Mondelez International, Inc. · NASDAQ:MDLZ
Mondelez International — CAGNY Conference 2015
66 slides from Mondelez International's conference presentation, Feb 17, 2015
Slide 1: Mondelez International CAGNY Conference
Mondelez International CAGNY Conference February 17, 2015 Exhibit 99.2
Slide 2: Irene Rosenfeld, Chairman and CEO
Irene Rosenfeld Chairman and CEO
Slide 3: Forward-looking statements
Forward-looking statements This presentation contains a number of forward-looking statements. Words, and variations of words, such as “will,” “expect,” “would,” “plan,” “likely,” “estimate,” “believe,” “hope,” “anticipate,” “look to,” “drive,” “positioned,” “target,” “commitment,” “objective,” “outl
Slide 4: Well-positioned to deliver strong shareholder returns
Well-positioned to deliver strong shareholder returns Leveraging our unique assets Delivering on cost-reduction initiatives Generating strong cash flow
Slide 5: A global snacks powerhouse
Snacks 75% Beverages 16% Cheese & Grocery 9% Global Market Share Ranking A global snacks powerhouse … $34B in net revenues in 2014 Biscuits #1 Chocolate #1 Gum #2 Candy #1
Slide 6: Leading brands in each snacks category
… with leading brands in each snacks category…
Slide 7: An advantaged global footprint
Emerging Markets 38% Developed Markets 62% Emerging markets Organic Net Revenue +7% in 2014 Significant white space opportunities $34B in net revenues in 2014 … and an advantaged global footprint
Slide 8: Why we like snacks
Why we like snacks $1.2 trillion global snacking market Well-aligned with consumer trends High margin Expandable consumption Grows with GDP in emerging markets 1. Source: Euromonitor
Slide 9: Global snack category growth well above other food categories
Category 2011 2012 2013 2014 Global snack category growth well-above other food categories Biscuits 7.3% 7.4% 5.5% 5.1% Chocolate 5.9% 6.0% 5.3% 3.7% Gum 2.0% 0.1% 0.7% 0.4% Candy 6.4% 6.2% 4.5% 2.9% Total Snacks 6.1% 5.9% 4.7% 3.9% Powdered Beverages 9.7% 11.5% 10.6% 13.1% Coffee 12.3% 7.2% (1.9)%
Slide 10: Long-term strategies and targets unchanged
Organic Net Revenue Growth: At or Above Category Growth Adjusted Operating Income Growth: High Single Digit Adjusted EPS Growth: Double Digit Long-term strategies and targets unchanged Long-Term Targets Focus portfolio on snacks Reduce supply chain and overhead costs Invest in advantaged brands, inn
Slide 11: In 2014, delivered strong earnings growth, margin expansion and cash flow
Organic Net Revenue Growth 1 +2.4% Adjusted OI Margin 1 12.9% +80 bps Adjusted EPS Growth 1,2 +23.4% 2013-2014 Free Cash Flow excluding items 1 +30% vs. target Return of Capital to Shareholders $2.9 billion In 2014, delivered strong earnings growth, margin expansion and cash flow 1. See GAAP to Non-
Slide 12: Long-term strategy drives 2015 transformation agenda
focus our portfolio reduce costs invest for growth Long-term strategy drives 2015 transformation agenda Complete coffee JV transactions Integrate bolt-on acquisitions Improve revenue mix Deliver strong net productivity Move Power Brands to advantaged assets Drive down overheads via ZBB Invest in Pow
Slide 13: Creating the world's leading pure-play coffee company
focus our portfolio Creating the world’s leading pure-play coffee company $3.4B in Net Revenue Jacobs Douwe Egberts $3.8B in 2014 Net Revenue ~$7B Net Revenue 1. As provided by D.E Master Blenders 1753
Slide 14: 84% of revenue from snacks after JV formed
focus our portfolio 75% 16% 9% 84% 6% 10% 84% of revenue from snacks after JV formed Optimizes capital allocation to core snacks JV structure enables MDLZ to participate in future coffee growth €4B expected cash proceeds Snacks Beverages Cheese & Grocery Based on 2014 Revenue Reported Excluding Coff
Slide 15: Kinh Do strengthens portfolio in Vietnam
focus our portfolio Kinh Do strengthens portfolio in Vietnam Advantaged Portfolio: Biscuits and mooncakes leader Local Scale: ~$175MM in sales Growing Market: 90MM people, 50%+ under 30 years old Distribution Platform: Network covers 130,000 outlets
Slide 16: Capture growth of free-from snacks with Enjoy Life
focus our portfolio Capture rapid growth of “free-from,” better-for-you snacks with Enjoy Life U.S. allergen-free segment growing 30%+ ~$40MM in revenue with good expansion potential To be operated on a stand-alone basis 1. Based on AC Nielsen data
Slide 17: Strategic decisions to improve revenue mix in 2015
focus our portfolio Strategic decisions to improve revenue mix in 2015 ~1 pp headwind to Organic Net Revenue growth in 2015 Discontinue low-margin, customer- specific product lines Exit low-margin products from spin-off Ongoing SKU simplification
Slide 18: Power Brands and innovation platforms driving growth
Power Brands 62% Other Brands 38% Power Brands Invest for Growth Power Brands and innovation platforms driving growth Grow ~2x company rate Carry significantly higher margins ~80% of A&C support Accounts for nearly all incremental A&C spending in 2015 $34B in net revenues in 2014
Slide 19: Driving growth by expanding innovation platforms
$200MM Platform $650MM Platform Invest for Growth Driving growth by expanding innovation platforms Created new biscuit occasion Sold in 54 countries Organic Net Revenue CAGR +35% since 2011 Drove category expansion and growth of core tablets Sold in 54 countries Offered under multiple brands ~13% of
Slide 20: Expanding Marvellous Creations platform globally
$40MM Revenue $500MM Platform by 2018 Invest for Growth Expanding Marvellous Creations platform globally & beyond
Slide 21: Investing in routes to market, especially traditional trade
MDLZ Coverage of Traditional Trade Outlets 2015E Increase ’15E vs. ’13 % Outlets Covered ’15E Increase ’15E vs. ’13 Invest for Growth Investing in routes to market, especially traditional trade 347,000 +37,000 36% +3 pp 1,250,000 +233,000 16% +2 pp 507,000 +24,000 23% +1 pp
Slide 22: Leverage operating model to drive focus, scale and speed
Invest for Growth Leverage operating model to drive focus, scale and speed Consistent region-based, category-led operating model – Improves ability to accelerate growth platforms and best practices – Simplifies and standardizes processes to drive speed/reduce costs Chief Growth Officer at center of
Slide 23: Long-term strategies and targets unchanged
Organic Net Revenue Growth: At or Above Category Growth Adjusted Operating Income Growth: High Single Digit Adjusted EPS Growth: Double Digit Long-term strategies and targets unchanged Long-Term Targets Focus portfolio on snacks Reduce supply chain and overhead costs Invest in advantaged brands, inn
Slide 24: Daniel Myers, EVP Integrated Supply Chain
Daniel Myers EVP Integrated Supply Chain
Slide 25: Supply Chain Reinvention on track
Priorities Three Year Financial Goals reduce costs $3B Gross Productivity Cost Savings (~$1B/per year; ~4.5% of COGS) $1.5B Net Productivity Cost Savings (~$0.5B/per year; ~2.3% of COGS) $1B Cash Flow • Step change leadership talent & capabilities • Transform global manufacturing platforms • Redesig
Slide 26: Acquisitions drove supply chain complexity
1990 2000 2010 reduce costs Acquisitions drove supply chain complexity Significant number of SKUs, formats and formulas Fragmented supplier base Sub-scale plants with low efficiency assets
Slide 27: Step changed leadership talent and capabilities
reduce costs Upgraded talent in 45% of critical roles Changed 75% of senior leadership team Step changed leadership talent & capabilities
Slide 28: Global platform transformation process
reduce costs Global platform transformation process
Slide 29: Lines of the Future driving savings
reduce costs 30%+ cost savings 2x output of current North American assets 20%+ cost savings Flexibility to produce wide range of package sizes 20%+ cost savings Significantly reduced manufacturing time Lines of the Future driving savings Development process results in reduced engineering, installati
Slide 30: Redesigning supply chain to deliver world-class efficiency
2012 2013 – 2015E 2016E – 2018E reduce costs New Brownfield & Greenfield Sites Power Brands on Advantaged Assets ~15% ~25% ~70% by ’18 Advantaged Lines Installed 40+ Net Revenue per Plant ~$200MM ~$230MM > $300MM by ’18 Redesigning supply chain to deliver world-class efficiency
Slide 31: Salinas, Mexico biscuit facility now on-stream
reduce costs Support growth volume in the Americas Repatriate co-man volume 2 LOF on-line Q4’14; 2 additional lines in Q1’15 Salinas, Mexico biscuit facility now on-stream
Slide 32: Invested $1.5B in network transformation since 2012
North America (includes Salinas) 1 greenfield 12 lines Europe 1 3 brownfields 15 lines EEMEA 2 brownfields 1 greenfield 4 lines Latin America 1 brownfield 5 lines Asia Pacific 2 brownfields 1 greenfield 7 lines reduce costs 1. Excludes Coffee and Cheese & Grocery Invested $1.5B in network transforma
Slide 33: Changing our network: Curitiba, Brazil
reduce costs Changing our network around the world Curitiba, Brazil
Slide 34: Changing our network: Manama, Bahrain
reduce costs Changing our network around the world Manama, Bahrain
Slide 35: Changing our network: Sri City, India
reduce costs Changing our network around the world Sri City, India
Slide 36: Changing our network: East Suzhou, China
reduce costs Changing our network around the world East Suzhou, China
Slide 37: Changing our network: Opava, Czech Republic
reduce costs Changing our network around the world Opava, Czech Republic
Slide 38: Changing our network: Skarbimierz, Poland
reduce costs Changing our network around the world Skarbimierz, Poland
Slide 39: Changing our network: Ladkrabang, Thailand
reduce costs Changing our network around the world Ladkrabang, Thailand
Slide 40: Changing our network: Bournville, UK
reduce costs Changing our network around the world Bournville, UK
Slide 41: Stepping up productivity delivery
Integrated Lean Six Sigma Procurement Transformation Simplicity reduce costs Stepping up productivity delivery
Slide 42: Integrated Lean Six Sigma delivers reliability and efficiency
Integrated Lean Six Sigma reduce costs 2014 Key Achievements 43 sites $300MM+ productivity 75% reduction in safety incidents 12,000+ colleagues trained Key Future Objectives Expand to 50 more sites $750MM+ productivity by 2018 Integrated Lean Six Sigma delivers best-in-class reliability and efficien
Slide 43: Procurement transformation driving savings
Procurement Transformation reduce costs 2014 Key Achievements Spend towers in place 4%+ gross productivity delivered Key Future Objectives Target 5% gross productivity – Leverage scale – Drive sustainable savings Procurement transformation driving savings
Slide 44: Applying simplicity initiatives across categories
Simplicity reduce costs 2014 Key Achievements Streamlining EU Biscuits – On-track for 60% reduction in complexity by 2016 Key Future Objectives Apply learnings to EU Chocolate – Creates high-scale platform – Target 10%+ total cost reduction Applying simplicity initiatives across categories
Slide 45: Delivering world-class productivity levels
reduce costs 1.1% 1.8% 2.5% 2.8% 2.8%+ Net Productivity as Percentage of COGS Delivering world-class productivity levels 2015E-2018E
Slide 46: Target $1 billion in incremental cash over three years
Receivables Inventory Payables reduce costs • Payment terms rationalization • Frequency extension • Supply chain financing • Raw and pack • Finished goods • Infrastructure • Processes & technology • Terms compliance • Sales phasing • Term negotiations Target $1 billion in incremental cash over three
Slide 47: On track to generate $1B incremental cash
reduce costs Cash Conversion Cycle (in days) Generated ~$600MM incremental cash in 2014 – Reduced CCC 23 days in 2 years Further working capital opportunity Based on balances as of year-end On track to generate $1B incremental cash
Slide 48: Successfully executing on SCR initiative
reduce costs Successfully executing on SCR initiative Upgraded talent and core leadership Delivered 2.8% net productivity in 2014 Targeting 2.8%+ net productivity with strong project pipeline Productivity Generated incremental $600 million of cash in 2014 Further working capital opportunity Cash Man
Slide 49: Brian Gladden, EVP and Chief Financial Officer
Brian Gladden EVP and Chief Financial Officer
Slide 50: Significantly reducing overhead costs
reduce costs Overheads as % of Net Revenue 2016E Significantly reducing overhead costs Identify and capture sustainable cost reductions with zero-based approach (ZBB) Three key initiatives: – Indirect Costs – People Costs & Org Model – Shared Services Savings driving margin improvement and fueling g
Slide 51: Early success with ZBB approach to indirect costs
reduce costs Early success with ZBB approach to indirect costs 1. Information Systems 2. Travel 3. Facilities 4. Contractors & Consultants 5. Perquisites 6. Company Vehicles 7. Events & Sponsorships 8. Recruitment & Development 9. Legal Services 10. Financial Services 11. Outsourced Business Support
Slide 52: Adopted new policies for indirect spending
Opportunity Target Savings Select Drivers reduce costs Adopted new policies for indirect spending Travel ~45% Reduce travel consumption by ~35% Implement industry standard travel policies Globally negotiate provider contracts Information Systems ~35% Reduce application portfolio by ~50% Rationalize
Slide 53: Streamlining how we work
Organization Shared Services reduce costs Streamlining how we work Eliminate redundancies by adopting region-based, category-led model – Key driver +300bps OI margin in Europe – Implemented in NA in 2014 Greater centralization of certain functions (e.g., Procurement) Simplify and standardize process
Slide 54: Restructuring Program enables $1.5B of expected incremental savings
Costs Benefits ~25% ~25% ~50% reduce costs 2014-2018 Restructuring Program enables $1.5B of expected incremental savings $3.5B total P&L cost $2B capex included in total short-term target of ~5% of revenue Drives margin expansion Provides fuel for growth Indirect Costs Supply Chain People Costs & Or
Slide 55: Targeting 15%-16% Adjusted OI margin in 2016
Beyond 2016, opportunity to drive continued margin expansion and fund growth reduce costs Targeting 15%-16% Adjusted OI margin in 2016 Adjusted Operating Income Margin 1. See GAAP to Non-GAAP reconciliation at the end of this presentation. 12.1% 12.9% ~14% 15%-16% 2015E 2016E
Slide 56: 2015 Outlook
Target Outlook – Income Statement Organic Net Revenue Growth 2%+ Estimated FX Impact on Net Revenue Growth ~(11)pp Adjusted Operating Income Margin ~14% Interest Expense ~$825MM Effective Tax Rate High Teens Adjusted Earnings Per Share Growth (constant FX) Double-Digit % Estimated FX Impact on EPS ~
Slide 57: Strong cash flow generation
Includes ~$0.5B FX headwind Strong cash flow generation ($ in billions) Net Cash Provided by Operating Activities excluding items and Restructuring Program $4.1 $4.3 $4.0 Capital Expenditures (including Restructuring) (1.6) (1.6) (1.8) 2012-14 and 2014-18 Restructuring Programs (0.2) (0.2) (1.0) Fre
Slide 58: Disciplined capital deployment based on returns
Reinvest to Drive Top-Tier Growth M&A Return Capital to Shareholders Debt Reduction Disciplined capital deployment based on returns Focus on chocolate, biscuits, gum and candy categories Predominantly in emerging markets Brand support and route-to-market expansion Supply Chain Reinvention Overhead r
Slide 59: Long-term strategies and targets unchanged
Organic Net Revenue Growth: At or Above Category Growth Adjusted Operating Income Growth: High Single Digit Adjusted EPS Growth: Double Digit Long-term strategies and targets unchanged Long-Term Targets Focus portfolio on snacks Reduce supply chain and overhead costs Invest in advantaged brands, inn
Slide 60: Mondelez International
Mondelez International ad
Slide 61: 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 62: GAAP to Non-GAAP Reconciliation: Net Revenues to Organic Net Revenues
GAAP to Non-GAAP Reconciliation Net Revenues to Organic Net Revenues International For the Twelve Months Ended December 31, 2014 Reported (GAAP) 34,244 $ Divestitures - Acquisitions (14) Currency 1,806 Organic (Non-GAAP) 36,036 $ For the Twelve Months Ended December 31, 2013 Reported (GAAP) 35,299 $
Slide 63: GAAP to Non-GAAP Reconciliation: Operating Income
GAAP to Non-GAAP Reconciliation Net Revenues Operating Income Operating Income margin Net Revenues Operating Income Operating Income margin Reported (GAAP) 34,244 $ 3,242 $ 9.5% 35,299 $ 3,971 $ 11.2% Integration Program and other acquisition integration costs - (4) - Spin-Off Costs - - 2012-2014 Re
Slide 64: Diluted EPS reconciliation
Diluted EPS % Growth 2013 Diluted EPS Attributable to Mondelez International (GAAP) 2.19 $ Discontinued Operations 0.90 2013 Diluted EPS Attributable to Mondelez International from Continuing Operations 1.29 Integration Program and other acquisition integration costs 0.10 Spin-Off Costs 0.02 2012-20
Slide 65: GAAP to Non-GAAP Reconciliation: Free Cash Flow
GAAP to Non-GAAP Reconciliation Net Cash Provided by Operating Activities (GAAP) 6,410 $ 3,562 $ Capital Expenditures (1,622) (1,642) Free Cash Flow (Non-GAAP) 4,788 $ 1,920 $ Items Cash impact of the resolution of the Starbucks arbitration (1) (2,616) Cash payments for accrued interest and other re
Slide 66: GAAP to Non-GAAP Reconciliation: Operating Cash Flow
GAAP to Non-GAAP Reconciliation Net Cash Provided by Operating Activities (GAAP) 6,410 $ 3,562 $ Items Cash impact of the resolution of the Starbucks arbitration (1) (2,616) Cash payments for accrued interest and other related fees associated with debt tendered as of December 18, 2013 (2) - Cash pay