General Mills, Inc. · NYSE:GIS
General Mills — Investor Day (July 2017)
56 slides from General Mills's investor day presentation, Jul 12, 2017
Slide 1: Bethany Quam, SVP; Group President, Europe & Australia
Bethany Quam SVP; Group President, Europe & Australia
Slide 2: Europe & Australia Segment
Europe & Australia Segment • F17 Net Sales: $1.8 Billion Yogurt Ice Cream • F17 Segment Operating Profit: $164 Million • Focused on 4 of 5 Global Platforms Mexican Snacks 77
Slide 3: Emerging Company in a Developed Market
Emerging Company in a Developed Market F17 EUROPE & AUSTRALIA NET SALES HOUSEHOLD PENETRATION 98% Other 86% 73% 63% 48% 28% France, UK, Australia 18% 13% Yogurt Mexican Ice Cream Snack Bars Category General Mills Source: Nielsen/IRI/Kantar latest 52 weeks through May 2017; current General Mills mark
Slide 4: Europe & Australia Fiscal 2018 Priorities
Europe & Australia Fiscal 2018 Priorities • Invest to Drive Differential Growth: −Old El Paso −Häagen-Dazs −Snack Bars • Return Yogurt to Share Growth 79
Slide 5: Old El Paso in Europe & Australia
Old El Paso in Europe & Australia MEXICAN FOODS CATEGORY HOUSEHOLD PENETRATION (% Households that Purchase Mexican Foods) 82 48 Europe & Australia U.S. Source: Europe Nielsen/IRI/Kantar, 52 weeks ended May 17, 2017, current General Mills markets; US Nielsen, 52 weeks ended November 26, 2016 80
Slide 6: Old El Paso Growth Driver: Stand 'N Stuff Innovation
Old El Paso Growth Driver: Stand ‘N Stuff Innovation F15 F16 F17 F18 Stand ‘N Stuff Stand ‘N Stuff Kits Stand ‘N Stuff Mini Stand ‘N Stuff Mini Kits 81
Slide 7: Old El Paso Messaging to Drive Penetration
Old El Paso Messaging to Drive Penetration CONVENIENT FRESH VARIETY 82
Slide 8: Slide 8
Slide 9: Häagen-Dazs in Europe & Australia
Häagen-Dazs in Europe & Australia F17 ICE CREAM RETAIL SALES IN EUROPE & AUSTRALIA (% vs. LY) 13% 3% Category Häagen-Dazs Source: Nielsen 84
Slide 10: Cup and Stick Bar Innovation
Häagen-Dazs Growth Driver: Cup and Stick Bar Innovation New Pint Flavors Mini Cups in U.K. Mini Stick Bars in France, Spain, and Belgium 85
Slide 11: Geographic Expansion and Market Activation
Häagen-Dazs Growth Driver: Geographic Expansion and Market Activation 86
Slide 12: Snack Bars in Europe & Australia
Snack Bars in Europe & Australia GENERAL MILLS EUROPE & AUSTRALIA SNACK BARS RETAIL SALES ($ in Millions) CGR = +15% F15 F16 F17 Source: Nielsen 87
Slide 13: Leveraging U.S. Innovation Platform
Leveraging U.S. Innovation Platform F18 1H INNOVATION EXPAND DISTRIBUTION 88
Slide 14: Yoplait in Europe
Yoplait in Europe FRANCE UNITED KINGDOM • Home of Yoplait • Leading Player in Kid Segment • Broad Portfolio • Focused Portfolio • 13% Market Share • 8% Market Share Source: Nielsen Fiscal 2017 89
Slide 15: Europe Yogurt Growth Driver: Innovation
Europe Yogurt Growth Driver: Innovation FRANCE UNITED KINGDOM • Targeting Indulgence Segment • Expanding Presence in Adult Segment • Fruit is Point of Difference • Leveraging Successful Liberté Canada Positioning 90
Slide 16: Europe Yogurt Growth Driver: Core Renovation
Europe Yogurt Growth Driver: Core Renovation BRAND RENOVATION SUGAR REDUCTION Renovating >40% of European Yogurt Portfolio in Fiscal 2018 91
Slide 17: Fiscal 2018 Europe & Australia Margin Drivers
Fiscal 2018 Europe & Australia Margin Drivers • Significant Dairy and Vanilla Inflation • GBP-EUR Transaction Foreign Exchange Headwind • Continued Strong HMM Savings • SRM to Drive Net Price Realization 92
Slide 18: Europe & Australia Summary
Europe & Australia Summary • Emerging Company in Developed Market • Priorities: − Drive Differential Growth on Old El Paso, Häagen-Dazs, and Snack Bars − Return Yogurt to Share Growth • F18 Goals: − Organic Net Sales*: +1 to +2% − Segment Operating Profit Margin: Lower *Non-GAAP measure 93
Slide 19: Christina Law, SVP; Group President, Asia & Latin America
Christina Law SVP; Group President, Asia & Latin America
Slide 20: Asia & Latin America Segment
Asia & Latin America Segment • F17 Net Sales: $1.7 Billion Ice Cream Yogurt • F17 Segment Operating Profit: $84 Million • Focused on 4 of 5 Global Platforms Snacks Convenient Meals 95
Slide 21: Asia & Latin America: Fiscal 2018 Priorities
Asia & Latin America: Fiscal 2018 Priorities • Accelerate Häagen-Dazs in Asia • Continue Aggressive Yoplait Expansion • Expand Snacking Platform • Drive On-trend Convenient Meals Businesses 96
Slide 22: Häagen-Dazs in Asia
Häagen-Dazs in Asia ICE CREAM CATEGORY RETAIL SALES IN ASIA ($ in Billions) CGR = +5% $18B 2011 2016 Source: Euromonitor, calendar years 97
Slide 23: Häagen-Dazs Growth Driver: Innovation
Häagen-Dazs Growth Driver: Innovation FRUIT & FLOWERS ASIAN FLAVORS Mochi Yuzu 98
Slide 24: Häagen-Dazs Growth Driver: Brand Refresh
Häagen-Dazs Growth Driver: Brand Refresh NEW GLOBAL SHOP RENOVATION NEW PACKAGING AD CAMPAIGN 99
Slide 25: Slide 25
Slide 26: Häagen-Dazs Growth Driver: Expansion in Handheld
Häagen-Dazs Growth Driver: Expansion in Handheld ICE CREAM EXPAND NEW FLAVORS CONSUMPTION IN ASIA DISTRIBUTION AND FORMATS & LATIN AMERICA (kilograms) Other Take Home Impulse Source: Euromonitor 2016 101
Slide 27: Yogurt Category in China
Yogurt Category in China YOGURT CATEGORY RETAIL SALES IN CHINA • World’s Largest Yogurt Market ($ in Billions) CGR = +21% • Premium Driving Growth $15B • China Yogurt Will Be Larger U.S. Market Size than U.S. + Western Europe by 2021 2011 2016 Source: Euromonitor, calendar years 102
Slide 28: Yoplait in China
Yoplait in China • Differentiated Texture and Taste • Premium Positioning • European Quality Certification • Shanghai in F16, Beijing in F17 103
Slide 29: Yoplait China Growth Driver: Aggressive City Expansion
Yoplait China Growth Driver: Aggressive City Expansion Beijing Shanghai 104
Slide 30: Yoplait China Growth Driver: Innovation and Brand Investment
Yoplait China Growth Driver: Innovation and Brand Investment Innovation Media Perle de Lait Perle de Lait 100% Fresh Milk Messaging Beverage Protein 105
Slide 31: Expand Snacking Platform
Expand Snacking Platform NATURE VALLEY IN YOKI POPCORN IN COOKIE CAKES IN LATIN AMERICA BRAZIL INDIA Leveraging U.S. Innovation Driving Value on Stovetop and More Than Doubling Distribution “For One” Popcorns 106
Slide 32: Drive On-trend Convenient Meals Businesses
Drive On-trend Convenient Meals Businesses WANCHAI FERRY KITANO Building Strong Kid Platform Seasonings and Meal Solutions 107
Slide 33: Asia & Latin America Summary
Asia & Latin America Summary • Accelerate Häagen-Dazs in Asia • Continue Aggressive Yoplait Expansion • Expand Snacking Platform • Drive On-trend Convenient Meals Businesses • F18 Goals: − Organic Net Sales*: +1 to +3%^ − Segment Operating Profit Margin: Higher *Non-GAAP measure 108 ^Includes -LSD i
Slide 34: Don Mulligan, EVP, Chief Financial Officer
Don Mulligan EVP, Chief Financial Officer
Slide 35: Joint Ventures
Joint Ventures CEREAL PARTNERS WORLDWIDE HÄAGEN-DAZS JAPAN • F17 Net Sales: $1.6 Billion* • F17 Net Sales: $0.4 Billion* • 130 Markets *Joint Venture net sales on a 100 percent basis 110
Slide 36: Joint Ventures Fiscal 2018 Plans
Joint Ventures Fiscal 2018 Plans CEREAL PARTNERS WORLDWIDE HÄAGEN-DAZS JAPAN • F17 Net Sales: +3%* • F17 Net Sales: +8%* • Core Renovation • Momentum Behind Recent • Extend Recent Innovation to New Innovation Markets • Continued Strong Growth from the Core *Constant currency growth rate 111
Slide 37: Our Shareholder Return Model
Our Shareholder Return Model GROWTH CASH RETURNS SHAREHOLDER RETURN 2-3% Double Digit Mid 2% Single Digit Low Single Digit Net Sales¹* Total Segment Net Share Dividend Yield Total Shareholder Operating Profit²* Repurchase Return Target: Cash Conversion ≥ 95% Target: Cash Return to Shareholders ≥ 90%
Slide 38: Investing to Drive Growth in Fiscal 2018
Investing to Drive Growth in Fiscal 2018 MARKETING CHANNEL & PROCESS GEOGRAPHIC TRANSFORMATION Media (% of Net Sales) EXPANSION Higher 4.0% vs LY Finance Human Resources F17 F18 Target Go to Market 113
Slide 39: Continuing to Drive Significant Cost Savings
Continuing to Drive Significant Cost Savings ($ in Millions) COST OF GOODS HMM SAVINGS ANNOUNCED PROJECTS SAVINGS $4,000 $390 $3,250 $700 $700 $540 $350 $75 F10 - F17 F18 F10 - F20 F15 F16 F17 F18 Cumulative Target Cumulative Target Savings Savings Goal 114
Slide 40: Moderating Pace of Margin Expansion in Fiscal 2018
Moderating Pace of Margin Expansion in Fiscal 2018 ADJUSTED OPERATING PROFIT MARGIN* (% of Net Sales) 18.1% Higher 16.8% vs LY 15.9% F15 F16 F17 F18 Target *Non-GAAP measure. See appendix for reconciliation. 115
Slide 41: Profit Margins Ahead of U.S. Food Peer Median
Profit Margins Ahead of U.S. Food Peer Median ADJUSTED OPERATING PROFIT MARGIN* (% of Net Sales) 27.2 18.1 Food Peer Median: 17.2 13.6 GIS Source: CapIQ, fiscal 2017/2016/calendar year 2016 Food Peers: CAG, CPB, HSY, K, KHC, MDLZ, SJM *Non-GAAP measure. See appendix for reconciliation. 116
Slide 42: Reducing Core Working Capital
Reducing Core Working Capital ($ in Billions) -52% Cum Decline $1.7 $1.6 $1.4 $1.2 40 $0.8 $0.7 34 29 24 8 10 F12 F13 F14 F15 F16 F17 Core Working Capital Core Working Capital Days 117
Slide 43: Fixed Asset Investment
Fixed Asset Investment ($ in Millions) $712 $729 $676 $664 $684 ~$650 $614 4.4% 4.4% 4.1% 4.0% ~4.2% 3.5% 3.7% F12 F13 F14 F15 F16 F17 F18 Target Ongoing Fixed Asset Investment Restructuring Fixed Asset Investment % Net Sales 118
Slide 44: Free Cash Flow Performance
Free Cash Flow Performance F18 TARGET: CASH CONVERSION ≥ 95% (3-Year Rolling, $ in Billions) CGR = +5% $5.9 $6.0 $5.6 $5.4 $4.9 109% 109% $4.1 102% 97% 94% 83% F10-F12 F11-F13 F12-F14 F13-F15 F14-F16 F15-F17 Free Cash Flow* Free Cash Flow Conversion* *Non-GAAP measure. See appendix for reconciliatio
Slide 45: Dividends and Share Repurchases
Dividends and Share Repurchases DIVIDENDS PER SHARE AVERAGE DILUTED SHARES OUTSTANDING CGR = +9% CGR = -2% $1.92 $1.96 667 666 $1.78 $1.67 $1.55 646 $1.32 $1.22 619 612 598 -1 to -2% F12 F13 F14 F15 F16 F17 Current F12 F13 F14 F15 F16 F17 F18 Annualized Target Rate 120
Slide 46: Strong Cash Returns to Shareholders
Strong Cash Returns to Shareholders TARGET: CASH RETURN ≥ 90% (3-Year Rolling, $ in Billions) $6.0 $6.2 $6.1 $6.2 $5.9 $5.6 $5.4 $4.9 $5.1 $4.1 $4.0 $3.3 F10-F12 F11-F13 F12-F14 F13-F15 F14-F16 F15-F17 Cash Return %: 80% 81% 86% 104% 110% 116% Free Cash Flow* Net Share Repurchases + Dividends Paid *
Slide 47: Fiscal 2018 Plan Assumptions
Fiscal 2018 Plan Assumptions • Category Trends Similar to F17 • Organic Net Sales* Trends to Improve from Q1 to Q2 and 1H to 2H • Adjusted Operating Profit Margin* Down in 1H, Up in 2H • Adjusted Diluted EPS* Down in 1H, Up in 2H *Non-GAAP measures 122
Slide 48: Fiscal 2018 Guidance
Fiscal 2018 Guidance ($ in Millions, Except per Share) FISCAL 2017 FISCAL 2018 RESULTS GROWTH Net Sales $15,620 -1 to -2%¹ Media Expense $624 Higher Total Segment Operating Profit* $2,953 Flat to +1%² Adjusted Operating Profit Margin* 18.1% Higher Interest Expense $295 Flat Tax Rate Excluding Items*
Slide 49: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2018 outlook for organic net sales growth, constant-currency total segment operating profit and adjusted diluted EPS, adjusted operating profit margin, effective tax rate excluding items, and free cash flow conversion are non-GAAP financial measures that ex
Slide 50: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of Adjusted Operating Profit Margin (Fiscal Years) Full Year % of Net Sales 2017 2016 2015 Operating profit as reported 16.4 % 16.3 % 11.8 % Mark-to-market effects (0.1) (0.4) 0.5 Divestitures (gain) loss, net 0.1 (0.9) - Restructuring costs 1.4 1.4 1.9 Project-related costs 0.3 0.4 0
Slide 51: Reconciliation of Free Cash Flow and Free Cash Flow Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (Fiscal Years, $ in Millions) 2017 2016 2015 2014 2013 2012 2011 2010 Net earnings, including earnings attributable to redeemable and noncontrolling interests $1,701 $1,737 $1,259 $1,861 $1,893 $1,589 $1,804 $1,535 Mark-to-market effects
Slide 52: Cash Return to Shareholders
Cash Return to Shareholders (Fiscal Years, $ in Millions) 2017 2016 2015 2014 2013 2012 2011 2010 Dividends paid $1,135 $1,072 $1,018 $983 $868 $800 $729 $644 Purchases of common stock for treasury 1,652 607 1,162 1,745 1,045 313 1,164 692 Proceeds from common stock issued on exercised options (113)
Slide 53: Reconciliation of Income Taxes on Adjusting Items
Reconciliation of Income Taxes on Adjusting Items (Fiscal Years, $ in Millions) 2017 2016 2015 2014 2013 2012 2011 2010 Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Earnings* Taxes Earnings* Taxes Earnings* Taxes Earnings* Taxes Earn
Slide 54: Reconciliation of Fiscal 2017 Total Segment Operating Profit
Reconciliation of Fiscal 2017 Total Segment Operating Profit ($ in Millions) Fiscal Year 2017 North America Retail $2,303.6 Convenience Stores & Foodservice 401.2 Europe & Australia 164.2 Asia & Latin America 83.6 Total Segment Operating Profit $2,952.6 Unallocated Corporate Items 190.1 Divestitures
Slide 55: Reconciliation of Fiscal 2017 Tax Rate Excluding Items
Reconciliation of Fiscal 2017 Tax Rate Excluding Items ($ in Millions) Fiscal Year 2017 Pretax Earnings* Income Taxes As reported $2,271.3 $655.2 Mark-to-market effects (13.9) (5.1) Divestitures (gain) loss 13.5 4.3 Restructuring costs 224.1 70.2 Project-related costs 43.9 15.7 Tax item - - Acquisit
Slide 56: Reconciliation of Fiscal 2017 Adjusted Diluted EPS
Reconciliation of Fiscal 2017 Adjusted Diluted EPS Per Share Data Fiscal Year 2017 Diluted earnings per share, as reported $ 2.77 Mark-to-market effects* (0.01) Divestitures (gain) loss, net* 0.01 Restructuring costs* 0.26 Project-related costs* 0.05 Diluted earnings per share, excluding certain ite