolio on snacks Pure-play coffee transaction Bolt
Slide 16: Delivered strong performance in 2015
Delivered strong performance in 2015 Results are pro forma. Pro forma results exclude Venezuela operations. See Form 8-K dated February 3, 2016. See GAAP to Non-GAAP reconciliations at the end of this presentation. Expand Margins Grow Revenue Adj. GM Margin +260bps1 Adj. OI Margin +150bps1 Net Produ
Slide 17: Building top-line momentum throughout 2015
Building top-line momentum throughout 2015 2015 Pro Forma Organic Net Revenue Growth1 2015 Snacks Share Performance2,3 Pro forma Organic Net Revenue growth excludes Venezuela operations. See Form 8-K dated February 3, 2016. See GAAP to Non-GAAP reconciliations at the end of this presentation. Share
Slide 18: Delivered top-tier performance versus peers
Delivered top-tier performance versus peers 20151,2 Organic Revenue Growth Adjusted Gross Margin Expansion Adjusted Operating Income Margin Expansion Adjusted Eps Growth (Constant FX) 1 Company A Mondelēz International Company J Company G 2 Company H Company C Company L Company H 3 Company I Company
Slide 19: Different focus for developed vs. emerging markets
Different focus for developed vs. emerging markets Pro forma results exclude Venezuela operations. See Form 8-K dated February 3, 2016. See GAAP to Non-GAAP reconciliations at the end of this presentation. For the purpose of this chart, with respect to the change in Adjusted Operating Income margin,
Slide 20: Developed markets stabilizing
Developed markets stabilizing Expecting positive volume/mix in 2016 Developed Markets Organic Net Revenue Growth Drivers Price Vol/Mix +3pp (3)pp 350+bps1 Adj. OI Margin Improvement For the purpose of this chart, with respect to the change in Adjusted Operating Income margin, Developed Markets refle
Slide 21: Developed market example: UK Chocolate
Developed market example: UK Chocolate Source: ACNielsen. Protecting & Strengthening a Leading Franchise Priced to recover cocoa-driven inflation Volume/mix-driven growth in H2’15 Stepped-up A&C and innovation Narrowed price gaps Gained share in H2’15 Organic Net Revenue Growth Gross Margin (low-to-
Slide 22: Developed market example: U.S. Biscuits
Developed market example: U.S. Biscuits Accelerating Growth and Expanding Margins Delayed investment in H1’15 until new capacity on stream Accelerated growth in H2’15 Stepped-up A&C Strong innovation with Oreo Thins and belVita Bites Volume/mix-driven growth Gained share in H2’15 Organic Net Revenue
Slide 23: Emerging markets remain challenged, largely due to Brazil and Russia
Emerging markets remain challenged, largely due to Brazil and Russia Emerging Markets: Pro Forma Organic Net Revenue Growth Drivers Price Vol/Mix +10pp (10)pp Expecting positive volume/mix in 2016, excluding Russia and Brazil
Slide 24: Emerging market example: Russia Chocolate
Emerging market example: Russia Chocolate Source: ACNielsen. Gross Margin ~300 bps Outstanding Execution in Very Volatile Environment Sharp and rapid devaluation of the Russian ruble beginning Q4 2014 Protected gross profit margin with price and productivity Implemented 3 price increases in 2015 Mai
Slide 25: Emerging market example: India Chocolate
Emerging market example: India Chocolate Organic Net Revenue Growth Executed Significant Pricing to Protect/Improve Margins Leading market share (~65%) with iconic brands Double-digit price increase in H1’15 to recover commodity- and currency-driven inflation Significantly expanded gross margin Impr
Slide 26: Increasingly challenging environment
Increasingly challenging environment Source: International Monetary Fund. Source: ACNielsen. Weaker Economic Growth Slowing Snacks Category Emerging Markets GDP Growth1 Global Snacks Category Growth2
Slide 27: Increasingly challenging environment
Increasingly challenging environment Source: FactSet. Volatile Commodities Challenging Currencies Cocoa Price Index1 Currency Index vs. USD1 Dec. 31, 2012 =100 Dec. 31, 2012 =100 Euro Real Ruble
Slide 28: 2016 Framework
2016 Framework Build on strong 2015 and solid momentum exiting year Price to protect gross margin and offset inflation Distort investments to Power Brands Enhance revenue mix Maintain prudent outlook given challenging environment
Slide 29: 2016 Outlook
2016 Outlook Organic Net Revenue Growth At least 2% Adjusted OI Margin 15%-16% Up ~200bps Underlying organic growth in line with 3%-4% category growth ~(125)bps headwind from revenue management actions Improving volume/mix trends Continued share improvement Developed markets continue to drive most o
Slide 30: 2016 Outlook
2016 Outlook Adjusted EPS Double-digit Growth1 Free Cash Flow excluding items ~$1.4B Strong operating gains drive EPS Modest tax headwind Coffee JV headwind in H1 Strong operating cash flow Includes ~$0.8B of restructuring costs Capex of ~5% of revenue Constant currency.
Slide 31: Positioned to deliver sustainable top- and bottom-line growth
One of few industry players positioned to deliver sustainable top- and bottom-line growth Grow Revenue … at or above category growth rates Expand Margins … by reducing supply chain and overhead costs Top-Tier Shareholder Returns
Slide 32: Brian Gladden, EVP and Chief Financial Officer
Brian Gladden EVP and Chief Financial Officer
Slide 33: Confident in margin improvement to 17%-18% in 2018
Confident in margin improvement to 17%-18% in 2018 Adjusted Operating Income Margin 2016-2018 Drivers Supply Chain Productivity + + + – – Overhead Reductions Indirect costs Global shared services Increased A&C + + Revenue Mix + + 17%-18% 15%-16% ~700 bps increase 1 1 1 Results are pro forma. Pro for
Slide 34: Expanding Adjusted Gross Profit margin by 275-375 bps by 2018
Expanding Adjusted Gross Profit margin by 275-375 bps by 2018 Price to offset commodity and currency-driven inflation World-class net productivity Strengthened revenue mix Based on conservative top-line and category growth Adjusted Gross Profit Margin +275-375 bps increase 42%-43% Results are pro fo
Slide 35: 3.5%+ net productivity annually through 2018
3.5%+ Net productivity annually through 2018 Net Productivity as a Percent of Cost of Goods Sold1 2013 2014 2015 2016E- 2018E 3.5%+ 2013 2015 2018E Lines of the Future Installed 0 35 70 Power Brands on Advantaged Assets ~15% ~25% ~70% SKUs ~74k ~30k Suppliers ~100k ~60k Key Drivers 2013-2015 net pro
Slide 36: Lines of the Future and Salinas biscuit plant
6_81 7 LOF operating in Q4’15 Adding 4 lines in mid-2016 Power Brands focus Key driver to improvement in North America margin in 2015 Much more to come Delivering committed savings at Salinas biscuit plant reduce costs
Slide 37: Reinventing our manufacturing network
Reinventing our manufacturing network Opava, Czech Republic Opened September 2015 Largest MDLZ biscuit plant in Europe Sri City, India Opening Q2 2016 Multi-category site Bahrain Opening Q1 2017 Focused biscuits facility
Slide 38: Indirect cost progress ahead of plans
Indirect cost progress ahead of plans Cost Package 2 year performance Targeted Reduction Update 1. Travel ü+ 50%+ Revised policies, accelerate progress 2. Facilities ü 55% Expanded scope, revised policies 3. Contractors & Consultants ü+ 70%+ Hit ‘18 target in ‘15 … reset target 4. Perquisite Vehicle
Slide 39: Shared services migrations on track
Shared services migrations on track Finance 40%+ of activities ~50% average cost savings ~150 separate process over 3 years Function % Activities in Scope Human Resources Order Management Sourcing Sales ~50% ~40% ~40% ~30% ~20% % Migrated
Slide 40: Confident in margin improvement to 17%-18% by 2018
6_81 Confident in margin improvement to 17%-18% by 2018 reduce costs Price to recover commodity- and FX-driven inflation Strong net productivity Improve revenue mix 275 to 375 bps Gross Margin Expansion Reduce Overheads Indirect expenses Global shared services Prudently increase A&C and route-to-mar
Slide 41: Cash flow
Cash flow ($ billions) Pro Forma 2015 2016E Net Cash Provided by Operating Activities, excluding items and Restructuring Program1 $4.3 $3.5+ Capital Expenditures (including Restructuring) $(1.5) ~$(1.3) Restructuring Program $(0.8) ~$(0.8) Free Cash Flow excluding items1 $2.0 $1.4+ Exceeded ~$1.0B t
Slide 42: Cash flow trends and targets
Reduced CCC by 22 days in 2015 Best in class working capital model Working Capital Capital Expenditures Capital expenditures near term includes ~$600MM of restructuring in 2016 and 2017 Capital expenditures of 4.0-4.5% of revenue in the long-term Restructuring $1.0 of $2.5B restructuring costs spent
Slide 43: Disciplined capital allocation based on returns
Disciplined capital allocation based on returns Brand support and route-to-market expansion Strong net productivity Overhead reductions Reinvest to Drive Top-Tier Growth Focus on core categories Predominantly in emerging markets M&A $5.5B share repurchase authorization remaining through 2018 Targeti
Slide 44: Strengthening advantaged snacks platform
Strengthening advantaged snacks platform Strong 2015 results In 2016, build on momentum to accelerate revenue growth and expand Adjusted OI margin by ~200 bps Delivering top-tier shareholder returns over long term
Slide 45: Mondelez International
Mondelez International ad
Slide 46: Appendix
Appendix
Slide 47: Commitment to solid investment grade ratings
Appendix: Commitment to solid investment grade ratings ($ billions) Total Debt $15.4 Net Debt $13.51 Committed to maintaining investment-grade rating with access to Tier 2 CP market $4.5 billion, multi-year revolving credit facility2 to backstop CP Reduced weighted-average cost of LT debt to 3.5% Lo
Slide 48: Manageable long-term debt maturity profile
Pro Forma reflects recent issuance of CHF and EUR Notes in January 2016 and maturity of USD Note on February 9, 2016. Euro notes converted at 0.9206 EUR/USD; GBP notes converted at 0.6786 GBP/USD; and CHF notes converted at 1.0021 CHF/USD $0.8 $1.7 $4.4 $0.7 Long-Term Debt Maturities Pro Forma Balan
Slide 49: Definitions of the company's non-GAAP financial measures
DEFINITIONS OF THE COMPANY’S NON-GAAP FINANCIAL MEASURES The company’s non-GAAP financial measures and corresponding metrics reflect how the company evaluates its operating results currently and provide improved comparability of operating results. As new events or circumstances arise, these definiti
Slide 50: Reconciliation
GAAP to Non-GAAP Reconciliation Biscuits Chocolate Gum & Candy Total Snacks Beverage Cheese & Grocery Mondelēz International For the Year Ended December 31, 2015 Reported (GAAP) 11,393 $ 8,074 $ 4,258 $ 23,725 $ 3,260 $ 2,651 $ 29,636 $ Historical coffee business - - - - (1,627) - (1,627) Adjusted (
Slide 51: Reconciliation
GAAP to Non-GAAP Reconciliation Power Brands Non-Power Brands Mondelēz International Emerging Markets Developed Markets Mondelēz International For the Year Ended December 31, 2015 Reported (GAAP) 20,194 $ 9,442 $ 29,636 $ 11,585 $ 18,051 $ 29,636 $ Historical coffee business (1,179) (448) (1,627) (4
Slide 52: Reconciliation
GAAP to Non-GAAP Reconciliation Latin America Asia Pacific EEMEA Europe North America Mondelēz International For the Year Ended December 31, 2015 Reported (GAAP) 4,988 $ 4,360 $ 2,786 $ 10,528 $ 6,974 $ 29,636 $ Historical coffee business - (33) (246) (1,348) - (1,627) Adjusted (Non-GAAP) 4,988 $ 4,
Slide 53: Reconciliation
GAAP to Non-GAAP Reconciliation Net Revenues Gross Profit Gross Profit Margin Operating Income Operating Income margin Reported (GAAP) 29,636 $ 11,512 $ 38.8% 8,897 $ 30.0% 2012-2014 Restructuring Program costs - (1) (4) 2014-2018 Restructuring Program costs - 42 1,002 Acquisition integration costs
Slide 54: Reconciliation
GAAP to Non-GAAP Reconciliation Net Revenues Gross Profit Gross Profit Margin Operating Income Operating Income margin Reported (GAAP) 34,244 $ 12,597 $ 36.8% 3,242 $ 9.5% Spin-Off Costs - (2) 35 2012-2014 Restructuring Program costs - 11 459 2014-2018 Restructuring Program costs - 3 381 Integration
Slide 55: Reconciliation
GAAP to Non-GAAP Reconciliation Net Revenues Gross Profit Gross Profit Margin Operating Income Operating Income margin Reported (GAAP) 35,299 $ 13,110 $ 37.1% 3,971 $ 11.2% Spin-Off Costs - - 62 2012-2014 Restructuring Program costs - 10 330 Integration Program and other acquisition integration cost
Slide 56: Reconciliation
GAAP to Non-GAAP Reconciliation 2015 2014 $ Change % Change Diluted EPS attributable to Mondelēz International 4.44 $ 1.28 $ 3.16 $ 246.9% Spin-Off Costs - 0.01 (0.01) 2012-2014 Restructuring Program costs - 0.21 (0.21) 2014-2018 Restructuring Program costs 0.45 0.16 0.29 Remeasurement of net moneta
Slide 57: Reconciliation
GAAP to Non-GAAP Reconciliation Q1 Q2 Q3 Q4 FY 2015 Reported (GAAP) 7,762 $ 7,661 $ 6,849 $ 7,364 $ 29,636 $ Historical coffee business (752) (875) - - (1,627) Acquisitions (5) (10) (84) (66) (165) Accounting calendar change (39) - (19) (20) (78) Currency 1,033 933 1,015 852 3,833 Organic (Non-GAAP)
Slide 58: Reconciliation
GAAP to Non-GAAP Reconciliation Emerging Markets Developed Markets Mondelēz International For the Twelve Months Ended December 31, 2015 Reported (GAAP) 11,585 $ 18,051 $ 29,636 $ Historical coffee business (442) (1,185) (1,627) Acquisitions (128) (37) (165) Accounting calendar change - (78) (78) Cur
Slide 59: Reconciliation
GAAP to Non-GAAP Reconciliation Emerging Markets Developed Markets Mondelēz International For the Twelve Months Ended December 31, 2014 Reported (GAAP) 12,961 $ 21,283 $ 34,244 $ Historical coffee business (1,106) (2,670) (3,776) Acquisitions (14) - (14) Currency 1,509 117 1,626 Organic (Non-GAAP) 1
Slide 60: Reconciliation
GAAP to Non-GAAP Reconciliation Power Brands Non-Power Brands Mondelēz International For the Twelve Months Ended December 31, 2015 Reported (GAAP) 20,194 $ 9,442 $ 29,636 $ Historical coffee business (1,179) (448) (1,627) Acquisitions - (165) (165) Accounting calendar change (60) (18) (78) Currency
Slide 61: Reconciliation
GAAP to Non-GAAP Reconciliation Latin America Asia Pacific EEMEA Total Europe North America Total Net Revenues Reported (GAAP) 4,988 $ 4,360 $ 2,786 $ 12,134 $ 10,528 $ 6,974 $ 17,502 $ Historical coffee business - (33) (246) (279) (1,348) - (1,348) Adjusted (Non-GAAP) 4,988 $ 4,327 $ 2,540 $ 11,855
Slide 62: Reconciliation
GAAP to Non-GAAP Reconciliation Latin America Asia Pacific EEMEA Total Europe North America Total Net Revenue Reported (GAAP) 5,382 $ 4,952 $ 3,915 $ 14,249 $ 14,059 $ 6,991 $ 21,050 $ Divestitures - - (20) (11) (39) Historical coffee business (5) (93) (730) (828) (3,076) - (3,076) Adjusted (Non-GAA
Slide 63: Reconciliation
GAAP to Non-GAAP Reconciliation Reported Exclude Venezuela Pro Forma Net Cash Provided by Operating Activities (GAAP) 3,728 $ (344) $ 3,384 $ Items Cash payments for accrued interest and other related fees associated with debt tendered as of March 20, 2015 (1) 58 - 58 Restructuring Programs Cash pay
Slide 64: Reconciliation
GAAP to Non-GAAP Reconciliation Reported Exclude Venezuela Pro Forma Net Cash Provided by Operating Activities (GAAP) 3,728 $ (344) $ 3,384 $ Capital Expenditures (1,514) 22 (1,492) Free Cash Flow (Non-GAAP) 2,214 $ (322) $ 1,892 $ Items Cash payments for accrued interest and other related fees asso