Mondelez International, Inc. · NASDAQ:MDLZ
Mondelez International — Kraft Foods — Sanford C. Bernstein Strategic Decisions Conference 2009
55 slides from Mondelez International's conference presentation, May 28, 2009
Slide 1: Sanford C. Bernstein Strategic Decisions Conference
Kraft Foods Sanford C. Bernstein Strategic Decisions Conference May 28, 2009 Exhibit 99.1
Slide 2: Forward-looking statements
Forward-looking statements This slide presentation contains forward-looking statements including our four strategies to return Kraft Foods to sustainable growth; that creating a high-performing organization will drive profitable growth in every region of the world; that we are restoring the power of
Slide 3: Agenda
Agenda • Company Overview • Strategic Turnaround • Financial Turnaround
Slide 4: Kraft Foods
leraft foods
Slide 5: Slide 5
Slide 6: Slide 6
Slide 7: Kraft has significant global scale
Kraft has significant global scale $42 billion in revenue World’s #2 food company #1 in North America Sales in 150 countries Operations in 70+ countries Approximately 100,000 employees
Slide 8: Our portfolio today
Our portfolio today Europe Developing Markets North America • Approximately 40% of revenue outside North America • More than 80% of revenue from #1 share positions • More than 50% of revenue from categories where market share is 2x the nearest competitor Europe Developing Markets North America Net R
Slide 9: We compete in five consumer sectors
We compete in five consumer sectors … 38% 20% Cheese 18% Grocery 10% Convenient Meals 15% Snacks Beverages • Snacks • Beverages • Cheese • Grocery • Convenient Meals 38% 20% Cheese 18% Grocery 10% Convenient Meals 15% Snacks Beverages May not add due to rounding
Slide 10: A strong portfolio of iconic brands
… with a strong portfolio of iconic brands • 9 brands over $1 billion • 50+ brands over $100 million
Slide 11: Entering 2007, several big opportunities
Entering 2007, several big opportunities • Create a high-performance culture • Restore the power of our portfolio • Leverage our scale in the marketplace • Drive sustainable savings • Return Kraft to sustainable earnings growth
Slide 12: Four strategies to return Kraft Foods to sustainable growth
Four strategies to return Kraft Foods to sustainable growth Balance Cost & Quality Exploit Sales Capabilities Reframe Categories Rewire for Growth
Slide 13: Rewire for Growth: Creating a high-performing organization
Rewire for Growth Creating a high-performing organization
Slide 14: Creating a high-performing organization
Creating a high-performing organization • Strengthened senior leadership team • Decentralized to create autonomous business units • Revised incentive systems with right metrics Drive profitable growth in every region of the world
Slide 15: North America: Both top-line and bottom-line growth
North America: Both top-line and bottom-line growth 2.9% 04-06 CAGR 4.5% Organic Revenue Growth* 4.8% (1.3)% (9.8)% Operating Income Growth (ex items)* 7.3% 04-06 CAGR * Does not reflect restated reportable business segments and certain financial reporting changes for 2009, as described in the compa
Slide 16: European Union: Solid returns from focus
European Union: Solid returns from focus 0.3% 04-06 CAGR 3.8% Organic Revenue Growth* 4.3% (9.1)% 1.7% Operating Income Growth (ex items)* 4.2% 04-06 CAGR 2008 ** 2008 ** * Does not reflect restated reportable business segments and certain financial reporting changes for 2009, as described in the co
Slide 17: Developing Markets: Rapid acceleration
Developing Markets: Rapid acceleration 9.9% 04-06 CAGR 11.6% Organic Revenue Growth* 17.9% 4.0% Operating Income Growth (ex items)* 39.6% 2008 ** 2008 ** 24.7% 04-06 CAGR * Does not reflect restated reportable business segments and certain financial reporting changes for 2009, as described in the co
Slide 18: Reframe Categories: Restoring the power of our portfolio
Reframe Categories Restoring the power of our portfolio
Slide 19: Growth diamond guiding investments
Growth diamond guiding investments • New product growth from platform-based innovation Snacking Health & Wellness Premium Quick Meals
Slide 20: Growth diamond guiding investments
Growth diamond guiding investments • Increasing value-oriented marketing Convenient Meals DiGiornonomics Deli Shaved vs Leading Deli Brand Cheese “Goodness Squared” Value vs Naturals Customer Relationship Marketing Beverages Powdered Beverages vs Carbonated Soft Drinks Grocery "60 Under 60" Inherent
Slide 21: Strengthening category mix
Strengthening category mix • Reframing our portfolio $1.6B Net Revenue 0.2% growth Divestitures $300M Net Revenue 1.3% of global volume $(4) million OI Pruning $3.2B Net Revenue 5.1% growth (European rights) Acquisitions
Slide 22: Investing where it matters most
Investing where it matters most Invest Incrementally Sustain Investment Fix • North America prioritizing investments Category Portfolio Roles
Slide 23: Investing where it matters most
Investing where it matters most Biscuits Powdered Bev Cheese Chocolate Coffee • Focused international investments Markets +8% Brands +13% Categories +10% Biscuits Powdered Bev Cheese Chocolate Coffee * Proforma with LU biscuit, constant currency 2008 Like-for-like Revenue Growth *
Slide 24: Restoring the power of our portfolio
Restoring the power of our portfolio • Growth diamond guiding investments • Strengthening our category mix • Investing where it matters most Fundamentals are strong... and getting stronger
Slide 25: Exploit Sales Capabilities: Leveraging our scale in the marketplace
Exploit Sales Capabilities Leveraging our scale in the marketplace
Slide 26: Established Wall-to-Wall in the U.S.
Established Wall-to-Wall in the U.S. • Program to enhance in-store effectiveness – One sales rep handles entire Kraft portfolio • Source of sustainable competitive advantage – Drove ~1pp of incremental revenue 3% 35% 63% Percent U.S. ACV (Distribution)
Slide 27: Taking Wall-to-Wall to the next level
Taking Wall-to-Wall to the next level 8% ~15% ~30% • High Visibility Wall-to-Wall – Fewer stores per rep – Additional merchandiser hours – Driving an additional ~1pp of revenue vs. base Wall-to-Wall stores 3% HVWTW Base WTW 35% 63% 63% 63% Percent U.S. ACV (Distribution)
Slide 28: Improving customer collaboration
Improving customer collaboration • Led to double digit growth with global customers
Slide 29: Expanding our reach to grow in growing channels
Expanding our reach to grow in growing channels 0.4pp 0.2pp 0.4pp 3.3pp 0.4pp Q4 0.4pp Q4 1.5pp Q4 7.0pp Q4 Kraft Foods U.S. Category Growth and Share Change Military +9% Convenience Stores +6% Club Stores +9% Dollar Stores +10%
Slide 30: Expanding our reach to grow market share
Expanding our reach to grow market share • Investing to improve coverage in traditional trade in developing markets – Gaining distribution and improving in-store execution – Expanding power brands geographically – Leveraging the portfolio to cover multiple price points
Slide 31: Leveraging our scale in the marketplace
Leveraging our scale in the marketplace • Taking Wall-To-Wall to the next level • Improving customer collaboration • Expanding our reach to grow market share Well positioned to grow our business around the world
Slide 32: Balance Costs and Quality: Driving sustainable savings
Balance Costs and Quality Driving sustainable savings
Slide 33: Using quality as an offensive weapon
Using quality as an offensive weapon 2009E 44% 55% 64% 70% • Moving from parity to vastly preferred Percent of products preferred to competition
Slide 34: Restored our Pricing Power
Restored our Pricing Power • Rebuilt brand equity to point where pricing and productivity can cover input cost inflation Cumulative Pricing versus Input Costs $0 ($1B) Q1’09
Slide 35: Utilizing tailwind of Restructuring Program
Utilizing tailwind of Restructuring Program $1.3 $1.1 2010+ $1.4 Cumulative Annualized Savings (Billions) • Streamlined manufacturing – 36 plants closed • Simplified organization – 19,000 positions being eliminated
Slide 36: Utilizing tailwind of Restructuring Program
Utilizing tailwind of Restructuring Program • Close price gaps • Upgrade product quality • Increase share of voice • Rebuild new product pipeline
Slide 37: Continuous improvement programs
Continuous improvement programs • End-to-End approach • Total network optimization • Implement SAP as core transactional system
Slide 38: Our strategies are working
Our strategies are working Balance Cost & Quality Exploit Sales Capabilities Reframe Categories Rewire for Growth
Slide 39: Very solid start to 2009
Very solid start to 2009 • Successfully navigating the abrupt shift from unprecedented cost spikes and pricing … to exceptional consumer weakness – Driving cost savings to build brands – Leveraging our portfolio for competitive advantage at retail – Focusing investment on priority categories, brands
Slide 40: On track to deliver 2009 guidance
On track to deliver 2009 guidance • Targeting organic revenue growth ~3% – Carryover pricing will contribute more than half of growth – Begin to lap most 2008 pricing in Q2; product line discontinuation actions in H2 – Expect vol/mix to improve as year progresses • Remain confident in delivering dil
Slide 41: Steady progress in turnaround
Steady progress in turnaround As 2009 unfolds • 2007: Rejuvenated top-line growth • 2008: Grew both top and bottom lines • 2009: Build profit margins and market share Market share will improve Volume/mix will strengthen Profit margins will expand for the year
Slide 42: Starting to deliver against our long-term growth model
Starting to deliver against our long-term growth model • Pricing + productivity cover input costs • Volume growth, improved product mix and overhead leverage drive higher operating margins Organic Revenue Growth 4%+ Manufacturing, Overhead Leverage 2-3pp Cash Flow Leverage & Tax Rate 1-2pp Long-Term
Slide 43: Kraft Foods
leraft foods
Slide 44: Slide 44
Slide 45: Improving cash generation
Improving cash generation $2.4 $2.1 Discretionary Cash Flow * $ Billions +$1 billion opportunity * Excluding Post cereals and adjusted for the timing of payment of deferred interest; see GAAP to Non-GAAP reconciliation at the end of this presentation.
Slide 46: Make today delicious
kraft foods Make today delicious
Slide 47: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation As Reported (GAAP) Impact of Divestitures / Other Impact of Acquisitions Impact of Currency Organic (Non- GAAP) For the Years Ended: December 31, 2005 North America 5.5% 0.4pp 0.0pp (0.9)pp 5.0% European Union 3.2% 1.1pp 0.0pp (3.1)pp 1.2% Developing Markets 14.1% 0.6
Slide 48: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation * Does not reflect restated reportable business segments and certain financial reporting changes for 2009, as described in the company’s Form 8-K dated March 25, 2009 and Form 10-Q for the three months ended March 31, 2009. * As Reported (GAAP) Impact of Divestitures
Slide 49: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation As Reported (GAAP) Asset Impairment, Exit and Implementati on Costs - Restructuring Asset Impairments / Other Expenses - Non- Restructuring (Gains) / Losses on Divestitures, net Excluding Items (Non- GAAP) For the Years Ended: December 31, 2005 North America (1.8)% (7
Slide 50: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation * Does not reflect restated reportable business segments and certain financial reporting changes for 2009, as described in the company’s Form 8-K dated March 25, 2009 and Form 10-Q for the three months ended March 31, 2009. * As Reported (GAAP) Asset Impairment, Exit
Slide 51: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation As Reported (GAAP) Impact of Divestitures Impact of Currency Organic (Non- GAAP) As Reported (GAAP) Organic (Non- GAAP) 2009 Reconciliation Kraft Foods, Inc. 9,396 $ - $ $ 10,182 $ (6.5)% 2.3% 2008 Reconciliation Kraft Foods, Inc. 10,046 $ (89) $ - $ 9,957 $ % Change
Slide 52: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ($ in millions, Unaudited) Net Cash Provided by Operating Activities (GAAP) 3,571 $ 4,141 $ Capital Expenditures (1,241) (1,367) Discretionary Cash Flow 2,330 $ 2,774 $ Discretionary cash flow from the Post cereals business (200) (100) Discretionary Cash Flow excludin
Slide 53: Supplementary restated growth
Supplementary restated growth a) See Supplementary GAAP to Non-GAAP reconciliations b) The As Restated 2007 and 2008 growth percentages reflect the restated reportable business segments and certain financial reporting changes for 2009, as described in the company's Form 8-K dated March 25, 2009 and
Slide 54: Supplementary GAAP to Non-GAAP Reconciliation
Supplementary GAAP to Non-GAAP Reconciliation As Restated (GAAP) Impact of Divestitures Impact of Acquisitions Imple- mentation Costs Impact of Currency Organic (Non- GAAP) As Reported (GAAP) Organic (Non-GAAP) 2008 Reconciliation Kraft Foods North America 23,956 $ - $ (20) $ - $ (56) $ 23,880 $ 4.7
Slide 55: Supplementary GAAP to Non-GAAP Reconciliation
Supplementary GAAP to Non-GAAP Reconciliation As Restated (GAAP) Asset Impairment, Exit and Implementation Costs - Restructuring Asset Impairments / Other Expenses - Non-Restructuring (Gains) / Losses on Divestitures, net Excluding Items (Non- GAAP) As Reported (GAAP) Excluding Items (Non- GAAP) 200
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