General Mills, Inc. · NYSE:GIS
General Mills — Barclays Global Consumer Staples Conference 2017
41 slides from General Mills's conference presentation, Sep 7, 2017
Slide 1: Barclays Global Consumer Staples Conference
GENERAL MILLS B a r c l ay s G l o b a l C o n s u m e r S t a p l e s C o n fe r e n c e September 7, 2017
Slide 2: Don Mulligan, EVP, Chief Financial Officer
Don Mulligan EVP, Chief Financial Officer
Slide 3: 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 4: General Mills Overview
General Mills Overview $15.6B Net Sales in F17 38,000 Employees Purpose: We serve the world by making food people love Goal: Create market leading growth to deliver top tier shareholder returns Strategy: Consumer First 4
Slide 5: Our Shareholder Return Model
Our Shareholder Return Model GROWTH CASH RETURNS SHAREHOLDER RETURN 2-3% Double Digit Mid 2% Single Digit Low Single Digit Net Sales¹* Total Segment Net Share Dividend Yield Total Shareholder Operating Profit²* Repurchase Return Target: Cash Conversion ≥ 95% Target: Cash Return to Shareholders ≥ 90%
Slide 6: Four Levers to Drive Shareholder Returns
Four Levers to Drive Shareholder Returns Sales Margin Cash Cash Growth Expansion Conversion Returns 6
Slide 7: Three of Four Levers Have Been Working
Three of Four Levers Have Been Working RETURNING TO CONSISTENT TOPLINE GROWTH IS OUR TOP PRIORITY Sales Margin Cash Cash Growth Expansion Conversion Returns ADJUSTED OPERATING FREE CASH FLOW CASH RETURNS TO ORGANIC NET SALES GROWTH* PROFIT MARGIN* CONVERSION* SHAREHOLDERS 18.1% 97% 116% Flat Flat 16
Slide 8: Total Shareholder Return Track Record
Total Shareholder Return Track Record (PRICE APPRECIATION PLUS DIVIDENDS, COMPOUND ANNUAL GROWTH) 12% 11% 11% 10% -11% CY06-16 CY11-16 CY13-16 CY16 CYTD 17 Source: CapIQ, CYTD ended Sep. 5, 2017 8
Slide 9: Fiscal 2018 Growth Priorities
Fiscal 2018 Growth Priorities • Grow Cereal Globally (Including CPW) • Improve U.S. Yogurt Through Innovation • Invest in Differential Growth Opportunities − Häagen-Dazs − Snack Bars − Old El Paso − Natural & Organic • Manage Foundation Brands with Appropriate Investment 9
Slide 10: Remain on Track to Fiscal 2018 Targets
Remain on Track to Fiscal 2018 Targets Change vs LY Organic Net Sales* -1% to -2% Total Segment Operating Profit* Flat to +1%1 Adjusted Operating Profit Margin* Higher Adjusted Diluted EPS* +1 to +2%¹ Reporting Q1 Results September 20 * Non-GAAP measure 1 Constant-currency growth rate 10
Slide 11: Today’s Agenda
Today’s Agenda ADDRESS INVESTORS’ TOP FAQS IN RECENT MONTHS • As You Enter Fiscal 2018, What is Changing at General Mills? • What are you Seeing in the Food Retail Environment in the U.S.? • Can General Mills Return to Consistent Topline Growth? 11
Slide 12: What’s Not Changing at General Mills
What’s Not Changing at General Mills • General Mills’ Purpose and Values • Our Consumer First Strategy • Our Focus on Five Key Global Platforms • Our Shareholder Return Model 12
Slide 13: New Global Organization Structure
New Global Organization Structure • Jeff Harmening Appointed CEO on June 1 Realigned New Global Global Capabilities • New Business Segments Segments • Flatter Organization & More Global Global Senior Leadership Functions • Strengthening Capabilities with External Talent 13
Slide 14: Global Prioritization
Global Prioritization Oui by Yoplait in the U.S. Häagen-Dazs Stick Bars in Asia and Europe Yoplait Expansion in China Annie’s on TV for the First Time Old El Paso Brand Building Global Häagen-Dazs Campaign 14
Slide 15: Global Priorities & Structure
Global Priorities & Structure Enable Better Idea Sharing DAIRY STRATEGIC GLOBAL GLOBAL BUSINESS UNIT SNACK BARS OLD EL PASO U.S. Retail India Leveraging Global Insights Optimizing Across Geographies Transferring Local Best Practices 15
Slide 16: Finding the Right Balance in Fiscal 2018
Finding the Right Balance in Fiscal 2018 INCREASED MEDIA INCREASED “IN THE ZONE” ON INVESTMENT INNOVATION PRICING 16
Slide 17: Today’s Agenda
Today’s Agenda ADDRESS INVESTORS’ TOP FAQS IN RECENT MONTHS • As You Enter Fiscal 2018, What is Changing at General Mills? • What are you Seeing in the Food Retail Environment in the U.S.? • Can General Mills Return to Consistent Topline Growth? 17
Slide 18: U.S. Food and Beverage Performance
U.S. Food and Beverage Performance U.S. FOOD AND BEVERAGE RETAIL SALES (% vs. LY) 0.8% 0.3% 0.2% -0.4% -1.3% Q1 Q2 Q3 Q4 Q1 Fiscal 2017 Fiscal 2018 Source: Nielsen XAOC 18
Slide 19: Private Label in the U.S.
Private Label in the U.S. U.S. PRIVATE LABEL RETAIL DOLLAR SHARE (% OF SALES) • Private Label Share Low in General Mills’ Categories 18.5 18.4 18.0 18.4 • Share Relatively Flat Across 10.3 10.1 9.7 10.0 Industry • Innovation is Best Defense Jul ‘14 Jul ‘15 Jul ‘16 Jul ‘17 Against Private Label Total
Slide 20: Food E-commerce in the U.S.
Food E-commerce in the U.S. • Transition to Full Basket Shopping Will E-COMMERCE PROJECTION (Share of General Mills Drive U.S. Food Growth Online U.S. Food Net Sales) 5% • Winning the First Basket is Critical • Online Will Represent At Least 5% of 1.5% General Mills U.S. Retail Sales by 2020 F17 F20
Slide 21: Food E-commerce in Europe
Food E-commerce in Europe U.K. RETAIL SALES DOLLAR SHARE INDEX (E-COMMERCE / TRADITIONAL) 128 • Private Label Share Under-indexes Online in Europe, Even in High P/L Markets Like the U.K. 65 • General Mills Brands are Advantaged Online • Similar Dynamics Playing Out in the U.S. Private Label General
Slide 22: Today’s Agenda
Today’s Agenda ADDRESS INVESTORS’ TOP FAQS IN RECENT MONTHS • As You Enter Fiscal 2018, What is Changing at General Mills? • What are you Seeing in the Food Retail Environment in the U.S.? • Can General Mills Return to Consistent Topline Growth? 22
Slide 23: The Keys to Consistent Topline Growth
The Keys to Consistent Topline Growth 1) Win Where We Play 2) Expand Where We Play 3) Reshape Our Portfolio for Growth 23
Slide 24: Win Where We Play
Win Where We Play POSITIVE OUTLOOK IN OUR GLOBAL CATEGORIES 2016 PROJECTED GLOBAL CATEGORY RETAIL SALES 5-YR. CGR RTE Cereal $23 Billion +LSD Ice Cream $64 Billion +MSD Yogurt $84 Billion +HSD Convenient Meals $89 Billion +MSD Sweet & Savory Snacks $295 Billion +MSD Source: Euromonitor, Calendar 201
Slide 25: Win Where We Play
Win Where We Play FISCAL 2018 PLAN HIGHLIGHTS TASTE NEWS IN U.S. CEREAL FUNDAMENTAL INNOVATION IN U.S. YOGURT INNOVATION AND MEDIA SUPPORT ON NATURE VALLEY HÄAGEN-DAZS INNOVATION IN EUROPE 25
Slide 26: Taste News in U.S. Cereal
Taste News in U.S. Cereal MARSHMALLOWS NEWS EACH QUARTER IN FISCAL 2018 LUCKY CHARMS U.S. RETAIL SALES (% VS. LY) 16% 3% F17 F18 Q1 10,000 Boxes of Marshmallows-only Lucky Charms Giveaway Source: Nielsen XAOC 26
Slide 27: Taste News in U.S. Cereal
Taste News in U.S. Cereal REACHING MORE CONSUMERS REESE’S PUFFS U.S. RETAIL SALES (% VS. LY) 8% 7% F17 F18 Q1 Source: Nielsen XAOC 27
Slide 28: Fundamental Innovation in U.S. Yogurt
Fundamental Innovation in U.S. Yogurt OUI BY YOPLAIT • Outperforming Other Recent LARGEST U.S. YOGURT LAUNCHES IN F13-F18 Category Innovations RETAIL SALES INDEX (FIRST SIX WEEKS RETAIL SALES, NEW PRODUCT VS. OUI) 100 • Distribution Still Building 78 • Media Support Just Beginning 54 51 46 Oui Launc
Slide 29: Increased Innovation and Media Support on Nature Valley
Increased Innovation and Media Support on Nature Valley NATURE VALLEY U.S. RETAIL SALES (% VS. LY) 8% 0% F17 F18 Q1 Source: Nielsen XAOC 29
Slide 30: Häagen-Dazs Flavor and Format Innovation in Europe
Häagen-Dazs Flavor and Format Innovation in Europe HÄAGEN-DAZS EUROPE & AUSTRALIA SEGMENT RETAIL SALES (% VS. LY) 28% 13% F17 Latest 12 Weeks Source: Nielsen/IRI, 12 weeks ended July 15, 2017 30
Slide 31: General Mills U.S. Retail Sales Trends Improving, As Expected
General Mills U.S. Retail Sales Trends Improving, As Expected GENERAL MILLS U.S. RETAIL SALES (% vs. LY) -4% -6% -7% -7% -8% Q1 Q2 Q3 Q4 Q1 Fiscal 2017 Fiscal 2018 Source: Nielsen XAOC 31
Slide 32: Expand Where We Play
Expand Where We Play LAUNCH GROWTH PLATFORMS IN OUR LARGEST MARKETS HÄAGEN-DAZS IN AUSTRALIA YOPLAIT IN CHINA ANNIE’S IN CANADA BUILD DISTRIBUTION IN UNDERDEVELOPED MARKETS Europe Latin Ex-France Asia America & U.K. 32
Slide 33: Reshape Our Portfolio for Growth
Reshape Our Portfolio for Growth F15-F17 ACQUISITIONS • M&A Has Enhanced Our Organic Growth Profile • M&A Focus Areas: • Bolt-on Acquisitions in North America and Europe F16 DIVESTITURE • Adding Scale in Emerging Markets 33
Slide 34: Today’s Summary
Today’s Summary • We’ve Made a Number of Significant Changes to Drive Improved Performance at General Mills • E-commerce Will be the Biggest Driver of Change in the U.S. Food Retail Environment and We See it as an Opportunity • We Will Return to Consistent Topline Growth By Winning Where We Play, Ex
Slide 35: Barclays Global Consumer Staples Conference
GENERAL MILLS B a r c l ay s G l o b a l C o n s u m e r S t a p l e s C o n fe r e n c e September 7, 2017
Slide 36: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2018 outlook for organic net sales growth, constant-currency total segment operating profit and adjusted diluted EPS, and adjusted operating profit margin are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting com
Slide 37: Reconciliation of Organic Net Sales Growth
Reconciliation of Organic Net Sales Growth Acquisitions Reported Organic Organic Organic Foreign & Net Sales Volume Price/Mix Net Sales Exchange Divestitures 53rd Week Growth Fiscal 2015 (2) pts 2 pts 0 % (3) pts 0 pts 1 pt (2) % Fiscal 2016 0 pts 0 pts 0 % (4) pts (1) pt (1) pt (6) % Fiscal 2017 (7
Slide 38: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of Adjusted Operating Profit Margin (Fiscal Years) Full Year % of Net Sales 2017 2016 2015 Operating profit as reported 16.4 % 16.3 % 11.8 % Mark-to-market effects (0.1) (0.4) 0.5 Divestitures (gain) loss, net 0.1 (0.9) - Restructuring costs 1.4 1.4 1.9 Project-related costs 0.3 0.4 0
Slide 39: Free Cash Flow Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (Fiscal Years, $ in Millions) 2017 2016 2015 Net earnings, including earnings attributable to redeemable and noncontrolling interests $1,701 $1,737 $1,259 Mark-to-market effects* (9) (40) 57 Divestitures (gain) loss* 9 (66) - Tax-related
Slide 40: Cash Return to Shareholders
Cash Return to Shareholders (Fiscal Years, $ in Millions) 2017 2016 2015 Dividends paid $1,135 $1,072 $1,018 Purchases of common stock for treasury 1,652 607 1,162 Proceeds from common stock issued on exercised options (113) (172) (164) Total cash return to shareholders $2,674 $1,507 $2,016 Cash ret
Slide 41: Reconciliation of Income Taxes on Adjusting Items
Reconciliation of Income Taxes on Adjusting Items (Fiscal Years, $ in Millions) 2017 2016 2015 Pretax Income Pretax Income Pretax Income Earnings* Taxes Earnings* Taxes Earnings* Taxes As reported $2,271 $655 $2,404 $755 $1,762 $587 Mark-to-market effects (14) (5) (63) (23) 90 33 Divestitures (gain)
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