Slide 1: General Mills Fiscal 2016 Review & 2017 Outlook
General Mills Fiscal 2016 Review & 2017 Outlook
Slide 2: A Reminder on Forward-looking Statements
A Reminder on 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
Slide 3: Fiscal 2016 Financial Review
Fiscal 2016 Financial Review Don Mulligan Executive Vice President; Chief Financial Officer
Slide 4: Fiscal 2016 Summary
Fiscal 2016 Summary • Consumer-first Initiatives Gained Traction on Many Important Businesses • Margin Expansion and Adjusted Diluted EPS* Exceeded Expectations • Continued to Reshape the Portfolio ▬ North American Green Giant Divestiture ▬ Annie’s Expansion in U.S., Yoplait Launch in China ▬ EPIC P
Slide 5: Increased Profit Margin Target
Increased Profit Margin Target • Cost Savings from Previously Announced Projects Increased to $600MM by Fiscal 2018 • Will Implement Additional Efforts to Optimize Spending, Reduce Complexity, and Prioritize Profitable Volume Adjusted Operating Profit Margin* (% of Net Sales) +400bps 20% +150bps vs
Slide 6: Fourth Quarter Fiscal 2016 Financial Summary
Fourth Quarter Fiscal 2016 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $3,928 -9% -8% Segment Operating Profit* 654 -18 -18 Net Earnings Attributable to General Mills 380 +103 Diluted EPS $0.62 +107 Certain Items Affecting Comparability 0.04
Slide 7: Fourth Quarter Fiscal 2016 Components of Net Sales Growth
Fourth Quarter Fiscal 2016 Components of Net Sales Growth Organic Net Sales = +1% +1pt 0 pts -1 pts -3pts -6pts -9pts Organic Organic Foreign 53rd Acquisitions / Total Volume Price & Mix Exchange Week Divestitures Net Sales
Slide 8: Full Year Fiscal 2016 Financial Summary
Full Year Fiscal 2016 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $16,563 -6% -2% Segment Operating Profit* 3,000 -1 +1 Net Earnings Attributable to General Mills 1,697 +39 Diluted EPS $2.77 +41 Certain Items Affecting Comparability 0.15 Adju
Slide 9: Fiscal 2016 U.S. Retail Segment
Fiscal 2016 U.S. Retail Segment Net Sales: $10.0B, -5% vs. LY Operating Profit: $2.2B, +1% vs. LY Net Sales by Operating Unit $MM % Change Cereal $2,313 -1% Snacks 2,094 -2 Baking Products 1,903 -3 Yogurt 1,303 -7 Meals 2,394 -10 Acquisitions / Divestiture: -2 Points of Net Sales Growth 53rd Week: -
Slide 10: Fiscal 2016 Convenience Stores & Foodservice Segment
Fiscal 2016 Convenience Stores & Foodservice Segment Net Sales: $1.9B, -4% vs. LY Operating Profit: $379MM, +7% vs. LY 6 Focus Platforms Net Sales ($ in Millions, % vs LY) +9% +5% +4% F13 F14 F15 F16 53rd Week: -2 Points of Net Sales Growth
Slide 11: Fiscal 2016 International Segment
Fiscal 2016 International Segment Net Sales: $4.6B, Constant-currency Growth +3%* Operating Profit: $442MM, Constant-currency Growth -3%* Net Sales by Region Constant- currency $MM % Change* Latin America $709 +12% Europe 1,998 +3 Asia / Pacific 996 +1 Canada 930 -4 Acquisition / Divestitures: -1 Po
Slide 12: Fiscal 2016 Adjusted Gross Margin Results
Fiscal 2016 Adjusted Gross Margin* Results 35.6% 34.7% • Cost Savings and Modest Input Cost Inflation Drove Annual Adjusted Gross Margin Expansion • Annual Input Cost Inflation was 2% F15 F16 *Non-GAAP measure. See appendix for reconciliation.
Slide 13: Fiscal 2016 Joint Venture Results
Fiscal 2016 Joint Venture Results After-tax Earnings: $88MM; +12% vs. LY in Constant Currency* Cereal Partners Worldwide Häagen-Dazs Japan Net Sales Flat** Net Sales +5%** *Non-GAAP measure. See appendix for reconciliation. **Growth rates in constant currency.
Slide 14: Core Working Capital
Core Working Capital ($ in Millions) Q4 F16 F15 % Change Accounts Receivable $1,361 $1,387 Inventories 1,414 1,541 Accounts Payable 2,046 1,684 Total Core Working Capital $729 $1,244 -41%
Slide 15: Fiscal 2016 Cash Flow Highlights
Fiscal 2016 Cash Flow Highlights Operating Cash Flow ($ in Millions) • $729MM in Capital $2,630 Investments $2,543 • Free Cash Flow* of $1.9B • Free Cash Flow Conversion* of 104% • Dividends Paid = $1.1B • Net Share Repurchases = $435MM F15 F16 *Non-GAAP measure. See appendix for reconciliation.
Slide 16: Fiscal 2017 Plan Assumptions
Fiscal 2017 Plan Assumptions • Organic Net Sales +LSD on “Growth” Businesses; Expect -MSD Declines on Other Businesses • Green Giant Divestiture Impact: -1 Point on Net Sales Growth and -$0.03 on EPS • COGS HMM = $380MM, More than Offsetting 2% Input Cost Inflation • Savings From Previously Announce
Slide 17: Fiscal 2017 Guidance Summary
Fiscal 2017 Guidance Summary ($ in Millions, Except per Share) Fiscal 2016 Fiscal 2017 Results Growth Net Sales $16,563 -2% to Flat¹ Adjusted Gross Margin* 35.6% +150bps Media Expense $754 -HSD Total Segment Operating Profit* $3,000 +6 to 8%² Adjusted Operating Profit Margin* 16.8% +150bps Interest
Slide 18: Fiscal 2016 Review & 2017 Outlook
Fiscal 2016 Review & 2017 Outlook Ken Powell Chairman and CEO
Slide 19: Positive U.S. Cereal Trends in Fiscal 2016
Positive U.S. Cereal Trends in Fiscal 2016 Cereal Category Retail Sales General Mills Cereal Retail Sales (% vs. LY) (% vs. LY) 0.1% 3% -0.8% -1.5% -1% -3% -3.2% F15 1H Q3 Q4 1H Q3 Q4 F16 F16 Source: Nielsen XAOC
Slide 20: Momentum Building for Gluten Free Cheerios
Momentum Building for Gluten Free Cheerios Gluten Free Cheerios Varieties Retail Sales (% vs. LY) 5% -1% -8% F15 1H 2H F16 Source: Nielsen XAOC
Slide 21: No Artificial Flavors and Colors News is Working
No Artificial Flavors and Colors News is Working Seven Featured Varieties Retail Sales (% vs. LY) 8% -6% -6% F15 1H 2H F16 Source: Nielsen XAOC
Slide 22: Nature Valley Bars Exited Fiscal 2016 with Momentum
Nature Valley Bars Exited Fiscal 2016 with Momentum Nature Valley Bars F16 Retail Sales (% vs. LY) 4% 1% 1H 2H Source: Nielsen XAOC
Slide 23: Lärabar Messaging is Resonating with Consumers
Lärabar Messaging is Resonating with Consumers Lärabar F16 Retail Sales (% vs. LY) 47% 41% 42% 36% 6% 9% 10% 1H Dec Jan Feb Mar Apr May Source: Nielsen XAOC
Slide 24: Continued Strong Growth for Our Natural & Organic Portfolio
Continued Strong Growth for Our Natural & Organic Portfolio F16 Proforma Net Sales = $750MM* *F16 proforma includes 12 months of Epic Provisions. Includes Net Sales in U.S. Retail and CS&F segments.
Slide 25: Fiscal 2016 U.S. Yogurt Summary
Fiscal 2016 U.S. Yogurt Summary U.S. Yogurt Net Sales • Declines in Net Sales and ($ in Millions) Share +5% • Merchandising was not -7% Competitive • Innovation and Marketing did not Break Through • Increased Profitability F14 F15 F16 • Focused on Innovation and Renovation to Drive Long- term Growth
Slide 26: Good Performance in Fiscal 2016 Soup and Baking Seasons
Good Performance in Fiscal 2016 Soup and Baking Seasons (Dollar Share Growth vs. LY) Ready-to-serve Soup Refrigerated Dough Dessert Mixes F16 Oct-Feb F16 Sep-Dec F16 Sep-Dec +2.0 Points +1.8 Points +0.1 Points Source: Nielsen XAOC
Slide 27: Focus 6 Platforms Driving Growth for Convenience Stores & Foodservice
Focus 6 Platforms Driving Growth for Convenience Stores & Foodservice F16 Net Sales on Focus 6 Platforms = +5% vs. LY Frozen Meals Cereal Yogurt
Slide 28: Fiscal 2016 Developed Markets Highlights
Fiscal 2016 Developed Markets Highlights Canada Europe Old El Paso Häagen-Dazs F16 YTD Retail Sales: +2% F16 YTD Retail Sales: +10% Wholesome Snacks Old El Paso F16 YTD Retail Sales: +9% F16 YTD Retail Sales: +3% Source: Nielsen FYTD through April 2016.
Slide 29: Fiscal 2016 Emerging Markets Highlights
Fiscal 2016 Emerging Markets Highlights Latin America Asia/Pacific F16 Net Sales: +12% in constant currency Yoplait in China Q4 Shanghai Market Share: 10% India F16 Net Sales: +DD* in constant currency Source: Nielsen 12-weeks ending April 2016. *Actual Net Sales in Local Currency Translated to USD
Slide 30: Fiscal 2016 CPW Highlights
Fiscal 2016 CPW Highlights • Investing in Renovation and Innovation • Exited F16 with Solid Momentum: Net Sales +3%* in Q4 • Strong DD Increase* in F16 After-tax Earnings * Growth rate in constant currency.
Slide 31: Fiscal 2017 Priorities
Fiscal 2017 Priorities • Drive Net Sales Momentum on “Growth” Businesses (75% of Net Sales) • Focus on Profitable Volume on “Foundation” Businesses • Drive Margin Expansion Across the Enterprise
Slide 32: Portfolio Segmentation
Portfolio Segmentation F16 Net Sales = $16.6 Billion “Growth” “Foundation” F17 Organic Growth = +LSD F17 Organic Growth = -MSD U.S. Retail U.S. Retail Cereal Progresso Soup Snack Bars Pillsbury Ref. Dough Natural & Organic Betty Crocker Desserts Totino’s Others Old El Paso 75% 25% Yogurt Convenience
Slide 33: U.S. Cereal & Bars
F17 “Growth” Highlights: U.S. Cereal & Bars Cereal Snack Bars
Slide 34: Natural & Organic
F17 “Growth” Highlights: Natural & Organic Annie’s Annie’s Core Distribution Category Expansion (Points of Distribution, % vs. LY) +DD +11% F15 F16 F17 Target Source: Nielsen Grocery + Supercenter
Slide 35: U.S. Yogurt: Establish a Solid Base for Long-term Growth
U.S. Yogurt: Establish a Solid Base for Long-term Growth Renovation & Consumer Increase Innovation Messaging Merchandising Competitiveness • Secure Display • Fund Competitive Price Points Refocus on All-family Snacking
Slide 36: Focus on Profitable Volume
F17 “Foundation” Highlights: Focus on Profitable Volume • Reduce Low-ROI Trade and Consumer Investment • SKU Optimization • Expect Sales Declines, Increased Profitability • Targeted Investment in News: More Premium Ingredients More Brownies More Variety Antibiotic Free Chicken Improved Shelf Set
Slide 37: CS&F Focus 6 Platforms
F17 “Growth” Highlights: CS&F Focus 6 Platforms Frozen Meals Yogurt Snacks Biscuits Cereal Mixes
Slide 38: Developed Markets
F17 “Growth” Highlights: Developed Markets Canada Europe
Slide 39: Emerging Markets
F17 “Growth” Highlights: Emerging Markets Brazil China India & Mexico Enter Beijing India Execute Pricing Mexico Häagen-Dazs Mooncakes
Slide 40: Driving Margin Expansion in F17
Driving Margin Expansion in F17 Adjusted Operating Profit Margin* • Continued Savings from HMM; (% of Net Sales) Higher Savings from Previously Announced Projects +150bps • Optimizing Trade and Consumer 16.8% Investments With Portfolio Roles 15.9% • Complexity Reduction/SKU Optimization • Additional
Slide 41: Fiscal 2017 and 2018 Outlook
Fiscal 2017 and 2018 Outlook Organic Adjusted Adjusted Net Sales* Operating Profit* Diluted EPS* (Constant Currency) Fiscal 2017 -2% to Flat +150bps +6-8% Modest Fiscal 2018 20% Margin +LDD Growth *Non-GAAP measures
Slide 42: Today's Summary
Today’s Summary • Returned to Organic Sales and Operating Profit Growth in Fiscal 2016 • Taking Actions to Drive Focused Growth and Margin Expansion • Setting the Stage for Sustainable, Long- term Shareholder Value Creation
Slide 43: Reconciliation of Fiscal 2016 Adjusted Operating Profit Margin
Reconciliation of Fiscal 2016 Adjusted Operating Profit Margin (% of Net Sales) Full Year 2016 2015 Operating Profit Margin as Reported 16.3% 11.8% Mark-to-market Effects -0.4 0.5 Divestitures (gain) -0.9 -- Acquisition Integration Costs -- 0.1 Restructuring Costs 1.4 1.9 Project-related Costs 0.4 0
Slide 44: Reconciliation of Fourth Quarter Constant-currency Net Sales Growth
Reconciliation of Fourth Quarter Constant-currency Net Sales Growth (Fiscal Year) Q4 2016 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Total Net Sales -9% -1 pt -8% Certain measures in this release are presented excluding t
Slide 45: Reconciliation of Total Segment Operating Profit
Reconciliation of Total Segment Operating Profit (Fiscal Years, $ in Millions) Q4 Full Year 2016 2015 2016 2015 U.S. Retail $430 $565 $2,179 $2,159 International 118 134 442 523 Convenience Stores & Foodservice 106 101 379 353 Total Segment Operating Profit $654 $800 $3,000 $3,035 Unallocated Corpor
Slide 46: Reconciliation of Constant-currency Total Segment Operating Profit Growth
Reconciliation of Constant-currency Total Segment Operating Profit Growth (Fiscal Year) 2016 % Change in % Change in Total Segment Total Segment Operating Profit Operating Profit Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Q4 -18% -- -18% Fiscal Year -1% -2 pts +1%
Slide 47: Reconciliation of Fourth Quarter Adjusted Diluted EPS
Reconciliation of Fourth Quarter Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Q4 2016 2015 Change Diluted EPS $0.62 $0.30 +107% Mark-to-market Effects (0.06) (0.01) Divestitures (loss) 0.04 -- Restructuring Costs 0.04 0.03 Project-related Costs 0.02 0.01 Tax Item --
Slide 48: Reconciliation of Fourth Quarter Adjusted Gross Margin
Reconciliation of Fourth Quarter Adjusted Gross Margin (Fiscal Years, $ in Millions) Q4 2016 Q4 2015 % of % of $ Net Sales $ Net Sales Net Sales $3,928 $4,299 Gross Margin as Reported $1,377 35.1% $1,515 35.3% Mark-to-market Effects (60) (8) Restructuring Costs 18 19 Project-related Costs 18 10 Adju
Slide 49: Reconciliation of Fourth Quarter Fiscal 2016 Tax Rate Excluding Items
Reconciliation of Fourth Quarter Fiscal 2016 Tax Rate Excluding Items (Fiscal Years, $ in Millions) Q4 2016 Q4 2015 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $455 $88 $344 $164 Mark-to-market Effects (60) (22) (8) (3) Divestitures (loss) 52 29 -- -- Restructuring Cost
Slide 50: Reconciliation of Full Year Constant-currency Net Sales Growth
Reconciliation of Full Year Constant-currency Net Sales Growth (Fiscal Year) Full Year 2016 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Europe -6% -9 pts +3% Canada -16 -12 -4 Asia/Pacific -3 -4 +1 Latin America -19 -31 +1
Slide 51: Reconciliation of Full Year Adjusted Diluted EPS
Reconciliation of Full Year Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Full Year 2016 2015 Change Diluted EPS $2.77 $1.97 +41% Mark-to-market Effects (0.07) 0.09 Divestitures (gain) (0.10) -- Restructuring Costs 0.26 0.35 Project-related Costs 0.06 0.01 Tax Item --
Slide 52: Reconciliation of Constant-currency International Segment Operating Profit Growth
Reconciliation of Constant-currency International Segment Operating Profit Growth (Fiscal Year) Full Year 2016 % Change in % Change in International International Segment Segment Operating Operating Profit Impact of Foreign Profit on a Constant- as Reported Currency Exchange currency Basis -15% -12
Slide 53: Reconciliation of Full Year Adjusted Gross Margin
Reconciliation of Full Year Adjusted Gross Margin (Fiscal Years, $ in Millions) 2016 2015 % of % of $ Net Sales $ Net Sales Net Sales $16,563 $17,630 Gross Margin as Reported $5,830 35.2% $5,949 33.7% Mark-to-market Effects (63) 90 Restructuring Costs 78 60 Project-related Costs 58 13 Venezuela Curr
Slide 54: Reconciliation of Fiscal 2016 Constant-currency After-tax JV Earnings
Reconciliation of Fiscal 2016 Constant-currency After-tax JV Earnings (Fiscal Year) Full Year 2016 % Change in % Change in After-tax After-tax JV Earnings JV Earnings Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis 5% -7 pts 12%
Slide 55: Reconciliation of Fiscal 2016 Free Cash Flow Conversion
Reconciliation of Fiscal 2016 Free Cash Flow Conversion (Fiscal Years, $ in Millions) 2016 Net Earnings, Including Earnings Attributable to Redeemable and Noncontrolling Interests $1,737 Mark-to-market, Net of Tax (40) Divestiture (Gain), Net of Tax (66) Restructuring Costs, Net of Tax 161 Project-r
Slide 56: Reconciliation of Fiscal 2016 Tax Rate Excluding Items
Reconciliation of Fiscal 2016 Tax Rate Excluding Items (Fiscal Years, $ in Millions) 2016 2015 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $2,404 $755 $1,762 $587 Mark-to-market effects (63) (23) 90 33 Divestitures (gain) (148) (82) -- -- Restructuring Costs 230 69 344