General Mills, Inc. · NYSE:GIS
General Mills — Investor Day (July 2014)
147 slides from General Mills's investor day presentation, Jul 8, 2014
Slide 1: Our 2015 Plans
Our 2015 Plans Putting the Consumer First
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: Our 2015 Plans: Putting the Consumer First
OUR 2015 PLANS Putting the Consumer First to Accelerate Topline Growth Ken Powel Chairman and Chief Executive Officer
Slide 4: We’re Focused on Growing Consumer Groups
We’re Focused on Growing Consumer Groups Emerging Markets Adults 55+ Millennials U.S. Multiculturals Expanding Middle Class 7226-4
Slide 5: Opportunity: Emerging Markets
Opportunity: Emerging Markets Middle Class Households in China, India, Brazil, Indonesia % Urbanized by 2020 (Millions) % Women Working by 2020 86% 384 71% 66% 63% 59% 56% 200 34% 26% 2010 2020 China Indonesia India Brazil Source: Euromonitor 2010 7226-5
Slide 6: Opportunity: Adults 55+
Opportunity: Adults 55+ • 25% of U.S. Population in 2010 • 30% of Population by 2020 • Strong Health Focus, Read Ingredient Labels Source: U.S. Census Bureau 7226-6
Slide 7: Opportunity: Millennials
Opportunity: Millennials • 20 to 37 Years Old • 77 Million U.S. Consumers • 63% of U.S. Moms by 2020 • Like Variety, Ethnic Flavors, Experimentation Source: U.S. Census Bureau 7226-7
Slide 8: Opportunity: U.S Multiculturals
Opportunity: U.S Multiculturals • 50% of Births Today • By 2060, 57% of U.S. Population • Hispanics Driving Growth Source: U.S. Census Bureau 7226-8
Slide 9: Our Business Portfolio is Built for Growth
Our Business Portfolio is Built for Growth RTE Cereal Baking Products, $3.9 Billion Dough, Vegetables, Other Snacks Super-premium $3.2 Billion Ice Cream $950 Million Convenient Meals Yogurt $2.8 Billion $3.0 Billion Fiscal 2014 Worldwide Net Sales*: $19.2 Billion * Non-GAAP measure. Includes $17.9 b
Slide 10: Consumers are Driving Growth in Our Categories
Consumers are Driving Growth in Our Categories Projected Global Category 2013 Retail Sales 5-Yr. CGR RTE Cereal $28 Billion +5% Ice Cream $77 Billion +7% Yogurt $80 Billion +9% Ready Meals $91 Billion +5% Sweet & Savory Snacks $305 Billion +6% Source: Euromonitor 2013 Sweet & Savory Snacks includes
Slide 11: We’re Participating in Faster-growing International Markets
We’re Participating in Faster-growing International Markets $ in Billions Europe Region $2.2 Canada 1.2 35% Outside U.S.* Asia/Pacific 1.0 Latin America 1.0 CPW 50% Share 1.0 HD Japan 50% Share .2 $6.6 Fiscal 2014 Worldwide Net Sales*: $19.2 Billion *Non-GAAP measure. Includes $17.9 billion consolid
Slide 12: Product Quality and Development Capabilities
Product Quality and Development Capabilities Fiscal 2014 New Products % Retail Sales* 4.8 4.0 3.1 2.7 2.0 1.7 1.2 Quality Sources of Assurance Protein Great Tasting Mainstream and High Fiber Gluten Free *Source: Nielsen-Total U.S. All Channels 7226-12
Slide 13: Supply Chain Capabilities
Supply Chain Capabilities (Fiscal Years) COGS HMM $4 Billion Sourcing $2 Billion >$400MM Manufacturing 2010-14 2015 2010-2020 Cumulative Plan Cumulative Goal Logistics 7226-13
Slide 14: Direct Selling Capabilities Across Retail Channels
Direct Selling Capabilities Across Retail Channels • Sustain Strong Customer Partnerships • Be Everywhere Consumers Shop • Drive Distribution and In-store Merchandising 7226-14
Slide 15: Marketing Capabilities
Marketing Capabilities U.S. Retail Media Investment 3% Digital 20% Digital Fiscal 2005 Fiscal 2015 Plan 7226-15
Slide 16: Our Fiscal 2015 Growth Targets
Our Fiscal 2015 Growth Targets Fiscal 2015 Fiscal 2014 Constant-currency Base Growth $17.9 Billion Net Sales +MSD $3.2 Billion Adj. Segment Operating Profit* +MSD $2.82 Adjusted Diluted EPS* +HSD * Non-GAAP measure. See appendix for reconciliation. 7226-16
Slide 17: Today’s Agenda
Today’s Agenda 2015 Growth Plan Overview ……………………………………………… Ken Powell U.S. Retail Priorities ………………………………………………… Jeff Harmening Sales Capabilities ……………………………………………………… Shawn O’Grady Q&A Discussion Convenience Stores & Foodservice Priorities …………… Bethany Quam International Priorities …………………………………
Slide 18: Our U.S. Retail Growth Plans
GENERAL MILLS Our U.S. Retail Growth Plans Jeff Harmening EVP; Chief Operating Officer, U.S. Retail
Slide 19: Our U.S. Retail Business Today
Our U.S. Retail Business Today Baking Products Big G $1.8 Billion $2.3 Billion Small Planet Foods $348 Million Snacks $1.8 Billion Yoplait $1.3 Billion Frozen Meals $1.4 Billion Foods $1.5 Billion 2014 U.S. Retail Net Sales: $10.6 Billion 7226-19
Slide 20: U.S. Retail Leadership
U.S. Retail Leadership Jeff Harmening Juliana Chugg David Clark Michele Meyer Jim Murphy Liz Nordlie Ann Simonds Anton Vincent Frozen Foods Yoplait Meals Big G Cereals Small Planet Foods Baking Products Snacks 7226-20
Slide 21: U.S. Food & Beverage Trends
U.S. Food & Beverage Trends Total Food & Beverage Branded Players Drive Growth Has Slowed Food & Beverage Growth (F12-F14, 2-year CAGR) 4.8% 2.0% 1.9% 3.3% 1.5% 2.3% 1.5% F09-F11 F12 F13 F14 Total Branded Private Avg Food & Bev Label Units Flat -0.7% Flat +0.1% Units Flat +0.4% -0.5% Price +3.3% +5.
Slide 22: Our U.S. Retail Segment Net Sales Performance
Our U.S. Retail Segment Net Sales Performance ($ in Billions) $10.6 $10.6 $10.5 $10.2 $10.2 F10 F11 F12 F13 F14 Operating Margin 23% 23% 22% 22% 22% 7226-22
Slide 23: We are Leading Growth in Many Categories
We are Leading Growth in Many Categories Fiscal 2014 Category ($ in Billions) Share +/- LY Grain Snacks $3.2 41.3% 3.8pts Frozen Hot Snacks 2.1 24.4 1.0 Fruit Snacks 1.0 47.7 0.9 RTS Soup 1.9 39.5 0.7 Mexican Products* 2.7 17.4 0.5 Frozen Pizza 4.3 9.1 0.5 RTE Cereal 9.0 31.0 0.3 Refrig. Baked Goods
Slide 24: 3 Key Operating Principles
3 Key Operating Principles • Sharpen Our Consumer-first Focus • Foster Our HMM Culture • Execute Brilliantly 7226-24
Slide 25: U.S. Retail Fiscal 2015 Priorities
U.S. Retail Fiscal 2015 Priorities • Invest in Cereal for Growth • Return Yogurt to Growth • Accelerate Better-for-you Snacking • Sustain Momentum on Totino’s & Old El Paso • Deliver HMM 7226-25
Slide 26: Breakfast Trends
Breakfast Trends More Consumers Eating RTE Cereal is the #1 Food Breakfast at Home Consumed for Breakfast In-home (% of Breakfast Occasions) % of In-home/Carried Breakfasts Including: 78 80 RTE Cereal 28 Fruit 14 Eggs/Omelettes 13 Bread 13 Hot Cereal 8 Pancake/Waffle/Fr Tst 8 Bacon 4 Yogurt 4 13 11
Slide 27: Demographic Trends Favor Cereal
Demographic Trends Favor Cereal Cereal is Popular with Hispanic Cereal Growing Age Groups Consumption is High (Cereal Eatings per Capita) 23.1 126 92.3 22.7 89.7 103 96 84 Under Age Age Age F14 Penetration F14 Buy Rate 13 13-34 35-54 55+ Population Growth to 2020: General 8% 6% -2% 22% Hispanic Popu
Slide 28: Cereal Share of Voice Has Declined
Cereal Share of Voice Has Declined (Advertising Spending Index; F11 = 100) Alternative RTE Cereal In-home Breakfast Items 107 100 100 84 F11 F14 F11 F14 Source: Nielsen Media Research; F14 figures are YTD April + May projected. Alternative in-home breakfast items include yogurt, eggs, bacon, sausage
Slide 29: General Mills Cereal Trends
General Mills Cereal Trends General Mills RTE Cereal Big G Cereal Net Sales Dollar Market Share ($ in Billions) $2.3 31.0 $1.9 29.7 F07 F08 F09 F10 F11 F12 F13 F14 F07 F08 F09 F10 F11 F12 F13 F14 Source: Nielsen All-outlet F07-F09, Nielsen XAOC F10-F14 7226-29
Slide 30: U.S. Cereal: Core Renovation
U.S. Cereal: Core Renovation 7226-30
Slide 31: U.S. Cereal: Consumer-first Marketing
U.S. Cereal: Consumer-first Marketing 7226-31
Slide 32: Back to Basics on Yellow Box Cheerios
Back to Basics on Yellow Box Cheerios • 100% Whole Grain Oats • 1 Gram of Sugar • No Artificial Colors • No Artificial Flavors 7226-32
Slide 33: Protein Innovation
Protein Innovation &=" BaBS NEW! Cheeri0s «= = «ay grain free granola f a, gluten free * non-gmo Pa Cinnamon 4 — oe —_—~ Almond ew ‘ 4 % j ; Oats & St Wen a aC a —— Ft iar aC int ems NET WT XX 02 QOXXG) ° 7226-33
Slide 34: Expanding Our Gluten-free Platform
Expanding Our Gluten-free Platform Chex Franchise Retail Sales CGR = +10% F10 F11 F12 F13 F14 Source: Nielsen XAOC 7226-34
Slide 35: The Power of Oats
The Power of Oats 7226-35
Slide 36: U.S. Yogurt: Finished Fiscal 2014 with Clear Momentum
U.S. Yogurt: Finished Fiscal 2014 with Clear Momentum Yoplait Dollar Share of Retail Sales Growth Greek Segment Original Style Yoplait (Fiscal 2014) (Fiscal 2014 vs LY) 10% 10% 10% 10% 10% 10% 8.5% 9% 6% 6% 2% Cal 2013 Cal Jan Feb Mar Apr May Cal Jan Feb Mar Apr May 2013 2013 -6% F14 Retail Sales +4
Slide 37: Consumers Shop Across Yogurt Segments
Consumers Shop Across Yogurt Segments Loyalty (Volume Share of Category Requirements) Kid 40% Greek 36% Light 32% Adult Specialized Health 31% Regular 28% Large Size 20% Adult Beverage 14% Source: Nielsen Panel – All Outlet, 52 weeks ended 11.23.13 7226-37
Slide 38: Lead Growth in Greek Segment in Fiscal 2015
Lead Growth in Greek Segment in Fiscal 2015 Taste-off Across America ¹ Comparison based on a national taste test of Yoplait Greek 100 Strawberry yogurt and Chobani ® Simply 100 Strawberry yogurt ² Comparison based on a national taste test of Yoplait Greek Blueberry yogurt and Chobani ® Blueberry fru
Slide 39: Drive Established Yogurt Growth
Drive Established Yogurt Growth 7226-39
Slide 40: Better-for-you Snacks Portfolio
Better-for-you Snacks Portfolio 7226-40
Slide 41: Leading Grain Snack Growth
Leading Grain Snack Growth Nature Valley Snacks Fiber One Snacks Retail Sales Retail Sales ($ in Millions) ($ in Millions) CGR = +12% CGR = +14% $828 $416 F10 F11 F12 F13 F14 F10 F11 F12 F13 F14 Source: Nielsen XAOC 7226-41
Slide 42: New Snack Platforms
New Snack Platforms June Launches 2 Varieties 3 Varieties 2 Varieties 7226-42
Slide 43: Natural & Organic Snack Innovation
Natural & Organic Snack Innovation June Launches 4 Varieties 4 Varieties 7226-43
Slide 44: Sustaining Momentum Frozen Hot Snacks
Sustaining Momentum Frozen Hot Snacks Totino’s Hot Snacks Retail Sales CGR = +4% F10 F11 F12 F13 F14 Source: Nielsen XAOC 7226-44
Slide 45: Sustaining Momentum Mexican Products
Sustaining Momentum Mexican Products Old El Paso Share Gains (F14 Dollar Share +/- LY) +4.7 +1.3 +0.4 +0.5 Kits Shells Seasoning Total Mexican* Source: Nielsen XAOC *Total Mexican is shelf-stable Mexican products ex-snack aisle 7226-45
Slide 46: Other U.S. Retail News
Other U.S. Retail News Baking Products Soup 7226-46
Slide 47: First Half Fiscal 2015 U.S. Retail Innovation
First Half Fiscal 2015 U.S. Retail Innovation 140+ New Items in 1H 7226-47
Slide 48: HMM Initiatives
HMM Initiatives U.S. Retail COGS HMM (Index: F10 = 100) 102 F10 F11 F12 F13 F14 F15 Plan 7226-48
Slide 49: Increasing Media Spending in Fiscal 2015
Increasing Media Spending in Fiscal 2015 U.S. Retail Media Expense +MSD F14 F15 Plan 7226-49
Slide 50: U.S. Retail Summary
U.S. Retail Summary • Operating with a Consumer-first Mindset to Drive MSD Net Sales Growth • Cereal, Yogurt, and Better-for-you Snacks are Top Priorities • HMM Will Fund Consumer Investment and Help Deliver MSD Profit Growth 7226-50
Slide 51: U.S. Sales Capabilities and Outlook
GENERAL MILLS U.S. Sales Capabilities and Outlook Shawn O’Grady Senior Vice President; President, Sales and Channel Development
Slide 52: U.S. Retail Sales
U.S. Retail Sales 2,000 Sales Employees Expertise In 25 Categories Frozen Refrigerated Dry Across 3 Temperature States Average 680 SKUs/Store 7226-52
Slide 53: U.S. Retail Sales Mission
U.S. Retail Sales Mission Today’s Topics: • Growth Across Channels • Advantaged Merchandising • Expanded Distribution 7226-53
Slide 54: Drive Growth on Key Products
Drive Growth on Key Products 7226-54
Slide 55: Retail Channel Food & Beverage Sales
Retail Channel Food & Beverage Sales Fiscal 2014 Total U.S. Retail Food & Beverage Sales = $655 Billion (4-yr CGR = +4%) $281 $129 $68 $62 $59 $23 $15 $12 $7 Traditional Super Convenience Club Small Natural/ Mass Small Online Grocery centers Stores Stores Format Organic Merchandise Grocery 4-yr CGR:
Slide 56: General Mills Growth Across Channels
General Mills Growth Across Channels (U.S. Retail Deliveries, 5-yr CGR) +DD +HSD +HSD +MSD +MSD +LSD FLAT Traditional Super Mass Club Natural/ Small Online Grocery centers Merchandisers Stores Organic Format Source: Internal delivery data 7226-56
Slide 57: Putting the Consumer First: Club Channel
Putting the Consumer First: Club Channel • General Mills Q4 F14 Sales Growth +9% • Strong Core Distribution; F14 Distribution +4% • Channel Over-indexes with Healthful Foodies Source: Internal delivery data; Nielsen scanner and panel data 7226-57
Slide 58: Putting the Consumer First: Small Format Stores
Putting the Consumer First: Small Format Stores • General Mills F14 Sales Growth +8% • Established Product Distribution +6% • Channel Over-indexes with 55+ Consumers Source: Internal delivery data; Nielsen scanner and panel data 7226-58
Slide 59: Putting the Consumer First: Natural/Organic Channel
Putting the Consumer First: Natural/Organic Channel • Distribution Gains for Larabar, Cascadian Farm • Channel Over-indexes with Millennial Consumers Source: Internal delivery data; Nielsen panel data 7226-59
Slide 60: Putting the Consumer First: Online
Putting the Consumer First: Online • Leveraging Natural/ Organic Brands • Driving Growth for Larabar; 7% of Total Sales • Channel Appeals to Millennial Consumers Source: Internal delivery data; Nielsen panel data 7226-60
Slide 61: Fiscal 2014 Merchandising Performance
Fiscal 2014 Merchandising Performance Category Merchandising Dynamics (Composite GIS Categories, F14) Merch Merch Incremental Support Lift Volume Volume GIS vs. Category: Source: Nielsen 7226-61
Slide 62: Fiscal 2015 Key Merchandising Initiatives
Fiscal 2015 Key Merchandising Initiatives • Focus on Largest, Most Responsive Categories • Focus on Largest, Most Responsive Brands • Leverage Brand Innovation and News • Increase In-store Impact with Themed Events 7226-62
Slide 63: Themed Merchandising Events
Themed Merchandising Events 7226-63
Slide 64: Distribution Expansion Across All Channels
Distribution Expansion Across All Channels Avg. # of General Mills SKUs in Stores 680 645 Snacks/Bars +9 630 Cereal +6 Yogurt Even 610 F11 F12 F13 F14 Source: Nielsen scanner data; Total US – Grocery + Supercenter 7226-64
Slide 65: Distribution Expansion: Grain Snacks
Distribution Expansion: Grain Snacks • Shelf Set Expand Section Size • Product Variety Optimized at 160 Items • Merchandising Focus on Largest Brands 7226-65
Slide 66: Distribution Expansion: Grain Snacks
Distribution Expansion: Grain Snacks Category Size vs. Distribution Category Shelf Space (Linear Feet of Space) CGR = +8% 1.1% 0.9% Share of Share of Food F12 F13 F14 Food Dollars Distribution Points Source: Nielsen Scanner and In-store audit data; Total U.S. – Grocery + Supercenter 7226-66
Slide 67: Distribution Expansion: Cereal
Distribution Expansion: Cereal • Shelf Set Power Brands/Navigation • Product Variety Optimized at 250 Items • Merchandising Focus on Largest Brands 7226-67
Slide 68: Distribution Expansion: Cereal
Distribution Expansion: Cereal GIS Cereal Distribution 31.0 24.3 24.7 Share of Share of Share of Category Dollars Distribution Points Facings Source: Nielsen XAOC (Dollar Share); Grocery + Supercenter (Distribution/Facings Share); 52 weeks ended 05.24.14 7226-68
Slide 69: Distribution Expansion: Yogurt
Distribution Expansion: Yogurt • Shelf Set Expand Section Size • Product Variety Balance Segment Mix • Merchandising Drive Sales Across Segments 7226-69
Slide 70: Distribution Expansion: Yogurt
Distribution Expansion: Yogurt Consumer-driven Yogurt Shelf Set Prem Greek Traditional Adult Bev Kid ASH Natural/ Regional National Brands Retail Yoplait Yoplait Organic Retailer Brand Brand Light Original Chobani Fage Oikos Dannon Yoplait Regional • Consumers Shop Across Segments • Align with Yogur
Slide 71: General Mills Yogurt Distribution Trend
General Mills Yogurt Distribution Trend Avg. # of GIS Yogurt SKUs in Distribution +/- LY 5 2 0 -4 -5 -5 -5 -6 F13 F13 F13 F13 F14 F14 F14 F14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Source: Nielsen Scanner data; Total US – Grocery + Supercenter 7226-71
Slide 72: Expand Distribution Across New Outlets
Expand Distribution Across New Outlets Hispanic Natural/Organic Online 7226-72
Slide 73: 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 Supply C
Slide 74: Outlook for Fiscal 2015
Outlook for Fiscal 2015 • Growth Across Channels • Advantaged Merchandising • Expanded Distribution 7226-74
Slide 75: Our Fiscal 2015 Growth Plans
GENERAL MILLS Our Fiscal 2015 Growth Plans Bethany Quam Vice President; President, Convenience Stores and Foodservice
Slide 76: Delivering General Mills brands to over 1 million locations
K-12 Colleges & Universities Foodservice Operators Delivering General Mills brands to over 1 MILLION away from home locations every year Healthcare Convenience Stores
Slide 77: A Large Market Opportunity
A Large Market Opportunity U.S. Food Expenditures (2014 Estimate) 47% 53% Away-from- At-home home $1.3 Trillion Source: Technomic 7226-77
Slide 78: Foodservice Industry Sales Trend
Foodservice Industry Sales Trend ($ in Billions) CGR = +2.5% $602 $620 $562 $565 $579 2009 2010 2011 2012 2013 Calendar Years Source: Technomic 2013 7226-78
Slide 79: General Mills Convenience Stores & Foodservice Net Sales Performance
General Mills Convenience Stores & Foodservice Net Sales Performance ($ in Millions) $1,983 $1,959 $1,919 $1,841 $1,741 F10 F11 F12 F13 F14 7226-79
Slide 80: Building Our Brands in CS&F
Building Our Brands in CS&F Focus Six Platforms (% of Total F14 Platform Sales) Frozen Breakfast Biscuits Snacks Baking Mixes Cereal Yogurt F14 Net Sales $875 Million 7226-80
Slide 81: CS&F Net Sales Performance Focus Six Platforms
CS&F Net Sales Performance Focus Six Platforms ($ in Millions) CGR = +4% +4% +8% +2% +4% +2% F10 F11 F12 F13 F14 7226-81
Slide 82: Innovating on Our Brands
Innovating on Our Brands 7226-82
Slide 83: Strong Earnings Performance Over Time
Strong Earnings Performance Over Time CS&F Segment Operating Profit ($ in Millions) $307 $178 $132 F04 F09 F14 Profit Margin: 7.5% 8.9% 16.0% Note: F04 not restated to current classification 7226-83
Slide 84: Key Channels – Prospects for Growth
Key Channels – Prospects for Growth (Food and Non-alcoholic Beverage Channel Sales) 2014 Est. 2013 Nominal Actual Sales Growth ($ in Billions) (vs. LY) Total Foodservice $621 3% K-12 Schools $18 2% Colleges & Universities $15 4% Convenience Stores $49 4% Sources: C-Stores – IRI AllScan (packaged foo
Slide 85: K-12 Schools
K-12 Schools Breakfast 12 Million U.S. Students Eat School Breakfasts Snacks 7226-85
Slide 86: Colleges & Universities
Colleges & Universities Gluten Free 22 Million College Students Snacking 7226-86
Slide 87: Convenience Stores
Convenience Stores General Mills Snacks Sales in C-stores CGR = +9% F09 F10 F11 F12 F13 F14 Source; IRI AllScan 7226-87
Slide 88: Strengthening Our Positioning in C-stores
Strengthening Our Positioning in C-stores New Segment: Sales Capabilities Ready-to-eat Bakery 7226-88
Slide 89: New Business Opportunity
New Business Opportunity Go-GURT Yogurt in Happy Meals 7226-89
Slide 90: CS&F Holistic Margin Management
CS&F Holistic Margin Management • Increasing HMM Cost Savings COGS Mix Productivity Management HMM • SKU Rationalization Admin Processes Pricing Consumer & Trade Programs • Mix Management 7226-90
Slide 91: CS&F Performance Outlook for Fiscal 2015
CS&F Performance Outlook for Fiscal 2015 • MSD Sales Growth – Solid Growth for Six Focus Platforms • HSD Operating Profit Growth • Continue Shaping Our Portfolio • Putting the Consumer First with Our Brands and Product Innovation Away From Home 7226-91
Slide 92: Our 2015 International Plans
GENERAL MILLS Our 2015 International Plans Chris O’Leary EVP; Chief Operating Officer, International
Slide 93: International Portfolio Evolution
International Portfolio Evolution (% Worldwide Net Sales from Outside the U.S.) F04* F14 23% 35% Worldwide Net Sales** Total General Mills: $12.3B $19.2B Outside the U.S.: $2.8B $6.6B * Fiscal 2004 not restated for current classifications. ** Non-GAAP measure. Includes proportionate share of JV net
Slide 94: International Segment Overview
International Segment Overview (Net Sales, Fiscal 2014) Asia/Pacific $1.0 Billion Europe $2.2 Billion Latin America $1.0 Billion Canada $1.2 Billion Segment Total: $5.4 Billion 7226-94
Slide 95: Strong Growth Performance
Strong Growth Performance International Segment International Adjusted Net Sales Segment Operating Profit* ($ in Billions) ($ in Millions) CGR = +16% CGR = +17% $5.2 $5.4 $515 $535 $4.2 $430 $2.9 $291 $2.6 $2.7 $239 $206 F09 F10 F11 F12 F13 F14 F09 F10 F11 F12 F13 F14 * Non-GAAP measure. See appendi
Slide 96: CPW Overview
CPW Overview (Fiscal 2014) #1 Positions in Emerging Markets • Indonesia • Russia • Philippines • Chile Emerging • Malaysia • Saudi Arabia • Thailand • Ukraine Developed • Turkey • Singapore Net Sales: $2.1 Billion 7226-96
Slide 97: A Broad International Portfolio
A Broad International Portfolio Yogurt $1.5 Billion Snacks 82% of Net Sales $0.6 Billion Across 5 Global Platforms Superpremium RTE Cereal $1.3 Billion Ice Cream $1.0 Billion Convenient Meals $1.0 Billion 2014 Net Sales Outside U.S.*: $6.6 Billion * Non-GAAP measure. Includes proportionate share of
Slide 98: Focusing on the Middle Class Consumer
Focusing on the Middle Class Consumer Middle Class Households in China, India, Brazil, Indonesia (Millions) 384 200 2010 2020 Source: Euromonitor 2010 7226-98
Slide 99: International Segment Fiscal 2015 Priorities
International Segment Fiscal 2015 Priorities • Emerging Markets Lead Topline Growth • Stable, Profitable Growth in Developed Markets • Strong Execution 7226-99
Slide 100: Greater China Summary
Greater China Summary Constant Currency Net Sales* Our Portfolio in China (% of F14 Net Sales) CGR = +15% +DD Snacks Häagen-Dazs Wanchai Ferry F10 F11 F12 F13 F14 F15 Plan * Actual net sales in local currency translated to USD at a fixed exchange rate. 7226-100
Slide 101: Greater China Häagen-Dazs Fiscal 2015 Growth Plans
Greater China Häagen-Dazs Fiscal 2015 Growth Plans 7226-101
Slide 102: Greater China Wanchai Ferry Fiscal 2015 Growth Plans
Greater China Wanchai Ferry Fiscal 2015 Growth Plans 7226-102
Slide 103: Greater China Yoplait Launch
Greater China Yoplait Launch China Yogurt Category Sales (Calendar Years) $17B $8B • Consumer-first Launch Plan $4B • Leveraging Sodiaal’s Global Dairy Expertise 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 • Project on Schedule Source: Euromonitor 2013 7226-103
Slide 104: AMEA Summary
AMEA Summary • F14 Net Sales: $285MM • Major Markets: Middle East, India, SE Asia, South Korea • Emerging Middle Class Driving Strong Packaged Food Growth • Business Focus on Sweet Snacking 7226-104
Slide 105: AMEA Fiscal 2015 Plans
AMEA Fiscal 2015 Plans 7226-105
Slide 106: Latin America Summary
Latin America Summary LATAM Region Net Sales ($ in Millions) +DD $1,020 $876 $405 F12 F13 F14 F15 Plan 7226-106
Slide 107: Brazil News: Festa Junina
Brazil News: Festa Junina 7226-107
Slide 108: Yoki Snacks & Soccer
Yoki Snacks & Soccer World Flavors Argentina U.S. Churrasco-flavored Bacon-flavored Potato Chips Peanuts 7226-108
Slide 109: Other First Half Fiscal 2015 Brazil News & Innovation
Other First Half Fiscal 2015 Brazil News & Innovation 7226-109
Slide 110: First Half Fiscal 2015 Canada Innovation
First Half Fiscal 2015 Canada Innovation 7226-110
Slide 111: Leading Emergence of Greek Yogurt in Key Western European Markets
Leading Emergence of Greek Yogurt in Key Western European Markets 7226-111
Slide 112: Europe Ice Cream & Meals
Europe Ice Cream & Meals 7226-112
Slide 113: CPW Developed Market Plans
CPW Developed Market Plans Category Sales Growth (Latest 52 Weeks % +/- LY) UK/Ireland +3% France -2 Germany +1 Italy -4 Spain -4 Australia/New Zealand -2 Total Developed Markets Flat Source: Nielsen, period ended April 2014 7226-113
Slide 114: CPW Emerging Market Plans
CPW Emerging Market Plans Category Sales Growth (Latest 52 Weeks % +/- LY) Mexico -2% Brazil +13 Russia +5 Turkey +7 South Africa +6 Southeast Asia +8 Total Emerging Markets +4 Source: Nielsen, period ended April 2014 7226-114
Slide 115: International HMM Expansion
International HMM Expansion International Segment COGS HMM Savings CGR = +17% +DD Dumpling Automation F10 F11 F12 F13 F14 F15 Plan Brazil Factory Re-engineering 7226-115
Slide 116: Consumer-first Marketing
Consumer-first Marketing International Segment Media Spending CGR = +6% +DD F10 F11 F12 F13 F14 F15 Plan 7226-116
Slide 117: International Leadership
International Leadership Chris O’Leary Gary Chu Dave Dudick Olivier Faujour Christina Law Jon Nudi Becky O’Grady Sean Walker Greater China Canada Yoplait SBU AMEA Europe/ Häagen-Dazs SBU Latin America Australasia Dave Homer Norio Mase CPW HDJ 7226-117
Slide 118: International Summary
International Summary • Middle-class Consumer Focus Will Drive Strong Sales Growth in Emerging Markets • Stable, Profitable Growth from Developed Markets • Constant-currency Growth Targets: – International Net Sales +HSD – International Segment Operating Profit +HSD – JV After-tax Earnings +HSD 7226
Slide 119: Our 2015 Financial Targets
GENERAL MILLS Our 2015 Financial Targets Don Mulligan EVP; Chief Financial Officer
Slide 120: Input Costs Inflationary, Driven by Global Demand
Input Costs Inflationary, Driven by Global Demand Input Cost Inflation • F14 Inflation Was +10% Above Plan • Dairy Was Key Driver • F15 Estimate is +3% Avg: +4-5% +4% +4% • Starting the Year 40% +3% +3% Covered for F15 F11 F12 F13 F14 F15 Plan Supply chain costs including raw materials, energy, wage
Slide 121: COGS HMM Savings
COGS HMM Savings (Fiscal Years, $ in Millions) $4,000 >$400 $2,000 2010-2014 Cumulative 2015 Plan Cumulative 2010-2020 Savings Savings Goal 7226-121
Slide 122: Ongoing Benefits from HMM
Ongoing Benefits from HMM SG&A Expense Adjusted Gross Margin* Excluding Media and R&D* (as a % of sales) (as a % of sales) 36.2 35.4 Higher than F14 13.6 13.2 Flat to Lower F13 F14 F15 Plan F13 F14 F15 Plan *Non-GAAP measure. See appendix for reconciliation. 7226-122
Slide 123: Core Working Capital Trend
Core Working Capital Trend Core Working Capital Net Sales Trend ($ in Millions) ($ in Millions) -19% Cum +20% Cum F11 F12 F13 F14 F11 F12 F13 F14 7226-123
Slide 124: Balance Sheet Strength
Balance Sheet Strength Fiscal Year 2001 2002 2014 Operating Cash Flow to Debt 22% 10% 29% Fixed Charge Coverage 5.3x 2.5x 8.0x Debt/EBITDA* 2.4x 6.8x 2.5x Moody’s Rating A3 Baa2 A3 Fiscal 2001 and 2002 not restated for current classifications. *Non-GAAP measure. See appendix for reconciliation. 7226
Slide 125: Operating Cash Flow
Operating Cash Flow ($ in Millions) $2,926 $2,541 Higher $2,407 than F14 • OCF has Increased at 7% CGR last 5 Years • OCF > $2.6 Billion/Year on Average Since F12 F12 F13 F14 F15 Plan 7226-125
Slide 126: Fixed Asset Investment
Fixed Asset Investment ($ in Millions) F15 CapEx Plan (% of Total Budget) $700 $676 $664 $614 Growth Essential 38% 41% Cost Savings 21% Key Projects: - Yoplait China Plant - Snack Bar Capacity F12 F13 F14 F15 - F16 New Products Estimate 7226-126
Slide 127: Free Cash Flow Conversion
Free Cash Flow Conversion* 125% 110% 103% 100%+ F12 F13 F14 F15 Plan *Non-GAAP measure. See appendix for reconciliation. 7226-127
Slide 128: Consistently Growing Dividends
Consistently Growing Dividends +17% $1.64 $1.55 $1.32 $1.22 $1.12 $0.96 F10 F11 F12 F13 F14 Current Annualized Rate 7226-128
Slide 129: Share Repurchases
Share Repurchases Average Diluted Shares Outstanding (in Millions) CGR = -1% 683 665 667 666 646 -3 to -4% F10 F11 F12 F13 F14 F15 Plan Yoplait Yoki 7226-129
Slide 130: Corporate Incentive Grid
Corporate Incentive Grid Rating Metrics 25% Net Sales Growth 25% Segment Operating Profit Growth 25% Adjusted Diluted EPS Growth 25% Return on Avg. Total Capital Increase Performance Ranges for Each Metric Based on Peer Company Results 7226-130
Slide 131: Return on Average Total Capital
Return on Average Total Capital* 12.7% 12.0% 12.0% Higher 11.6% than F14 F12 F13 F14 F15 Plan Yoplait Yoki *Non-GAAP measure. See appendix for reconciliation. 7226-131
Slide 132: Fiscal 2015 Guidance Summary
Fiscal 2015 Guidance Summary ($ in Millions, Except per Share) Fiscal Fiscal 2015 2014 Growth Net Sales $17,910 +MSD¹ Adjusted Gross Margin* 35.4% Higher Media Expense $870 Faster than Sales Adjusted Segment Operating Profit* $3,154 +MSD¹ Interest Expense $302 +HSD Tax Rate Excluding Items* 32.2% Co
Slide 133: Strong Returns to Shareholders
Strong Returns to Shareholders (Price Appreciation Plus Dividends, Compound Annual Growth) Fiscal Years General Mills S&P 500 1984 – 2014 +14% +12% 1994 – 2014 +11% +9% 2004 – 2014 +12% +8% 2009 – 2014 +20% +18% Source: Bloomberg 7226-133
Slide 134: Our 2015 Plans: Putting the Consumer First
OUR 2015 PLANS Putting the Consumer First to Accelerate Topline Growth Ken Powel Chairman and Chief Executive Officer
Slide 135: Today’s General Mills Summary
Today’s General Mills Summary • Our #1 Priority in 2015 is Accelerating Topline Growth • Our Key Strategy is to Put Consumers First • U.S. Retail Focus – Cereal, Yogurt, Snacks • U.S. Sales Focus – Channels, Merchandising, Distribution • CS&F Focus – 6 Focus Platforms, Renewed Topline Growth • Inter
Slide 136: Our 2015 Plans
Our 2015 Plans Putting the Consumer First
Slide 137: Reconciliation of Total Net Sales, Including Proportionate Share of JV Net Sales
Reconciliation of Total Net Sales, Including Proportionate Share of JV Net Sales (Fiscal Years, $ in Millions) 2014 2004 Net Sales: United States $12,523 $9,441 Non-United States 5,387 1,629 Total Net Sales $17,910 $11,070 Proportionate Share of JV Net Sales 1,247 1,212 Total Net Sales, Including Pr
Slide 138: Reconciliation of Adjusted International Segment Operating Profit
Reconciliation of Adjusted International Segment Operating Profit (Fiscal Years, $ in Millions) 2014 2013 2012 2011 2010 2009 International Segment Operating Profit $473 $490 $430 $291 $192 $239 Venezuela Currency Devaluation 62 25 -- -- 14 -- Adjusted International Segment Operating Profit $535 $51
Slide 139: Reconciliation of Adjusted Segment Operating Profit
Reconciliation of Adjusted Segment Operating Profit (Fiscal Years, $ in Millions) 2014 2013 U.S. Retail $2,312 $2,393 Adjusted International 535 515 Convenience Stores & Foodservice 307 315 Adjusted Segment Operating Profit $3,154 $3,223 Unallocated Corporate Items 196 326 Divestiture (Gain) (66) --
Slide 140: Reconciliation of Adjusted Diluted EPS
Reconciliation of Adjusted Diluted EPS (Fiscal Years) 2014 2013 Diluted EPS $2.83 $2.79 Mark-to-market Effects (.05) -- Divestiture Gain, net (.06) -- Restructuring .01 .02 Tax Item -- (.13) Acquisition Integration Costs -- .01 Venezuela Currency Devaluation .09 .03 Diluted EPS Excluding Certain Ite
Slide 141: Reconciliation of Adjusted Gross Margin
Reconciliation of Adjusted Gross Margin (Fiscal Years, $ in Millions) 2014 2013 % of % of $ Net Sales $ Net Sales Net Sales $17,910 $17,774 Gross Margin as Reported 6,370 35.6% 6,424 36.1% Mark-to-market Effects (48) (4) Venezuela Currency Devaluation 23 16 Adjusted Gross Margin $6,344 35.4% $6,436
Slide 142: Reconciliation of SG&A Expense Excluding Media and R&D
Reconciliation of SG&A Expense Excluding Media and R&D (Fiscal Years, $ in Millions) 2014 2013 % of % of $ Net Sales $ Net Sales Net Sales $17,910 $17,774 SG&A Expense, As Reported 3,474 19.4% 3,552 20.0% Advertising and Media Expense 870 895 Research and Development Expense 244 238 SG&A Expense, Ex
Slide 143: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow (Fiscal Years, $ in Millions) 2014 2013 2012 Net Income $1,824 $1,855 $1,567 Net Cash Provided by Operating Activities, As Reported $2,541 $2,926 $2,407 Purchases of Land, Buildings, and Equipment (664) (614) (676) Free Cash Flow $1,878 $2,312 $1,731 Free Cash Flow C
Slide 144: Reconciliation of Return on Average Total Capital
Reconciliation of Return on Average Total Capital ($ in Millions) Fiscal Year 2014 2013 2012 2011 Net Earnings, Including Earnings Attributable to Redeemable and Noncontrolling Interests $1,861 $1,892 $1,589 Interest, Net, After-tax 191 201 239 Earnings Before Interest, After-tax 2,052 2,094 1,828 M
Slide 145: Reconciliation of Tax Rate Excluding Items
Reconciliation of Tax Rate Excluding Items (Fiscal Years, $ in Millions) 2014 2013 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $2,655 $883 $2,535 $741 Mark-to-market effects (48) (18) (4) (2) Restructuring Costs 4 -- 19 3 Integration Costs -- -- 12 4 Tax Items -- -- --
Slide 146: Reconciliation of Fiscal 2001 and 2002 Debt to EBITDA
Reconciliation of Fiscal 2001 and 2002 Debt to EBITDA (Fiscal Years, $ in Millions) 2002 2001 Total Debt* $9,439 $3,428 Net Earnings $458 $665 Cumulative Effect of Change in Accounting Principle (3) -- Earnings Before Cumulative Effect of Change in Accounting Principle $461 $665 Earnings from Joint
Slide 147: Reconciliation of Fiscal 2014 Debt to EBITDA
Reconciliation of Fiscal 2014 Debt to EBITDA (Fiscal Years, $ in Millions) 2014 Total Debt* $8,786 Net Earnings, Including Earnings Attributable To Redeemable and Noncontrolling Interests $1,861 After-tax Earnings from Joint Ventures 90 Income Taxes 883 Earnings Before Income Taxes and After-tax Ear