Slide 1: Healthy Growth: General Mills Fiscal 2014 2nd Quarter Results
Healthy Growth General Mills Fiscal 2014 2 nd Quarter Results December 18, 2013 6354-1
Slide 2: 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 and uncertainties that could cause actua
Slide 3: Q2 Financial Review
Q2 Financial Review Don Mulligan Executive Vice President; Chief Financial Officer 6354-3
Slide 4: Second Quarter Fiscal 2014 Financial Summary
Second Quarter Fiscal 2014 Financial Summary ($ in Millions, Except per Share) $ % Change Net Sales $4,876 Flat Segment Operating Profit* 920 -4% Net Earnings Attributable to General Mills 550 +2 Diluted EPS $0.84 +2 Certain Items Affecting Comparability (.01) Adjusted Diluted EPS* $0.83 -3 * Non-GA
Slide 5: Second Quarter Fiscal 2014 Components of Net Sales Growth
Second Quarter Fiscal 2014 Components of Net Sales Growth +1pts Flat Flat -1pts Volume Price & Foreign Total Mix Exchange Net Sales 6354-5
Slide 6: Second Quarter Fiscal 2014 Net Sales Results by Segment
Second Quarter Fiscal 2014 Net Sales Results by Segment ($ in Millions) $ % Change Total Net Sales $4,876 Flat U.S. Retail 2,965 -1% International 1,403 +2 Constant Currency* +5 Convenience Stores & Foodservice 507 -2 * Non-GAAP Measure. See Appendix for Reconciliation. Table does not foot due to ro
Slide 7: Second Quarter Fiscal 2014 Gross Margin Performance
Second Quarter Fiscal 2014 Gross Margin Performance As Reported Underlying* 35.7% 36.1% 36.7% 35.7% • Expect 2nd Quarter Inflation Will Be Highest of F14 • Expect 3% Inflation for Year in Total • 70% Covered Q2 F13 Q2 F14 Q2 F13 Q2 F14 * Non-GAAP Measure. See Appendix for Reconciliation.. 6354-7
Slide 8: Second Quarter Fiscal 2014 Segment Operating Profit
Second Quarter Fiscal 2014 Segment Operating Profit ($ in Millions) Year-Ago $ % Change % Change Total Segment Operating Profit* $920 -4% +10% U.S. Retail 682 -6 +9 International 153 +10 +4 Convenience Stores & Foodservice 85 -12 +24 * Non-GAAP Measure. See Appendix for Reconciliation. 6354-8
Slide 9: Second Quarter Fiscal 2014 Joint Venture Summary
Second Quarter Fiscal 2014 Joint Venture Summary Constant-currency JV Earnings After Tax Net Sales Growth ($ in Millions, As Reported) • CPW +2% $33 • HDJ +11% $26 Q2 F13 Q2 F14 6354-9
Slide 10: Second Quarter Fiscal 2014 Other Income Statement Items
Second Quarter Fiscal 2014 Other Income Statement Items • Unallocated Corporate Expense Lower Excluding Mark- to-market Effects • Interest Expense Down 9% vs LY – Refinanced Some CP with €500 Million Bond Offering • Tax Rate Excluding Items Affecting Comparability 33.2% Versus 32.8% a Year Ago* * No
Slide 11: Fiscal 2014 Core Working Capital
Fiscal 2014 Core Working Capital ($ in Millions) 2nd Quarter F14 F13 Accounts Receivable $1,726 $1,674 Inventories 1,752 1,770 Accounts Payable 1,424 1,245 6354-11
Slide 12: First Half Fiscal 2014 Financial Summary
First Half Fiscal 2014 Financial Summary ($ in Millions, Except per Share) $ % Change Net Sales $9,248 +4% Segment Operating Profit* 1,731 Flat Net Earnings Attributable to General Mills 1,009 -7 Diluted EPS $1.54 -6 Certain Items Affecting Comparability (.01) Adjusted Diluted EPS* $1.53 +1 * Non-GA
Slide 13: First Half Fiscal 2014 U.S. Retail Net Sales
First Half Fiscal 2014 U.S. Retail Net Sales First Half Net Sales (Change vs. LY) Total U.S. Retail Segment +1% Snacks +9 Small Planet Foods +8 Big G Cereals +2 Baking Products +1 Yoplait -1 Frozen Foods -2 Meals -5 6354-13
Slide 14: First Half Fiscal 2014 Convenience Stores & Foodservice Net Sales
First Half Fiscal 2014 Convenience Stores & Foodservice Net Sales Total Segment: -1% vs. LY First Half Highlights • Product Mix Focus on Higher Margin Products • Sales Growth in Snacks, Cereal, Yogurt, and Frozen Breakfast 6354-14
Slide 15: First Half Fiscal 2014 International Net Sales Growth
First Half Fiscal 2014 International Net Sales Growth at Constant-currency* Total Segment: +13% vs. LY Canada Asia +11% Pacific +8% Europe -2% Häagen-Dazs Wanchai Ferry Cereal Nature Valley Shops Yogurt Häagen-Dazs Old El Paso Yoplait Latin America +73% Yoki La Salteña Diablitos *Non-GAAP Measure. S
Slide 16: First Half Fiscal 2014 Cash Flow Highlights
First Half Fiscal 2014 Cash Flow Highlights Operating Cash Flow ($ in Millions) $1,317 • Capital Investment = $269 Million, Comparable to Last Year $1,009 • Dividends Paid to Shareholders = $490 Million • Share Repurchases = $864 Million, 80% More Than Year Ago 1H F13 1H F14 6354-16
Slide 17: Fiscal 2014 Outlook
Fiscal 2014 Outlook 2nd Half Expectations • LSD Net Sales Growth, Fueled by Continuing Product News and Innovation • Input Cost Inflation Lower than First Half • FX a Headwind (Translation & Transaction) • Segment Operating Profit* Margin Expansion, Fueled by HMM • DD Growth in Adjusted Diluted EPS*
Slide 18: U.S. Retail Business Update
U.S Retail Business Update Ian Friendly Executive Vice President; Chief Operating Officer – U.S. Retail 5491-18 18
Slide 19: U.S. Categories - Balanced Growth
U.S. Categories - Balanced Growth Aggregate General Mills Categories (Change vs. LY) 1H Fiscal 2013 1H Fiscal 2014 +1.7% +0.8% -0.1% -0.2% Unit Volume Pricing Unit Volume Pricing Source: Nielsen XAOC Period Ended 11.23.13 5491-19 19
Slide 20: Leading U.S. Cereal Growth
Leading U.S. Cereal Growth General Mills Cereal Dollar Share +0.2 pts vs LY 30.7 31.3 F13 1H F14 Source: Nielsen XAOC Period Ended 11.23.13 5491-20 20
Slide 21: Cereal Innovation - Protein
Cereal Innovation - Protein • Strong Distribution Gains • Projected Year-one Retail Sales = $30+ Million New! Source: Nielsen XAOC 5491-21 21
Slide 22: More Fiscal 2014 Cereal Innovation
More Fiscal 2014 Cereal Innovation Launching in January 5491-22 22
Slide 23: Fiscal 2014 Cereal Brand Building
Fiscal 2014 Cereal Brand Building 5491-23 23
Slide 24: Our Yogurt Performance is Improving
Our Yogurt Performance is Improving Retail Sales Trend -2% -4% -9% 1H F13 2H F13 1H F14 Source: Nielsen XAOC, 1HF14 Period Ended 11.23.13 5491-24 24
Slide 25: U.S. Yogurt – Greek Momentum
U.S. Yogurt – Greek Momentum 1H F14 Yoplait Greek Performance Trends New in January +64% +62% +29% Dollar Sales Avg Pts. of Unit Turns Distribution Source: Nielsen XAOC Period Ended 11.23.13 5491-25 25
Slide 26: U.S. Yogurt – Yoplait Original
U.S. Yogurt – Yoplait Original Original Style Yoplait Base Unit Growth +6% 0% -9% -8% -13% Q2 F13 Q3 F13 Q4 F13 Q1 F14 Q2 F14 Source: Nielsen XAOC 5491-26 26
Slide 27: U.S. Yogurt - Liberté
U.S. Yogurt - Liberté Distribution Growth New Products (Total Pts. of Dist. Avg. % +/- LY) 112 108 97 62 Q3 F13 Q4 F13 Q1 F14 Q2 F14 Source: Nielsen XAOC 5491-27 27
Slide 28: U.S. Grain Snack Innovation Leading Category Growth
U.S. Grain Snack Innovation Leading Category Growth General Mills Grain Snacks Dollar Share +3.8 pts vs LY 41.3 37.5 F13 F14 YTD Sources: Nielsen XAOC Period Ended 11.23.13 5491-28 28
Slide 29: Fiber One Snacks Innovation
Fiber One Snacks Innovation Fiber One Grain Snacks Retail Sales New in January +13% +39% +14% F12 F13 1H F14 Source: Nielsen XAOC, 1H F14 Period Ended 11.23.13 5491-29 29
Slide 30: Second Half Fiscal 2014 Snacks Innovation
Second Half Fiscal 2014 Snacks Innovation 5491-30 30
Slide 31: Small Planet Foods Snacks
Small Planet Foods Snacks 1H F14 Retail Sales +20% Second-half New Items Source: Nielsen Period Ended 11.23.13 and SPINS Period Ended 10.26.13 5491-31 31
Slide 32: U.S. Convenient Meals - Helpers
U.S. Convenient Meals - Helpers New in January 5491-32 32
Slide 33: Progresso - Continued Share Growth
Progresso - Continued Share Growth Ready-to-serve Soup Progresso Dollar Share 38.5 37.9 1H F13 1H F14 Source: Nielson XAOC Period Ended 11.23.13 5491-33 33
Slide 34: U.S. Convenient Meals - Old El Paso
U.S. Convenient Meals - Old El Paso Old El Paso Shelf Stable Mexican Aisle Category Dollar Share Frozen Entrees 17.7 17.2 1H F13 1H F14 Source: Nielsen XAOC; Period Ended 11.23.13 5491-34 34
Slide 35: Holiday Baking Season Initiatives
Holiday Baking Season Initiatives Refrigerated Dough Dessert Mixes 5491-35 35
Slide 36: U.S. Market Innovation
U.S. Market Innovation 50+ New Items in Second Half F14 5491-36 36
Slide 37: Increasing Marketing Support
Increasing Marketing Support 1H F14 Advertising Expense +1% 5491-37
Slide 38: Building Capabilities U.S. Retail Sales
Building Capabilities U.S. Retail Sales 2013 Kantar Rankings Composite Score 28% 25% 24% 19% 18% 13% 11% 10% 7% 6% #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 P&G Unilever General Kraft PepsiCo Nestle Kellogg Coca- ConAgra Kimberly- Mills Foods Cola Clark Group • #1 Best Sales Force / Customer Teams • #1 Best Su
Slide 39: Continuing Benefits from HMM
Continuing Benefits from HMM Optimize Nature Valley Protein Bar Production 5491-39 39
Slide 40: U.S. Retail Fiscal 2014 Summary
U.S. Retail Fiscal 2014 Summary • High Level of Innovation and Brand-building Support in Market • On Track to Achieve LSD Sales Growth in Fiscal 2014 • Full-year Segment Operating Profit Expected to Grow Faster Than Sales 5491-40 40
Slide 41: Operating Highlights and Second-half Outlook
Operating Highlights and Second–half Outlook Ken Powell Chairman of the Board; Chief Executive Officer 5491-41 41
Slide 42: Convenience Stores & Foodservice First Half F14 Financial Summary
Convenience Stores & Foodservice First Half F14 Financial Summary ($ in Millions) 1st Half $ % Change Net Sales 975 -1 Segment Operating Profit 159 -3 . 5491-42 42
Slide 43: Convenience Stores & Foodservice Strong Earnings Performance
Convenience Stores & Foodservice Strong Earnings Performance Segment Operating Profit ($ in Millions) CGR = 13% $306 $315 $287 $263 $170 $178 F08 F09 F10 F11 F12 F13 5491-43 43
Slide 44: Convenience Stores & Foodservice Continuing Innovation
Convenience Stores & Foodservice Continuing Innovation Snacks Yogurt Yoplait® ParfaitPro® Max Frozen Breakfast 5491-44 44
Slide 45: Foodservice Channel Growth Outlook
Foodservice Channel Growth Outlook (Food and Non-alcoholic Beverage Channel Sales) 2014 Est. 2013 Annual Nominal Sales Growth (in Billions) (vs. LY) Convenience Stores $66 4% Total Foodservice $620 4% K-12 Schools $18 2% Colleges & Universities $15 5% Healthcare $24 5% Sources: C-Stores - Packaged F
Slide 46: General Mills International First Half F14 Financial Summary
General Mills International Segment First Half F14 Financial Summary ($ in Millions) 1st Half $ % Change Net Sales 2,724 +10 Segment Operating Profit 279 +5 5491-46 46
Slide 47: International Highlights: Canada
International Highlights Canada • Yoplait/Liberte Q2 F14 Retail Sales +8% • Q2 F14 Category Sales +2% Source: Nielsen 13-week period ended 11.23.13 5491-47 47
Slide 48: International Highlights - Europe
International Highlights - Europe Yogurt Häagen-Dazs Old El Paso 5491-48
Slide 49: International Highlights: China
International Highlights China Häagen-Dazs Wanchai Ferry 1H F14 Net Sales +12% 1H F14 Net Sales +13% 5491-49 49
Slide 50: Yoki Year One Highlights
Yoki Year One Highlights Retail Sales Growth 2x Categories +HSD Categories Yoki Brands Source: Nielsen 12 Months Period Ended Sep 2013 5491-50 50
Slide 51: International Highlights: Cereal Partners Worldwide
International Highlights Cereal Partners Worldwide Cereal Category Value Sales Growth ( Latest 52 Weeks) UK Flat Southwest Europe -2% Central Europe Flat Latin America +5% Asia +9% CPW Combined Markets +1% CPW Value Share = 22% 1H F14 CPW Constant-currency Net Sales +1% Source: Nielsen, Latest 52 We
Slide 52: Today's General Mills Update
Today's General Mills Update • First-half F14 Results Broadly Consistent with Our Plans • Expect Earnings Growth to Accelerate in Second Half: • Strong Slate of New Product Introductions • Lower Input Cost Inflation • Easier Comparisons to LY Earnings Growth • Full-year F14 Outlook: Healthy Growth a
Slide 53: Healthy Growth: General Mills Fiscal 2014 2nd Quarter Results
Healthy Growth General Mills Fiscal 2014 2 nd Quarter Results December 18, 2013 5491-53
Slide 54: Reconciliation of Segment Operating Profit
Reconciliation of Segment Operating Profit (Fiscal Years, $ in Millions) Q2 YTD Q2 2014 2013 2014 2013 U.S. Retail $682 $723 $1,294 $1,298 International 153 139 279 265 Convenience Stores & Foodservice 85 96 159 164 Segment Operating Profit $920 $959 $1,731 $1,727 Unallocated Corporate Items 49 127
Slide 55: Reconciliation of Adjusted Diluted EPS
Reconciliation of Adjusted Diluted EPS (Fiscal Years) Q2 YTD Q2 2014 2013 2014 2013 Diluted EPS $0.84 $0.82 $1.54 $1.64 Mark-to-market Effects (.02) .04 (.02) (.03) Restructuring .01 -- .01 .01 Tax Item -- -- -- (.10) Diluted EPS Excluding Certain $0.83 $0.86 $1.53 $1.52 Items Affecting Comparabilit
Slide 56: Q2 Reconciliation of Constant-currency Net Sales Growth
Q2 Reconciliation of Constant-currency Net Sales Growth (Fiscal Years) Q2 2014 % Change in Net % Change in Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange Currency Basis Europe -1 1 -2 Canada -1 -5 4 Asia/Pacific 5 0 5 Latin America 6 -16 22 Total International 2% -3 p
Slide 57: Reconciliation of Gross Margin
Reconciliation of Gross Margin (Fiscal Years, $ in Millions) 2014 Q2 2013 Q2 % of % of $ Net Sales $ Net Sales Net Sales $4,876 $4,882 Gross Margin as Reported 1,762 36.1% 1,742 35.7% Mark-to-market Effects (21) 48 Gross Margin Excluding Mark-to-market Effects $1,741 35.7% $1,790 36.7% 5491-57 57
Slide 58: Reconciliation of Effective Income Tax Rate
Reconciliation of Effective Income Tax Rate (Fiscal Years, $ in Millions) Q2 2014 Q2 2013 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $801 $267 $754 $245 Mark-to-market effects (21) (8) 48 18 Restructuring Costs 1 -- 3 1 Integration Costs -- -- 5 1 Tax Item -- -- -- --
Slide 59: YTD Q2 Reconciliation of Constant-currency Net Sales Growth
YTD Q2 Reconciliation of Constant-currency Net Sales Growth (Fiscal Years) YTD Q2 2014 % Change in Net % Change in Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange Currency Basis Europe -1 1 -2 Canada 7 -4 11 Asia/Pacific 9 1 8 Latin America 51 -22 73 Total Internationa