Mondelez International, Inc. · NASDAQ:MDLZ
Mondelez International — Kraft Foods — Investor Day (September 2010)
192 slides from Mondelez International's investor day presentation, Sep 15, 2010
Slide 1: Hitting Our Sweet Spot
Hitting Our Sweet Spot September 15, 2010 Kraft Foods Exhibit 99.2
Slide 2: Forward-looking statements
Forward-looking statements This slide presentation contains a number of forward-looking statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “goals,” “may,” “aim,” “will” and similar expressions are intended to identify our forward-looking statements. Examples of
Slide 3: Agenda
Agenda • Hitting our sweet spot • Seizing our global snacks opportunity – Biscuits – Chocolate – Gum and Candy • Winning in each region – North America – Europe – Developing Markets • Transforming our financial performance
Slide 4: <show video>
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Slide 5: Irene Rosenfeld Chairman and CEO
Irene Rosenfeld Chairman and CEO
Slide 6: Welcome to today's Kraft Foods
Welcome to today’s Kraft Foods
Slide 7: Kraft Foods in 2006
Kraft Foods in 2006 Grocery ~65% ICC ~10% Discounter/ Club/Mass/ Other ~25% Snacks 29% Convenient Meals 16% Cheese 19% Beverages 21% Grocery 15% North America 67% Developing Markets, Oceania, North Asia 13% European Union 20% (1) As reported originally in Kraft Foods 2006 Form 10-K filed with the SE
Slide 8: Rebuilding the foundation
Rebuilding the foundation “Turnaround” • Improve portfolio mix • Fix the base • Peer-average growth
Slide 9: Fixed the base
Fixed the base • Inferior product quality, limited advertising support • Centralized structure • Limited exposure to outside ideas • Overhead cost disadvantage • 80% of top leaders new to company or position • Accountable Business Units • ~2/3 of Base Kraft Foods revenue rated preferred/superior • B
Slide 10: Improved portfolio mix: Acquisitions, Divestitures
Improved portfolio mix Acquisitions Divestitures (European rights)
Slide 11: Started to deliver growth in line with peer averages
Started to deliver growth in line with peer averages 4 Kraft Foods 8.0% 8 Kraft Foods 3.2% 10 Kraft Foods (6.2)% 10 Kraft Foods 3.3% (1) Based on fiscal year. Source: Thomson First Call. Operating EPS Growth (1) Danone 31.0% Nestle 17.3% ConAgra 32.9% Hershey 15.4% Nestle 15.0% Coca-Cola 13.9% Sara
Slide 12: Cadbury was the final piece of the puzzle
Cadbury was the final piece of the puzzle Fixed the Base Delivering Growth Improved Portfolio Mix
Slide 13: Today's Kraft Foods
Today’s Kraft Foods KFNA 49% KFDM 26% KFE 25% Grocery ~55% ICC ~20% Discounter/ Club/Mass/ Other ~25% Confectionery (2) 29% Convenient Meals 10% Cheese 14% Beverages 17% Grocery 8% Biscuits (2) 22% (1) 2009 Pro Forma amounts are based on the acquisition of Cadbury and the divestiture of the Pizza bu
Slide 14: Shifting from Turnaround to Growth
Shifting from Turnaround to Growth Future “Growth” “Turnaround” • Improve portfolio mix • Drive power brands • Fix the base • World-class capabilities • Peer-average growth • Top-tier growth
Slide 15: A global snacks powerhouse and unrivaled portfolio of brands
A global snacks powerhouse and unrivaled portfolio of brands people love
Slide 16: Three strategies drive growth
Three strategies drive growth Delight Global Snacks Consumers Unleash the Power of Our Iconic Heritage Brands Create a Performance-Driven, Values-Led Organization
Slide 17: Being a global snacks powerhouse accelerates long-term growth
Being a global snacks powerhouse accelerates long-term growth Delight Global Snacks Consumers • Snacks is an advantaged growth category • Snacks carry inherently higher margins • We are ideally positioned to capitalize on these advantages
Slide 18: Snacks is an advantaged growth category
Snacks is an advantaged growth category • Aligned with consumer trends – On-the-go consumption – Simple indulgences – Health & Wellness (Crackers, Gum)
Slide 19: Snacks is an advantaged growth category
Snacks is an advantaged growth category • Aligned with consumer trends • Sales are expandable – Highly responsive to merchandising – Multiple channels of distribution – Flexible pack sizes
Slide 20: Snacks is an advantaged growth category
Snacks is an advantaged growth category • Aligned with consumer trends • Sales are expandable • Consumption in developing markets likely to rise with GDP growth * Source: Euromonitor Snacks kg per capita*
Slide 21: Snacks carry inherently higher margins: private label
Snacks carry inherently higher margins % Private Label (1) Lower levels of private label penetration Gum Packaged Food Global 12% 1% 4% 9% U.S. 18% <1% 1% 9% Chocolate Biscuits *Source: For Gum, Chocolate and Biscuits, Euromonitor 2009. For Packaged Good, Euromonitor 2008.
Slide 22: Snacks carry inherently higher margins: revenue from ICC
Snacks carry inherently higher margins % Revenue from ICC Total Confectionery (1) 34% KFNA U.S. (2) 5% Lower levels of private label penetration Greater percentage of sales in Immediate Consumption Channels (1) Source: IRI (2) Source: Nielsen
Slide 23: Snacks carry inherently higher margins
Snacks carry inherently higher margins Lower levels of private label penetration Greater percentage of sales in Immediate Consumption Channels Extensive distribution infrastructure
Slide 24: Snacks carry inherently higher margins
Snacks carry inherently higher margins Lower levels of private label penetration Greater percentage of sales in Immediate Consumption Channels Extensive distribution infrastructure Consistent global consumer behavior enables marketing and innovation scale
Slide 25: Kraft Foods uniquely positioned to capitalize on these advantages
Today’s Kraft Foods is uniquely positioned to capitalize on these advantages Source: Euromonitor (1) "Snacking" includes Sweet and Savory Snacks, Snack Bars, Confectionery, Biscuits, Packaged/Industrial Cakes and Packaged/Industrial Pastries. (2) Includes Kraft Foods and Cadbury. % Global Share Kraf
Slide 26: Delight global snacks consumers
erate foods
Slide 27: Undisputed leader of global snacks
Undisputed leader of global snacks Delight Global Snacks Consumers Skew investments to Snacks Power Brands Drive growth through global innovation platforms Become the world’s leader in “Hot Zone”
Slide 28: Diversified portfolio of Snacks Power Brands will drive growth
Diversified portfolio of Snacks Power Brands will drive sustainable growth Biscuits & Nuts Chocolate Gum & Candy Mid-to-high single-digit top-line growth Mid-teens margins
Slide 29: Iconic brands outside of Snacks are integral to our strategy
Iconic brands outside of Snacks are integral to our strategy Unleash the Power of Our Iconic Heritage Brands Category-leading, “must-have” brands for retail customers High margin, strong cash flow businesses Enables scale advantage versus competition
Slide 30: Driving success in two ways
Driving success in two ways Unleash the Power of Our Iconic Heritage Brands Invest strategically in Regional Power Brands Apply entrepreneurial mindset to Local Brands
Slide 31: Invest strategically in regional Power Brands
Invest strategically in regional Power Brands North America Developing Markets Europe Mid single-digit top-line growth High-teens margins
Slide 32: Apply entrepreneurial mindset to Local Brands
Apply entrepreneurial mindset to Local Brands North America Developing Markets Europe Low single-digit top-line growth High-teens margins
Slide 33: Snacks and Regional Power Brands will drive top-tier organic revenue growth
Snacks and Regional Power Brands will drive top-tier organic revenue growth Note: 2010 includes 12 months of Cadbury results. Snacks includes other Kraft Foods Snacks businesses beyond core categories (e.g., Handi-Snacks, Marshmallows, etc.). Snacks Regional Power Brands Local Brands Mid-to-High Sin
Slide 34: Seizing growth opportunities with world-class execution
Seizing growth opportunities with world-class execution Create a Performance-Driven, Values-Led Organization Unmatched consumer connections Strong leadership, deep bench Business-relevant societal issues World-class cost structure
Slide 35: Business positioned to benefit from a virtuous cycle
Business positioned to benefit from a virtuous cycle Set growth objectives off a solid base Manage input costs by maintaining strong brand equities Focus and prioritize investments to drive top-tier revenue growth Leverage scale to drive productivity and reduce overhead costs Reinvest upside to acce
Slide 36: Our strategies will deliver sustainable, top-tier growth
Our strategies will deliver sustainable, top-tier growth Delight Global Snacks Consumers Unleash the Power of Our Iconic Heritage Brands Create a Performance-Driven, Values-Led Organization Organic revenue growth 5%+ Mid- to high-teens margins EPS growth 9-11%
Slide 37: Agenda
Agenda • Hitting our sweet spot • Seizing our global snacks opportunity – Biscuits – Chocolate – Gum and Candy • Winning in each region – North America – Europe – Developing Markets • Transforming our financial performance
Slide 38: Global Category Teams accelerate Snacks growth
Global Category Teams (GCTs) accelerate Snacks growth • Approach based on experience and benchmarking – Best of Kraft Foods – Best of Cadbury – Lessons learned from benchmarking other companies • Cornerstone of competitive advantage – Facilitates sharing of best practices – Enables rapid deployment
Slide 39: GCTs focused on Power Brands, capabilities and innovation
GCTs focused on Power Brands, world-class capabilities and innovation Grow Snacks Power Brands Leverage Capabilities Drive Innovation Platforms • Deliver effective brand equity management within a “glocal” framework • Drive best practices across markets • Build the innovation pipeline to drive growt
Slide 40: GCT structure key to stepping up growth from new products
GCT structure key to stepping up growth from new products (1) 3-year trailing basis. New Product Development as % of Total Revenue (1) ~8% Base Kraft Foods Pro Forma combined Kraft Foods and Cadbury ~9% 11%
Slide 41: Striking the right balance between global and local
Striking the right balance between global and local • Business Units retain P&L authority • GCTs compensated based on global category growth • BUs and GCTs work together to drive “glocal” behavior
Slide 42: GCTs and Business Units will drive meaningful revenue synergies
Together, GCTs and Business Units will drive meaningful revenue synergies • Targeting $1 billion of revenue synergies over next three years – ~85% of revenue synergies to come from Snacks – Key driver of 5%+ organic net revenue growth • Multiple areas of opportunity – White space within newly expand
Slide 43: “kraft foods
¢ “kraft foods ¢, ¢ eS make today delicious
Slide 44: Mark Clouse, Global Biscuits Category Team Leader
1 Mark Clouse Senior Vice President and Global Biscuits Category Team Leader
Slide 45: Global Biscuits is a $68B category with strong growth
Global Biscuits is a $68B category with strong growth, especially in developing markets Biscuits Retail Value ($ in billions) CAGR (Cst Fx '07-'09) $17 $14 $8 $16 $13 $68 Asia Pacific Latin America CEEMA W. Europe N. America Global 6% 2% 3% 8% 10% 9% (1) Central and Eastern Europe, Middle East and A
Slide 46: Undisputed global leader in Biscuits
We’re the undisputed global leader in Biscuits, more than the next five players combined $9.1 $2.0 $1.4 $1.3 $1.0 $0.8 $3.8 19% 4% 3% 3% 2% 1% 9% Total Biscuits Net Revenues Global Share Key Brands (2009 $ in billions) Campbell Kraft Foods Kellogg United Biscuit PepsiCo Nestlé Retailer Brands Source
Slide 47: Top markets representing 75% of global revenues
No. 1 in 8 of Top 10 markets, representing 75% of global revenues Kraft Foods Biscuits Top Ten Country Share Performance Kraft Foods Leading Branded Competitor USA $4.1 45% Kellogg 23% France 1.2 United Biscuit Canada 0.5 Dare China 0.4 Ting Hsin Venezuela 0.3 Puig Italy 0.3 Barilla Spain 0.2 Cuetar
Slide 48: Biscuits will continue to fuel leadership in Snacks
Biscuits will continue to fuel Kraft Foods’ leadership in Snacks • Global scale as competitive advantage • Combined Snacking scale with Cadbury market access and chocolate brands • Strong Health and Wellness bundles • Talent with “Biscuits in their blood”
Slide 49: Focus on Power Brands, capabilities and innovation
Focus on Power Brands, world-class capabilities and innovation Grow Snacks Power Brands
Slide 50: Glocal: Oreo is the No. 1 cookie in the world
“Glocal”: The best of local and global Spotlight: Oreo is the No. 1 cookie in the world Global Appeal “Glocal” Model Global Impact The Ritual: Twist, Lick, and Dunk The Product The Moment 9 Million Fans #1 Snack Local Flavors and Formats Global Innovation Bundles Over 100 Countries, growing over 15%
Slide 51: Leverage capabilities
Focus on Power Brands, world-class capabilities and innovation Leverage Capabilities Grow Snacks Power Brands Insights Operations Talent R&D Route-to -Market
Slide 52: Building global operations capabilities as competitive advantage
Building global operations capabilities as a tangible competitive advantage • Key challenge is the complex and broad range of offerings in Biscuits • Unmatched global scale enables unique opportunities for Kraft Foods’ advantage Develop efficient and sustainable manufacturing technology Global netwo
Slide 53: Drive innovation platforms
Focus on Power Brands, world-class capabilities and innovation Leverage Capabilities Drive Innovation Platforms Grow Snacks Power Brands Insights Operations Talent R&D Route-to -Market Wholesome Snacks Chocolate Bakery Sweet Treats Hunger Satisfaction
Slide 54: Innovation platforms allow us to win in multiple markets
Innovation platforms allow us to win in multiple markets Platforms Growth Strategy Focus Brands • Expand largest global cookie brands to snacking icons • Provide compelling savory snacking alternatives to address hunger needs anytime and anywhere • Create unique wholesome bundles with great taste an
Slide 55: Two Brands / One Global Platform
Two Brands / One Global Platform Spotlight: On-the-go crackers going global Harmonized Bundle Harmonized Target and Communication World-Class Activation
Slide 56: Significant revenue synergies
Significant revenue synergies Route to Market White Space Opportunities Choco-Bakery Technology White Space Opportunities
Slide 57: Accelerating growth to build ~$12B Biscuits business
Accelerating growth to build ~$12B Biscuits business $9.1B ~$12B Biscuit Platforms – Net Revenue Growth (1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
Slide 58: Jim Cali, Global Gum and Candy Category Team Leader
1 Jim Cali Senior Vice President and Global Gum and Candy Category Team Leader
Slide 59: Global Gum and Candy is a $74B category
Global Gum and Candy is a $74B category with strong growth, especially in gum Gum and Candy Retail Value ($ billions) $74 $15 $19 $11 $12 $17 Candy Gum Total 4% 6% 5% 2% 5% 3% 2% 5% 3% 8% 8% 8% 7% 9% 7% 4% 4% 4% CAGR (Cst Fx '06-'09) Gum Candy (1) Central and Eastern Europe, Middle East and Africa.
Slide 60: Challenging for leadership in gum and candy globally
Challenging for leadership in gum and candy globally Total Gum & Candy Net Revenues $5.2 $5.6 $3.1 $1.4 $0.8 $0.7 $0.6 Global Share 14% 14% 7% 3% 2% 2% 2% Key Brands Kraft Foods (1) Mars- Wrigley Lotte Hershey Haribo Nestlé (1) 2009 Pro Forma net revenues based on the Cadbury acquisition. Source: Eu
Slide 61: Top gum markets representing 75% of global revenue
No. 1 or No. 2 in all Top 10 gum markets, representing 75% of global revenue Kraft Foods USA $0.7 37% Mars-Wrigley 56% Mexico 0.3 87% Mars-Wrigley 3% Brazil 0.3 71% Arcor 11% Japan 0.2 26% Lotte 52% France 0.2 50% Mars-Wrigley 33% Russia 0.1 21% Mars-Wrigley 73% Canada 0.1 45% Mars-Wrigley 51% Turke
Slide 62: Become the world's leading gum and candy company
Become the world’s leading gum and candy company • Highly attractive category fundamentals • Leverage global scale and growth momentum • Strong Developing Market position and potential • Advantaged route-to-market scale with total Snacks portfolio
Slide 63: Focus on Power Brands, capabilities and innovation
Focus on Power Brands, world-class capabilities and innovation Grow Snacks Power Brands
Slide 64: Spotlight: Trident, World's #1 brand
Spotlight: Trident – World’s #1 brand, growing double-digits Brazil Mexico USA Spain 2009 Revenues $230 $180 $420 $100 Share (1) 48% 46% 20% 44% Chg (‘05-'09) +910 bps +1,570 bps +570 bps +250 bps (1) Source: Nielsen / IRI Permissible Pleasure Functional Extension Base Renovation Wellness
Slide 65: Spotlight: Halls, World's #1 brand
Spotlight: Halls – World’s #1 brand, growing across both high and low development markets Low Brand Maturity: India High Brand Maturity: Mexico Product centric advertising and core flavor Emotional communication and innovation builds new occasion Net Revenue 20%+ July ‘10 YTD Share +510 bps since (1
Slide 66: Leverage capabilities
Focus on Power Brands, world-class capabilities and innovation Leverage Capabilities Grow Snacks Power Brands Insights Operations Talent R&D Route-to -Market
Slide 67: Building global insights as competitive advantage
Building global insights as a tangible competitive advantage Globally led insight platforms drive multi-market learning, accelerate innovation and drive total category Category Segmentation … 20 markets globally Consumer Portraits … understand need states and usage occasions Iterative New Product De
Slide 68: Drive innovation platforms
Focus on Power Brands, world-class capabilities and innovation Leverage Capabilities Drive Innovation Platforms Grow Snacks Power Brands Oral Care Wellness Pleasure Freshness Halls Insights Operations Talent R&D Route-to -Market
Slide 69: Driving growth across Gum and Candy innovation platforms
Driving growth across 7 Gum and Candy innovation platforms Innovation Platforms Growth Strategy Focus Brands • Grow share - mouth freshness and confidence • Example : Dentyne Pure (US), Fresh n ’ Clean (EU) • Grow occasions - mouth and cosmetic care • Example: Trident White , Trident Extra Care • Cr
Slide 70: Consumer insights provide base for innovation
Driving Advantage Impact Consumer Insights Provide Base for Innovation Unlock New Need State U.S. Launch Q1 2011 Ingredient Technology U.S. Launch Q2 2010 Stride Growth +200 bps Rollout 2010 -11 New Format U.S. Launch Q4 2009 Year 1 sales $130 MM Rollout 2011
Slide 71: Innovation supported share growth in U.S. Gum category
Innovation supported 10 share points of growth in U.S. Gum category U.S. Market Share (1) (1) Includes food, drug, mass merchants (excluding Wal-Mart) and convenience stores. Source: IRI H1 2010 Trident is growth driver Successful platform product launch by competitor Trident Layers, Stride Shift &
Slide 72: Significant revenue synergies
Significant revenue synergies Scale to strengthen position vs. competition Route-to-Market: Leverage Cadbury “Hot Zone” expertise
Slide 73: Accelerate growth to build $6.5 billion gum and candy business
Accelerate growth to build $6.5 billion gum and candy business $5.2B ~$6.5B Gum and Candy Platforms – Net Revenue Growth (1) 2009 Pro Forma net revenues based on the Cadbury acquisition. (1)
Slide 74: Tim Cofer, Global Chocolate Category Team Leader
1 Tim Cofer Senior Vice President and Global Chocolate Category Team Leader
Slide 75: Global Chocolate is a $90B category
Global Chocolate is an $90B category with strong growth, especially in developing markets Chocolate Retail Value ($ in billions) CAGR (Cst Fx '07-'09) 5% 3% 3% 12% 13% 5% (1) Central and Eastern Europe, Middle East and Africa. Source: Euromonitor 2009 based on fixed USD exchange rates (1)
Slide 76: We are a global leader in Chocolate
We are a global leader in Chocolate Total Chocolate Net Revenues $8.2 $8.0 $6.4 $3.9 $3.8 $2.2 $2.0 Global Share 15% 15% 13% 7% 7% 3% 4% Key Brands Kraft Foods (1) Mars- Wrigley Nestlé Ferrero Lindt Hershey Retailer Brands (2009 $ in billions) (1) (1) 2009 Pro Forma net revenues based on the Cadbury
Slide 77: Top markets representing 60% of global revenue
No. 1 or No. 2 in all Top 10 markets, representing 60% of global revenue Kraft Foods Chocolate Top Ten Country Share Performance United Kingdom $1.6 36% Mars-Wrigley 24% Germany 0.6 (2) 12% Ferrero 21% Australia 0.6 49% Mars-Wrigley 17% Brazil 0.6 36% Nestlé (3) 45% Russia 0.4 20% Mars-Wrigley 22% F
Slide 78: Become the world's most loved, fastest-growing chocolate company
Become the world’s most loved, fastest-growing chocolate company • Global scale as competitive advantage • Strong emerging market position • “Fabric of the nation” power brands • Strong innovation pipeline, RD&Q and marketing capabilities • Route-to-market scale of total Snacks • Talent with “chocol
Slide 79: Focus on Power Brands, capabilities and innovation
Focus on Power Brands, world-class capabilities and innovation
Slide 80: Spotlight: Milka is a proven growth engine
Spotlight: Milka is a proven growth engine, up 46% to $1.6 billion in last 3 years Recent Innovation Flowpack Big Foot Iconic Brand Image Premium Say it with Milka Brand Values Innocence, Naturalness, Joyful and Confident
Slide 81: Spotlight: Cadbury is a Power Brand beyond compare
Spotlight: Cadbury is a Power Brand beyond compare Source: Nielsen MAT June 2010 (Aus, India, RSA, IE), MAT July (UK) Country Share Market Position • British icon beyond compare; Top 3 Consumer “Power Brand” status above BBC, Facebook, Marks & Spencer and Coca-Cola • Continued robust growth +5% (lat
Slide 82: Leverage capabilities
Focus on Power Brands, world-class capabilities and innovation Leverage Capabilities Grow Snacks Power Brands Insights Operations Talent R&D Route-to -Market
Slide 83: Building global R&D capabilities as competitive advantage
Permissibility Unique Tastes & Textures Modernize Core Classics New Formats Building global R&D capabilities as a tangible competitive advantage Wafer Aeration Fewer Calories Multi-Texture Multi-Flavour Fusions Magical Experience Special Indulgence Modern Convenience Best Chocolate Bitesize Pocket P
Slide 84: Drive innovation platforms
Focus on Power Brands, world-class capabilities and innovation Leverage Capabilities Drive Innovation Platforms Grow Snacks Power Brands Insights Operations Talent R&D Route-to -Market Sharing & Bite Size Gifting & Seasonals Value-Added Tablets Countlines Affordability
Slide 85: Innovation platforms allow us to win in multiple markets
Innovation platforms allow us to win in multiple markets and counter competitive threats Tablets Countlines Sharing & Bite Size Gifting & Seasonals Affordability Platforms Growth Strategy • Strengthen leadership position • Drive category growth via expansion into new textures, occasions and segments
Slide 86: Extending leadership in Tablets via innovation
Kraft Foods continues to extend leadership in Tablets via consistent innovation success Rejuvenate the Core More Special Lighter Feel Break the rules in packaging Modernise and extend through new formats More indulgent, multi-layer, mousse texture Lighter textures More generous inclusions 35g
Slide 87: Significant revenue synergies
Significant revenue synergies Premium Expansion Gifting Fast-Adapts Tablets Fast-Adapts Countlines Expansion Bite Size Expansion Affordability Expansion
Slide 88: Accelerate growth to build $10 billion global chocolate business
Accelerate growth to build $10 billion global chocolate business $8.2B $10B+ Chocolate Platforms – Net Revenue Growth (1) (1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
Slide 89: Irene Rosenfeld Chairman and CEO
Irene Rosenfeld Chairman and CEO
Slide 90: Agenda
Agenda • Hitting our sweet spot • Seizing our global snacks opportunity – Biscuits – Chocolate – Gum and Candy • Winning in each region – North America – Europe – Developing Markets • Transforming our financial performance
Slide 91: Winning in each region
Winning in each region • Focus on Power Brands to drive growth • Local Brands provide scale and cash flow • Strengthen capabilities in both grocery and ICC channels • Leverage consumer insights for collaborative marketing programs • Drive End-to-End productivity • Manage overheads
Slide 92: Portfolio composition varies by region
Portfolio composition varies by region Snacks ~66% Local ~18% Regional ~16% Snacks ~32% Local ~33% Regional ~36% Snacks ~70% Local ~18% Regional ~12% Category Portfolio Composition 2009 Pro Forma (1) Europe $11.9B Revenue North America $23.6B Revenue Developing Markets $12.6B Revenue (1) 2009 Pro Fo
Slide 93: Tony Vernon, President, Kraft Foods North America
1 Tony Vernon Executive Vice President and President, Kraft Foods North America
Slide 94: Improved portfolio mix in North America
Beverages 15% Biscuits/Nuts 24% Confectionery 8% Grocery 13% Convenient Meals 19% Cheese 21% Improved portfolio mix Grocery 19% Beverages 14% Snacks 24% Convenient Meals 22% Cheese 21% KFNA 2006 (1) 2006 Net Revenues $23.1 billion KFNA Today (2) 2009 Net Revenues $23.6 billion Snacks: 32% (1) As ori
Slide 95: Unrivaled collection of iconic brands
Snacks Convenient Meals Cheese Beverages Grocery Unrivaled collection of iconic brands
Slide 96: Strong positions in snack categories
Strong positions in snack categories Cookies #1 45% 2.7x 2% Crackers #1 46% 1.6x 9% Gum #2 35% 0.6x 4% Nuts #1 27% 4.5x 37% Position Private Label % Share Relative to Nearest Branded Competitor Kraft Foods % Share Source: Nielsen
Slide 97: Strong market shares with below-average private label exposure
Strong market shares with below-average private label exposure Beverages • Powdered Soft Drinks #1 50% 7.0x 23% • Aseptic #1 65% 4.6x 2% • Coffee #2 27% 0.8x 10% Cheese • Cream Cheese #1 66% 66.1x 30% • Processed Slices #1 53% 5.7x 31% • Natural Cheese #1 18% 2.9x 45% Convenient Meals • Lunch Combin
Slide 98: Environment will remain difficult
Environment will remain difficult Economy Consumer Customer • GDP slowly rebounding • Recovery remains jobless • Commodities expected to rise • Consumer confidence remains low • Continued focus on value • Away-from-home traffic improving, but below historical levels • “Loss leaders” used to drive tr
Slide 99: Solid operating momentum, but work to do
Solid operating momentum … but work to do • Solid base volume trend improvements – Product quality advantages – Advertising improvements … both quality and spending levels • Organization refocused from category managers to accountable brand advocates • Heightened cost management focus delivering res
Slide 100: Profitably grow our brands
Profitably grow our brands Focus Resources • 20 Power Brands • 20 Local Brands • Win with people
Slide 101: Brands drive North America
40 Brands drive North America U.S. Retail Portfolio 2010E - Percentage of Net Revenue and Operating Income 67% 20% 13% Power Brands Local Brands Rest of Portfolio 67% 23% 10% Power Brands Local Brands Rest of Portfolio Net Revenue Operating Income
Slide 102: Marketing and innovation focused on 20 Power Brands
Snacks Convenient Meals Cheese Beverages Grocery Marketing & Innovation focused on 20 Power Brands
Slide 103: New Power Brand advertising campaigns
15 new Power Brand advertising campaigns in the last year Power Brand Base Volume trend improvement 200+ bps (1) New Advertising (1) August 2010 YTD base dollar volume growth versus full year 2009. Q2-Q3 ‘09 Q4 ‘09 Q1 ‘10 Q2 ‘10 To Come H2 ‘10
Slide 104: Big innovation focused on Power Brands
Big innovation focused on Power Brands Oscar Mayer Deli Carved • Launching Q3 ‘10 • Builds on Deli Shaved platform … with next generation quality in packaged meat • Very favorable retailer response / distribution • Extendable platform Jell-O Mousse • Launched Q4 ‘09 • New consumer usage occasion: “P
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Slide 106: Ritz Crackers marketing
Ritz Crackers marketing • “Open For Fun” campaign • Brand contemporization • Marketing spending +25% August YTD • Crackerfuls innovation expanding user base • Strong base dollar volume results (1) August YTD +13% • August YTD revenues +12% (1) Nielsen, August 21, 2010.
Slide 107: Oscar Mayer marketing
Oscar Mayer marketing • Unifying brand campaign across categories levering scale • “It doesn’t get better than this” campaign • Marketing spending +20% August YTD • Deli Carved innovation driving quality trade-up • Solid base dollar volume results (1) August YTD +2% • August YTD revenues +4% (1) Nie
Slide 108: Capri Sun marketing
Capri Sun marketing • Complementary “I can respect that” Mom and “Disrespectoids” Kid campaigns • Integrated Sustainability marketing with Pouch Brigades • Marketing halo working for subline innovations (Sunrise and Roaring Waters) • Strong base dollar volume results (1) August YTD +8% • August YTD
Slide 109: Kraft/Velveeta Mac & Cheese marketing
Kraft/Velveeta Mac & Cheese marketing • “You Know You Love It” Kraft campaign • Integrated ‘Noodle’ marketing: Iconic brand at Iconic places • Focused Velveeta “Ultimate Get Together” campaign • Marketing spending +45% August YTD • Kraft Homestyle innovation driving quality trade-up • Strong base do
Slide 110: Philadelphia Cream Cheese marketing
Philadelphia Cream Cheese marketing • “Spread a little Philly” campaign • Broadened recipe usage campaign • Integrated plan with significant digital elements (e.g., Paula Dean) • Marketing spending +30% August YTD • Usage-based innovation pipeline • Solid base dollar volume results (1) August YTD +2
Slide 111: Increased Power Brand advertising spending driving growth
Increased Power Brand advertising spending driving mid-single digit growth Mid- Single Digit Growth Mid-to- High Teens Margins Power Brand A&C Spending (% of Net Revenue) ~6.5% 8%-9% brands >10% 2010E 2013E
Slide 112: Local Brands managed smartly for profitable growth
Snacks Convenient Meals Cheese Beverages Grocery 20 Local Brands managed smartly for profitable growth
Slide 113: Entrepreneurial Local Brands approach
Entrepreneurial Local Brands approach • Focused “one-idea” marketing • Non-traditional media • Scale-enabled customer relationship marketing • Focused Wall-to-Wall Sales utilization • High-potential brand managers with ownership, entrepreneurial spirit Low Single Digit Growth High Teens Margins
Slide 114: Jet Puffed Marshmallows marketing
Jet Puffed Marshmallows marketing • “One idea” marketing focus on S’mores • Branded partnership pooling resources • Traditional and non-traditional vehicles • Bundled marketing in Kraft Food & Family • Wall-To-Wall in-store leverage for displays • Trajectory-changing impact
Slide 115: Show ad spots
Show ad spots for: Premium Crackers (Canada) Stride * *
Slide 116: Winning with our people in North America
Winning with our people in North America • Performance-driven, values-led culture • Strong, diverse talent base … but supplementing with proven, external leaders • Broader best practice sharing and implementation • Significantly reduced internal processes • Marketers focused on Marketing! • Sales fo
Slide 117: Leverage Sales
Profitably grow our brands Focus Resources Leverage Sales • 20 Power Brands • 20 Local Brands • Win with people • Win in store • Customer team transformation • Trade spending efficiency
Slide 118: Win every account, every store, every household
Win every account, every store, every household, your Mom Grocery / Wall-to-Wall ICC / Hot Zone To Date • Coverage in 16,600 stores • Automated and customer- specific in-store agenda • Margin accretive investment based on better merchandising Refinements to Come • Top-down in-store agenda prioritiza
Slide 119: Customer team transformation
Customer team transformation • Further customer segmentation • Centralization of administrative tasks • Aligned “One Number” planning approach Outcome: Increased Effectiveness AND Lower Cost
Slide 120: Trade spending efficiencies
Trade spending efficiencies • Rolled out new system and tools • Driving efficiency: Optimizing low return events Price-deal realignments to reduce promoted price variability • Changing sales incentive to improve customer team alignment with brands • Reinvesting efficiencies into advertising Trade Sp
Slide 121: Expand Margins
Profitably grow our brands Focus Resources Leverage Sales Expand Margins • 20 Power Brands • 20 Local Brands • Win with people • Store coverage optimization • Customer team transformation • Trade spending efficiency • Productivity step-up • Zero overhead growth • Cost synergies
Slide 122: Cadbury integration update
Cadbury integration update • Integration progressing very well • Base business strong – H1’10 revenues up mid-single digits – H1’10 YTD U.S. gum share +2.4 pp – U.S. gum share up 8+ pp in 6 years • Distinct innovation culture – Trident Layers – Stride Mega Mystery – Dentyne Pure • Bringing innovatio
Slide 123: Profitably grow our brands
Profitably grow our brands • “Big marketing” on our Power Brands • Entrepreneurial management of our Local Brands • Leverage Sales scale • Relentless focus on cost improvements across the business Organic Revenue growth of 3%-4% High-teens Operating Income Margins
Slide 124: Michael Clarke, President, Kraft Foods Europe
1 Michael Clarke Executive Vice President and President, Kraft Foods Europe
Slide 125: Today's Kraft Foods Europe
Beverages 40% Snacks 38% Grocery 4% Convenient Meals 4% Cheese 14% Today’s Kraft Foods Europe Beverages 20% Biscuits 20% Chocolate 37% Gum & Candy 10% Cheese 8% Other 5% 2006 Net Revenues $6.7 billion 2009 Net Revenues $11.9 billion Snacks: 67% KFE 2006 (1) KFE Today (2) (1) As originally reported i
Slide 126: Unrivaled collection of global, regional and local brands
Chocolate Biscuits Gum & Candy Cheese & Grocery Coffee An unrivaled collection of global, regional and local brands
Slide 127: Leadership positions in key categories
Leadership positions in key categories … Source: Nielsen 2009, shares in categories in countries in which Kraft Foods competes Chocolate #1 1.2 Biscuits #1 1.6 Gum & Candy #1 1.5 Coffee #1 1.4 Cream Cheese #1 5.4 Category Position Kraft Foods Share% Relative to Nearest Branded Competitor
Slide 128: #1 in Snacks
… and #1 in Snacks Company Share in Snacks (1) Kraft Foods 14% Mars-Wrigley 8% Ferrero 6% Nestlé 5% PepsiCo 5% (1) Source: Euromonitor 2009. Total $89 billion Snacking market for Western Europe (all markets whether KFE competes or not) includes Confectionery (Chocolate, Gum, Candy), Biscuits, Snack
Slide 129: Transformed operations
Transformed operations • Established pan-European category business model • Focusing on priority brands and opportunities • Driving savings through End-to-End Productivity • Reducing overhead costs
Slide 130: Top-line results are improving
Top-line results are improving … 2.5 pp (2) Base Kraft Foods Europe Organic Net Revenue Growth (1) (0.8)% (0.3)% Q3’09 Q4’09 Q1’10 Q2’10 2.5% 5.2% 0.4% Q2’09 H1 2010 3.9% (3) (1) Reported net revenues for each period were the following: Q2’09, (17.4)%; Q3’09, (11.5)%; Q4’09, 8.0%; Q1’10, 40.5%; Q2’1
Slide 131: Margins continue to expand
… and margins continue to expand Base Kraft Foods Europe Operating Income Margin Q3’08 Q3’09 Q4’08 Q4’09 Q1’09 Q1’10 Q2’09 Q2’10 (1) (1) (2) (2) (2)(3) (2)(3) (2) 8.9% 9.2% 7.6% 10.0% 10.2% 8.2% 10.6% 12.2% (1) Reported Operating Income Margins were the following: 4.9% Q3’08; and (6.7)% Q4’08. See G
Slide 132: Positioned to succeed despite a slow economic recovery
Economy Customer Consumer Positioned to succeed despite a slow economic recovery • GDP back to growth 1.0% to 1.5% Pre-Recession: 2.5% • High unemployment 9% to 10% Pre-Recession: 7.2% • EU financial crisis and Euro devaluation • Commodities remain at a high level • Consumer confidence slowly recove
Slide 133: Europe's favorite Snacking company: Focus Resources
Focus Resources Europe’s favorite Snacking company • 15 Power Brands • Snacks platforms • Proprietary propositions in Coffee and Cheese • Local Brands • Win with people
Slide 134: Focus resources on 15 Power Brands
Chocolate Biscuits Gum & Candy Cheese & Grocery Coffee Focus resources on 15 Power Brands, 10 of which are in Snacks
Slide 135: Expand from pure Chocolate to Snacking
Expand from pure Chocolate to Snacking • Power Brand focus • Differentiate packaging and integrated marketing communications • Leverage proprietary technologies to drive new product growth • Capture revenue synergies
Slide 136: Reframe Biscuits into Snacking
Reframe Biscuits into Snacking • Power Brand focus • Differentiate local heritage brands, leveraging LU umbrella brand • Accelerate global and regional growth platforms • Capture white space opportunities Choco-Bakery
Slide 137: Grow Gum and expand Halls
Grow Gum and expand Halls • Power Brand focus • Grow Gum via o communication and innovation • Expand usage of Halls via range relaunch and new products • Leverage Kraft Foods scale in snacks
Slide 138: Leverage proprietary propositions in Coffee and Cheese
Leverage proprietary propositions in Coffee and Cheese Coffee Cheese & Grocery • Power Brands focus • Expand Tassimo in on-demand • Reframe Soluble and strengthen Roast & Ground • Focus on Philadelphia • Leverage versatility strategy and proprietary propositions
Slide 139: Local Brands contributing to growth
H1 2010 H1 2010 Local Brands contributing to growth Nordic Chocolate Kraft Process Cheese Net Revenue in H1’10 up mid-single digits +200 bps Gross Margin • Market leader in all segments • Leverage EU growth platforms & co-branding opportunities • Entrepreneurial spirit Net Revenue in H1’10 up mid-si
Slide 140: Win with our people
Win with our people • Build performance-driven, value-led culture – Pride in our brands – External focus – Winning spirit • Leverage change management capability to integrate and restructure • Strong, diverse talent • Recognized leader in Sales and Marketing
Slide 141: Leverage Sales
Leverage Sales Focus Resources Europe’s favorite Snacking company • 15 Power Brands • Snacks platforms • Proprietary propositions in Coffee and Cheese • Local Brands • Win with people • Drive availability • Shopper insights • Merchandising • Customer collaboration
Slide 142: Leverage our Sales strength
Leverage our Sales strength • Drive availability – Leverage “best of both” to win in store and Instant Consumption – Invest in feet on the street • Leverage shopper insights • Win at point of sale – Own events, cross category promotions – Hot Zone, multi-touch points • Effective customer collaborati
Slide 143: Expand Margins
Expand Margins Leverage Sales Focus Resources Europe’s favorite Snacking company • 15 Power Brands • Snacks platforms • Proprietary propositions in Coffee and Cheese • Local Brands • Win with people • Drive availability • Shopper insights • Merchandising • Customer collaboration • Mix improvement •
Slide 144: Reduce costs and expand margins
Reduce costs and expand margins • Category model driving mix – Resource allocation behind power brands – Geographic / portfolio mix improvement • End-to-End productivity savings – Targeting COGS productivity of 4% – Procurement savings step-up (SAVOR) – Supply chain re-configuration • Continued nega
Slide 145: Driving growth, margins as Europe's favorite Snacking company
Driving growth, margins as Europe’s favorite Snacking company • Unrivaled portfolio, #1 position in Snacks • Strategies are working, building momentum • Growth roadmap defined • Significant synergy potential Organic Revenue growth of 2%-3% Mid-teens Operating Income Margins
Slide 146: Sanjay Khosla, President, Kraft Foods Developing Markets
1 Sanjay Khosla Executive Vice President and President, Kraft Foods Developing Markets
Slide 147: Three years ago, laid out plan to turn around KFDM
Three years ago, laid out plan to turn around KFDM to sustainable long-term growth • Winning through focus strategy has three pillars: – 5 Categories, 10 Power Brands and 10 Priority Markets (5-10-10) – Win locally, leverage globally – Build depth of international talent
Slide 148: KFDM has delivered excellent results
2006-2009 CAGR Organic Net Revenue: (1) +13% Operating Income: +24% KFDM has delivered excellent results (1) Reported Net Revenue 2006-2009 CAGR was 16%. See GAAP to Non-GAAP Reconciliation at the end of this presentation.
Slide 149: Moved KFDM to a virtuous cycle
Moved KFDM to a virtuous cycle Focus on Power Brands 2006-2009 CAGR nearly 20% Reduce Costs Improve Gross Profit Margins Increase A&C Invest in Sales
Slide 150: Favorable environment provides further opportunity
Favorable environment provides further opportunity Economy Consumer Customer • Growing Asia-Pacific and Latin America markets • Slow recovery in Central and Eastern Europe • Increasing purchasing power • Rising demand for on-the-go snacks • Both Modern and Traditional Trade are growing
Slide 151: Win in Developing Markets through Snacks leadership
Focus Resources Win in Developing Markets through Snacks leadership • 5-10-10 5 Categories 10 Power Brands 10 Priority Markets
Slide 152: Today's Kraft Foods Developing Markets
Biscuits 19% Chocolate 29% Gum & Candy 21% Coffee 9% Powdered Beverages 8% All Other 14% Today’s Kraft Foods Developing Markets Snacks 44% Coffee 12% All Other 27% Powdered Beverages 17% (2) 2009 Net Revenues $12.6 billion Snacks: 69% KFDM 2006 (1) Pro Forma amounts are based on the acquisition of C
Slide 153: Power Brands will grow strong double-digit
Chocolate Biscuits Gum & Candy Powdered Beverages Coffee 10 Power Brands will grow strong double-digit with high gross margins
Slide 154: Focus on ten priority markets
Focus on ten priority markets • Top 10 Priority Markets: • Priority Markets drive ~70% of total KFDM growth • BRICM to grow strong double digit, delivering ~50% of KFDM growth – Australia – Brazil – China – India – Indonesia – Mexico – Poland – Russia – South Africa – Ukraine
Slide 155: Terrific geographic fit with Cadbury
Terrific geographic fit with Cadbury Legacy Cadbury Legacy Kraft Foods % 2009 Net Revenues by Country $ in mil. (1) $525 $1,050 $400 $500 $750 $1,500 $425 $400 (1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
Slide 156: Brazil
Brazil (1) 2009 Pro Forma based on the Cadbury acquisition. • 2009 Net Revenue: Pro Forma Combined (1) : $1.5B Base Kraft Foods '06-'09 CAGR up double-digits • Strong leadership position in Gum and Powdered Beverages • #1 brands in all priority categories • H1 2010 revenue up high-teens (1) Key Bran
Slide 157: China
China • 2009 Net Revenue: Pro Forma Combined (1) : $0.5B Base Kraft Foods '06-'09 CAGR up low-teens • Strong leadership position in Biscuits • H1 2010 revenue up 20%+ (1) Key Brands (1) 2009 Pro Forma based on the Cadbury acquisition.
Slide 158: India
India • 2009 Net Revenue: Pro Forma Combined (1) : $0.4B • Strong leadership position in Chocolate • H1 2010 revenue up nearly 25% (1) • Strong route-to-market capability Key Brands (1) 2009 Pro Forma based on the Cadbury acquisition.
Slide 159: Win in Developing Markets through Snacks Leadership
Win Locally, Leverage Globally Build Depth of International Talent Expand Margins Leverage Sales Focus Resources Win in Developing Markets through Snacks Leadership Empower local business units Drive best sales practices • 5-10-10 5 Categories 10 Power Brands 10 Priority Markets Drive productivity R
Slide 160: Spotlight: Oreo, World's #1 cookie
Spotlight: Oreo – World’s #1 cookie delivers sustained high growth Context • Oreo flat in early 2000’s • Redefined business model based on key consumer insights Results • Net revenue CAGR 2006-2009 of 30%+ • H1 2010 revenue up 35%+ • Gross Profit Margin well above average New Products Building the B
Slide 161: Spotlight: Tang, Back to Basics
Spotlight: Tang – “Back to Basics” focus drives total turnaround Context • 2008: Brand not growing • 2009: “Back to Basics” with broadened competitive frame Product quality, flavor innovation, Kids “Movement”, new package formats, in-store activation Broader frame of cold beverages, including water
Slide 162: Invest to drive best sales practices across markets
Organization & Infrastructure Invest to drive best sales practices across markets • Leverage combined company route-to-market strengths • Expand distribution • Sales Executive Teams
Slide 163: Build depth of international talent
Build depth of international talent • Moved with tremendous speed & quality in integrating organization • Align top talent to key categories, brands, markets • Drive towards a world-class diverse and inclusive organization
Slide 164: Driving growth and margins as Developing Markets' favorite snacking company
Driving growth and margins as Developing Markets’ favorite snacking company • 5-10-10 strategy has track record of success • Win locally, leverage globally is working well • Good progress in building depth of talent Organic Revenue growth of 10%+ Mid-teens Operating Income Margins
Slide 165: Tim McLevish, Executive Vice President and CFO
1 Tim McLevish Executive Vice President and CFO
Slide 166: Agenda
Agenda • Hitting our sweet spot • Seizing our global snacks opportunity – Biscuits – Chocolate – Gum and Candy • Winning in each region – North America – Europe – Developing Markets • Transforming our financial performance
Slide 167: Shifting from Turnaround to Growth
Shifting from Turnaround to Growth “Growth” “Turnaround” • Improve portfolio mix • Drive power brands • Fix the base • World-class capabilities • Peer-average growth • Top tier growth Future
Slide 168: Strategies will deliver a step-up in growth
Strategies will deliver a step-up in growth … Create a Performance-Driven, Values-Led Organization Delight Global Snacks Consumers Unleash the Power of Our Iconic Heritage Brands Organic Revenue growth 5%+ Mid-to-High Teens Profit Margins EPS growth 9%-11%
Slide 169: Based on an enhanced growth algorithm
… based on an enhanced growth algorithm • Organic Revenue growth – ~2/3 from volume/mix – ~1/3 from price • Pricing primary lever to offset input cost inflation • Volume/mix and productivity to expand gross margins • Overhead leverage and cost synergies – Fuel increased A&C – Fund Sales and R&D inve
Slide 170: Enhanced growth algorithm builds on improved base business
Enhanced growth algorithm builds on improved base business Base Kraft Foods Improvements Enhancements • Improved product quality • Stronger brand equities • Increased innovation pipeline • Focus on higher growth snack categories • Improved geographic mix • Improved channel mix • Leveraging new Globa
Slide 171: Brands and Business Units will deliver 5%+ organic revenue growth
Brands and Business Units will deliver 5%+ organic revenue growth Note: 2010 includes 12 months of Cadbury results. Snacks includes other Kraft Foods Snacks businesses beyond core categories (e.g., Handi-Snacks, Marshmallows, etc.). Snacks Regional Power Brands Local Brands Mid-to-High Single Digit
Slide 172: 5%+ revenue growth target benefits from synergies
5%+ revenue growth target benefits from synergies in the short-term Short-Term • Targeting $1 billion of revenue synergies over next three years • 70 bps of organic growth per year
Slide 173: Long-term momentum benefits from shift to Developing Markets
Long-term momentum benefits from shift to high-growth Developing Markets Short-Term Long-Term KFNA 49% KFDM 26% KFE 25% • Targeting $1 billion of revenue synergies over next three years • 70 bps of organic growth per year (1) (1) 2009 Pro Forma amounts based on the Cadbury acquisition and the divest
Slide 174: Long-term momentum benefits from shift to Developing Markets
Long-term momentum benefits from shift to high-growth Developing Markets Short-Term Long-Term KFNA ~45% KFDM ~33% KFE ~22% • Targeting $1 billion of revenue synergies over next three years • 70 bps of organic growth per year 2013E
Slide 175: End-to-end productivity will drive gross margin gains
End-to-end productivity will drive gross margin gains • Procurement (SAVOR) • Manufacturing (Lean Six Sigma) • Customer Service & Logistics (1) Excludes Cadbury. Productivity % of COGS (1) 2.9% >4% ~4% Target 2010E
Slide 176: Investments in brand building will increase
Investments in brand building will increase A&C as a Percentage of Net Revenues 7.5% 9%-10% ~8% (1) (1) Pro Forma for the Cadbury acquisition. 2009 Pro Forma 2010E Target
Slide 177: Resetting overhead costs will accelerate margin expansion
Resetting overhead costs will accelerate margin expansion • Europe – Negative Overhead Growth (NOG) • North America – Zero Overhead Growth (ZOG) • Developing Markets – Half Overhead Growth (HOG) (1) Excludes Cadbury. Overheads % of Net Revenue (1) ~13.5% 14.7% ~12.0% Target 2010E
Slide 178: Substantial change to continue across the organization
Substantial change to continue across the organization Pan-European Category Model Functional Transformation Catalyst (SAP) Change Management Initiatives
Slide 179: Cost synergies will further expand profit margins
Cost synergies will further expand profit margins to mid-to-high teens Cost Synergies / Pre-Tax Integration Costs (Cumulative P&L Impact) Cost Synergies Total at least $750 million ~15% ~70% >90% 2010E 2012E 2011E ~100% ~50% ~80% Integration Program Costs Total ~$1.5 billion (Cumulative)
Slide 180: Targeting top-tier margins
Targeting top-tier margins 10 Kraft Foods 13.7% Coca-Cola 27.6% PepsiCo 18.8% Campbell 16.8% Hershey 16.2% General Mills 16.0% Kellogg 15.9% Danone 15.3% Heinz 14.7% Nestle 14.7% ConAgra 8.9% Sara Lee 7.9% (1) Source: Company reports. Operating Income Margins (Fiscal Year) (1)
Slide 181: Begun to deliver growth in line with peer averages
Begun to deliver growth in line with peer averages 4 Kraft Foods 8.0% 8 Kraft Foods 3.2% 10 Kraft Foods (6.2)% 10 Kraft Foods 3.3% (1) Source: Thomson First Call. Operating EPS Growth (1) Danone 31.0% Nestle 17.3% ConAgra 32.9% Hershey 15.4% Nestle 15.0% Coca-Cola 13.9% Sara Lee 19.3% General Mills
Slide 182: Earnings trajectory will significantly improve
Earnings trajectory will significantly improve mid-teens growth $2.00+ 9%-11% 7%-9% $2.00 Operating EPS Kraft Foods + Cadbury Kraft Foods before Cadbury Transaction
Slide 183: Significantly stepped up free cash flow
Significantly stepped up free cash flow Free Cash Flow (1) ($ billions) (1) Defined as cash flow from operations less capital expenditures. See GAAP to Non-GAAP reconciliation a the end of this presentation.
Slide 184: Will maintain strong capital discipline: Return on Invested Capital
Will maintain strong capital discipline while supporting strong growth Return on Invested Capital (1) (1) Defined as Operating Net Profit After Taxes divided by Invested Capital (average total net debt plus equity). Operating Net Profit After Taxes includes operating net income and adds back after-t
Slide 185: New metrics for success
New metrics for success Future “Growth” “Turnaround” • Mid-teens margins • Organic revenue growth of 5%+ • Organic revenue growth of 4%+ • Mid-to-high teens margins • EPS growth of 7%-9% • EPS growth of 9%-11% • Improve free cash flow • Improve ROIC
Slide 186: “kraft foods
! “kraft foods ¢ f ee make today delicious
Slide 187: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations
Slide 188: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation As Reported (GAAP) Impact of Divestitures Impact of Acquisitions Impact of Currency Organic (Non-GAAP) As Reported (GAAP) Organic (Non-GAAP) June 30, 2010 Kraft Foods Europe 2,793 - (662) 2,183 34.1% 5.2% June 30, 2009 Kraft Foods Europe 2,083 (7) - - 2,076 March 31,
Slide 189: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation As Reported (GAAP) Asset Impairment, Exit and Implementation Costs - Restructuring Asset Impairments / Other Expenses - Non-Restructuring (Gains) / Losses on Divestitures, net Excluding Items (Non- GAAP) For the Three Months Ended September 30, 2008 Kraft Foods Europe
Slide 190: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ($ in billions, Unaudited) Net Cash Provided by Operating Activities (GAAP) 3.6 $ 4.1 $ 5.1 $ Capital Expenditures (1.2) (1.4) (1.3) Free Cash Flow (Non-GAAP) (1) 2.3 $ 2.8 $ 3.8 $ (1) May not add due to rounding Cash Flows For the Twelve Months Ending December 31, Kr
Slide 191: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation As Reported (GAAP) (1) Impact of Divestitures / Other Impact of Acquisitions Impact of Currency Organic (Non-GAAP) For the Twelve Months Ended: December 31, 2007 8.6% (0.6)pp 0.8pp 3.1pp 5.3% December 31, 2008 16.9% (0.8)pp 8.9pp 2.0pp 6.8% December 31, 2009 (3.7)% (0
Slide 192: 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 Twelve Months Ended: December 31, 2007 18.0% 0.0pp 0.2pp 6.5pp 11.3% December 31, 2008 38.0% (0.1)pp 4.7pp 15.9pp 17.5% December 31, 2009 (3.5)% (0.5