Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Conagra Foods — CAGNY 2008
55 slides from Conagra Brands's conference presentation, Feb 19, 2008
Slide 1: Exhibit 99.2
Exhibit 99.2
Slide 2: Agenda
Agenda Agenda Gary Rodkin – Overview Greg Smith – Supply Chain André Hawaux – Financial Metrics
Slide 3: Gary Rodkin, CEO
Gary Rodkin, CEO Gary Rodkin, CEO
Slide 4: Note on Forward-Looking Statements
Note on Forward-Looking Statements This release contains forward-looking statements. These statements are based on management’s current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances. The Company undertakes no responsibili
Slide 5: Becoming a True Operating Company that Delivers Sustainable, Profitable Growth
Becoming a True Operating Company that Delivers Sustainable, Profitable Growth Early Focus Vision Culture Wiring Portfolio Changes Cost – “Low Hanging Fruit” Current Focus Innovation / Renovation Marketing Impact Pricing Next Wave of Productivity “Player-Coach” Approach Becoming a True Operating Com
Slide 6: Consumer Foods Segment: Top-Line Growth Drivers
Consumer Foods Segment: Consumer Foods Segment: Sticky Innovation Marketing Impact Smart Pricing Top-Line Growth Drivers
Slide 7: Sizable Equities in Attractive Categories
Sizable Equities in Attractive Categories Liquid Eggs $125 MM Number Cocoa Mix $150 MM Number Whipped Toppings $125 MM Number Cooking Spray $125 MM Number Frozen $1.9 B Number Canned Pasta $475 MM Number Popcorn $425 MM Number Canned Tomatoes $275 MM Number Shelf Stable Desserts $175 MM Number Meat
Slide 8: High Quality Sales Trends for Many Brands
High Quality Sales Trends for Many Brands High Quality Sales Trends for Many Brands Chef Boyardee Orville Redenbacher's Greater than 5% Sales Growth: Rolling 3-Qtr Period Blue Bonnet Egg Beaters Healthy Choice Hebrew National Libby’s Marie Callender's Rosarita Wesson Snack Pack
Slide 9: Innovation Platform
Innovation Platform: Innovation Platform: Amazing Taste Health & Wellness Extreme Convenience Key Drivers
Slide 10: Healthy Choice Cafe Steamers
Healthy Choice Cafe Steamers Healthy Choice Cafe Steamers
Slide 11: Healthy Choice Cafe Steamers
Healthy Choice Cafe Steamers Healthy Choice Cafe Steamers On-Track for $100 MM + Year 1 Raising the Bar Toward Restaurant Quality Meeting Strict Health & Wellness Guidelines Delivering Extreme Convenience
Slide 12: Healthy Choice Cafe Steamers Ad Video
Healthy Choice Cafe Steamers Ad Video
Slide 13: Healthy Choice Panini
Healthy Choice Panini Healthy Choice Panini
Slide 14: Healthy Choice Meals
Healthy Choice Meals Healthy Choice Meals * Includes Month Allocation on Café Steamers + 8% Avg Price + 0.3% (Measured Channels) Mkt Share + 19% (All Channels) Net Sales Healthy Choice Meals FY ’08 YTD* vs. Year AGO
Slide 15: Orville Naturals
Orville Naturals Orville Naturals
Slide 16: Orville Naturals
Orville Naturals Orville Naturals Bold Flavors All Natural One-Step Convenience
Slide 17: Orville Naturals Ad Video
Orville Naturals Ad Video
Slide 18: Hunt's
Hunt’s Hunt’s
Slide 19: Hunt's
Hunt’s Hunt’s + 1.7% + 9% Mkt Share + 1.1% Mkt Share Net Sales + 5% Net Sales 10/07 – * vs. Year AGO FY ’08 YTD vs. Year AGO Hunt’s Canned Tomatoes * Period of Increased Advertising & New Products
Slide 20: Hunt's Ad Video
Hunt’s Ad Video
Slide 21: Chef Boyardee
Chef Boyardee Chef Boyardee
Slide 22: Chef Boyardee
Chef Boyardee Chef Boyardee + 2.6% Mkt Share + 6.5% Net Sales FY ’08 YTD Chef Boyardee
Slide 23: Winter 2008 Product News
Winter 2008 Product News
Slide 24: Egg Beaters – Now with Yolk
Egg Beaters – Now with Yolk 6g 6g Protein Calories 210mg 50mg Cholesterol 5g 1.5 g Fat Shell Eggs (Large) Egg Beaters with Yolk Egg Beaters – Now with Yolk Taste at Parity with Shell Eggs
Slide 25: Egg Beaters Ad Video
Egg Beaters Ad Video
Slide 26: Orville Redenbacher's Smart Cakes
Orville Redenbacher’s Smart Cakes Orville Redenbacher’s Smart Cakes
Slide 27: Innovation Process: Brands – Categories – Technologies
Innovation Process: Brands – Categories – Technologies External Focus Early Prototyping Iterative Feedback Final Testing Launch Fewer, Bigger, Better, Faster to Market Innovation Process: Brands – Categories – Technologies
Slide 28: More Product News: Fiscal Year 2009 Pipeline
More Product News: More Product News: Game Changing Snacks Game Changing Meals Fiscal Year 2009 Pipeline Focusing on: • Healthy • Flavor • All Natural • Portable
Slide 29: Marketing Investment
Marketing Investment Marketing Investment Effectiveness Significantly Improving Long-Term A&P Target: 6-7% of Sales for Consumer Foods Segment Investment will Accelerate for High-ROI Opportunities
Slide 30: Pricing Actions
Pricing Actions Pricing Actions Latest Round Effective March 24th – 95%+ Portfolio – Significant $ Impact Very Clear Direction - Initiative Led by CEO
Slide 31: Commercial Operations
Commercial Operations Commercial Operations Food & Ingredients Segment – Sales = $1.9 Billion + 13% – Operating Profit = $252 Million + 14% Trading & Merchandising Segment – Sales = $873 Million + 74% – Operating Profit = $240 Million + 341% Outstanding Fiscal 2008 H1 Performance
Slide 32: Another Key CAG Growth Driver
Another Key CAG Growth Driver Another Key CAG Growth Driver $2.0 Billion Annual Sales # 1 Potato Company in North America, # 2 Worldwide 20% International Strong Double Digit Export Growth Past 5 Years Margin & ROIC Accretive 3 Year Trends Sales 8% + CAGR
Slide 33: Trading & Merchandising
Trading & Merchandising Trading & Merchandising Fertilizer Wholesale Distribution Grain and By-Products Merchandising Energy and Agricultural Commodities Trading Proactive Risk Governance & Controls Linking Supply & Demand – Managing Logistical & Price Risk
Slide 34: Organization
Organization Organization Direct CEO Leadership of Largest Operating Segment Managed as One Portfolio “Player – Coach” Approach Transition in Process
Slide 35: Greg Smith, Supply Chain
Greg Smith, Supply Chain Greg Smith, Supply Chain
Slide 36: Supply Chain
Supply Chain Supply Chain End-To-End Initiatives to Lower Total Delivered Cost Procurement Manufacturing Logistics Customer Service
Slide 37: Supply Chain Priorities
Supply Chain Priorities Supply Chain Priorities Safety / Quality Customer Service Cost Management
Slide 38: COGS Opportunities
COGS Opportunities Biggest $ Impact Scale & Supplier Base Overall Equipment Effectiveness Yield & Waste Reduction Touches & Miles End-To-End Initiatives COGS Opportunities Logistics $5.0 B COGS Base Manufacturing Procurement $0.6 B $1.1 B $3.3 B Biggest Opportunity = Consumer Foods Segment Represent
Slide 39: Example
Example: Example: Procurement Increased Contracted Volume, Less Spot Buys Reduced Safety Stock and Obsolescence Lower Input Delivery Costs Manufacturing Optimize Plant Based Run Strategies Improved Overall Equipment Effectiveness Logistics Reduced Working Capital Improved Customer Service Vendor Sup
Slide 40: Example: Component Consolidation and Rationalization
Example: Example: Procurement Reduces Can Varieties from 100 to 20 Enables Purchasing Leverage Manufacturing Fewer Changeovers Utilize Capacity Across Multiple Regions Logistics Standard Pallets Reduce Network Miles by 15% Increase Direct Plant Shipments $20 MM Opportunity Component Consolidation an
Slide 41: Consumer Foods Cost Opportunities: Current View
Consumer Foods Cost Opportunities: Current View Logistics Consumer Foods Cost Opportunities: Current View $225 Million (4-5%) Fiscal 2010 $225 Million (4-5%) Fiscal 2009 $225 Million (4-5%) Fiscal 2008 Current View of COGS Cost Savings Potential COGS Inflation for Fiscal ‘08 is $400 Million, or > 8%
Slide 42: André Hawaux, EVP & CFO
André Hawaux, EVP & CFO André Hawaux, EVP & CFO
Slide 43: Financial Outlook
Financial Outlook Financial Outlook
Slide 44: Financial Outlook: Sales, EPS and ROIC
Financial Outlook: Sales, EPS and ROIC Financial Outlook: Sales, EPS and ROIC 12% + 8% - 10% 4% + Near Term 13% + ROIC 8% - 10% EPS 4% Sales Long Term New Guidance All EPS and ROIC guidance discussed in this presentation excludes items impacting comparability. The inability to predict the timing and
Slide 45: Financial Outlook: Sales
Financial Outlook Sales: 4% + Financial Outlook Innovation Strong Performance in Food & Ingredients Accelerated Pricing More Effective A&P Spend – Target 6-7% of Consumer Foods Sales
Slide 46: Financial Outlook: Accelerated Pricing
Financial Outlook Financial Outlook List Pricing Trade Spend Effectiveness Portfolio Management / Mix Accelerated Pricing:
Slide 47: Financial Outlook: Margin and EPS Drivers
Financial Outlook Financial Outlook Mix – Innovation is Gross Margin Accretive Productivity – COGS: $225 MM / YR Consumer Foods segment Ultimate Margin Impact Depends on Inflation – SG&A: Zero Growth for “Core Overhead” SAP as an Enabler Capital Allocation Key Items Driving 8-10% EPS Growth from 4%+
Slide 48: Financial Outlook: Capex, Depreciation, Buyback
Financial Outlook Financial Outlook CAPEX $450 MM Per Year – Quality / Food Safety – Innovation – Productivity Depreciation $350 MM Per Year Share Buyback Remains Benchmark for Capital Allocation – $500 MM Authorization
Slide 49: Summary
Summary Summary More Balanced Algorithm – Higher Sales Growth Expectations – Mix – Productivity – G&A Initiatives – Capital Allocation Long Term EPS Goals Unchanged : 8-10% EPS Growth* – Assumes normal ( $200 mm/yr) Trading & Merchandising profits – Unusually high T&M Profits normalized in determini
Slide 50: Summary
Summary Summary Today’s News Release : Q3 2008 Better than Planned – Very strong Trading & Merchandising results – Food & Ingredients momentum also ahead of expectations – As expected, Consumer Foods margin pressure Pricing benefit starting to show in Q3, more in Q4 Solid Q3 volumes Input cost incre
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Slide 52: Appendix A: Margin % Goals
Appendix A: Margin % Goals Margin % Goals and Margin $ Goals Very Different in an Inflationary Environment CAG Commitment to $ Growth. Margin % Goals Relevant at Later Date. 42% 50% Profit Margin % After Inflation & Pricing Before Inflation & Pricing 10% $ Profit Growth $1.10 $1.00 Profit $ $1.50 $1
Slide 53: Appendix B: Consumer COGS – Major Components
Appendix B: Consumer COGS – Major Components Appendix B: Consumer COGS – Major Components Logistics $5.0 B COGS Base Manufacturing Procurement $0.6 B $1.1 B $3.3 B Proteins 20.0% Fats and Oils 15.0% Dairy 5.0% Grains and Other Ingredients 10.0% Seeds and Nuts 5.0% Fruits, Vegetables, Legumes 10.0% S
Slide 54: Appendix C: Regulation G
Appendix C: Regulation G Appendix C: Regulation G Fiscal 2008 EPS Reconciliation for Regulation G purposes Quarter 1 Quarter 2 Fiscal Year Total Diluted EPS from Continuing Operations, rounded 0.36 $ 0.50 $ Items Impacting Comparability: Benefit from Restructuring Charges (0.02)* Peter Pan Recall Co
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