Slide 1: Fiscal 2017 Fourth Quarter and Full-year Results
General Mills Fiscal 2017 Fourth Quarter and Full-year Results June 28, 2017
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: Ken Powell, Chairman of the Board
Ken Powell Chairman of the Board
Slide 4: Jeff Harmening, Chief Executive Officer
Jeff Harmening Chief Executive Officer
Slide 5: Fiscal 2017 Summary
Fiscal 2017 Summary • Executed Important Changes • New Global Organization Structure • Accelerated Cost-savings Initiatives • Full-year Net Sales and Operating Profit Fell Short of our Targets • Adjusted Diluted EPS Grew +6%*; Returned $2.7B in Cash to Shareholders * Growth in constant currency. Non
Slide 6: Fiscal 2018 Overview
Fiscal 2018 Overview • Significant Improvement in Topline Growth Trends • Global Prioritization of Our Biggest Growth Platforms • Increased Investment in Brands and Capabilities • Improved Execution • Profit and EPS Growth Rates Reflect Higher Investment 6
Slide 7: Operating Profit Margin Progress
Operating Profit Margin Progress Adjusted Operating Profit Margin* • Significant Progress from F15 (% of Net Sales) to F17 • Moderating Pace of Margin 18.1% Higher Expansion in F18 16.8% 15.9% • Focused on Balancing Sales Growth and Margin Expansion Over Long Term F15 F16 F17 F18 * Non-GAAP measure,
Slide 8: Fiscal 2017 Financial Review
Fiscal 2017 Financial Review Don Mulligan EVP; Chief Financial Officer
Slide 9: Fourth Quarter Fiscal 2017 Financial Summary
Fourth Quarter Fiscal 2017 Financial Summary ($ in Millions, Except per Share) Constant- Organic currency $ % Change % Change* % Change* Net Sales $3,807 -3% -3% Segment Operating Profit* 673 +3 +4% Net Earnings Attributable to 409 +8 General Mills Diluted EPS $0.69 +11 Certain Items Affecting Compa
Slide 10: Fourth Quarter Fiscal 2017 Components of Net Sales Growth
Fourth Quarter Fiscal 2017 Components of Net Sales Growth Organic Net Sales* = -3% +4 pts Flat Flat -3% -7 pts Organic Organic Foreign Acquisitions / Total Volume Price & Mix Exchange Divestitures Net Sales As Reported *Non-GAAP measure. 10
Slide 11: Fiscal 2017 Financial Summary
Fiscal 2017 Financial Summary ($ in Millions, Except per Share) Constant- Organic currency $ % Change % Change* % Change* Net Sales $15,620 -6% -4% Segment Operating Profit* 2,953 -2 -1% Net Earnings Attributable to General Mills 1,658 -2 Diluted EPS $2.77 Flat Certain Items Affecting Comparability
Slide 12: Fiscal 2017 North America Retail
Fiscal 2017 North America Retail Net Sales Growth Segment Growth Q4 F17 by Operating Unit Q4 F17 Organic Net Sales* -4% -5% U.S. Snacks +1% Flat U.S. Cereal -1 -3 Constant-currency U.S. Meals & Baking -1 -10 +9% -2% Segment Operating Profit* Canada -2 -2 Constant-currency* +2 -2 U.S Yogurt -22 -18 *
Slide 13: Fiscal 2017 Convenience Stores & Foodservice
Fiscal 2017 Convenience Stores & Foodservice Net Sales Growth Segment Growth Q4 F17 by Platform Q4 F17 Organic Net Sales* Flat -3% Focus 6 Platforms +3% +2% Other -3 -8 Segment Operating Profit Flat +6% *Non-GAAP measure. See appendix for reconciliation 13
Slide 14: Fiscal 2017 Europe & Australia
Fiscal 2017 Europe & Australia Segment Growth Q4 F17 Organic Net Sales¹* -9% -4% Constant-currency -26% -9% Segment Operating Profit* ¹Impact of Yoplait Europe Reporting Period Difference: -DD in Q4, -LSD in F17 *Non-GAAP measure. See appendix for reconciliation 14
Slide 15: Fiscal 2017 Asia & Latin America
Fiscal 2017 Asia & Latin America Segment Growth Q4 F17 Organic Net Sales¹* +8% +3% Constant-currency -23% +20% Segment Operating Profit* ¹Impact of Brazil Reporting Period Difference: +DD in Q4, +LSD in F17 *Non-GAAP measure. See appendix for reconciliation 15
Slide 16: Fiscal 2017 Joint Venture Results
Fiscal 2017 Joint Venture Results After-tax Earnings: $85MM; -6% vs. LY in Constant Currency* Cereal Partners Worldwide Häagen-Dazs Japan Net Sales: +3%** Net Sales: +8%** *Non-GAAP measure. See appendix for reconciliation. **Growth rates in constant currency. 16
Slide 17: Fiscal 2017 Cost Savings and Margin Results
Fiscal 2017 Cost Savings and Margin Results Adjusted Operating Adjusted Gross Margin* Profit Margin* (% of Net Sales) (% of Net Sales) F17 Cost Savings 36.1% 35.6% 18.1% • COGS HMM: $390MM 16.8% • Announced Projects: $540MM F16 F17 F16 F17 *Non-GAAP measures. See appendix for reconciliation. 17
Slide 18: Core Working Capital
Core Working Capital ($ in Millions) Q4 F17 F16 % Change Accounts Receivable $1,430 $1,361 Inventories 1,484 1,414 Accounts Payable 2,120 2,046 Total Core Working Capital $794 $729 +9% 18
Slide 19: Fiscal 2017 Cash Flow Highlights
Fiscal 2017 Cash Flow Highlights Full-year Operating Cash Flow ($ in Millions) • Fixed Asset Investment = $2,630 $684MM $2,313 • Dividends Paid = $1,135MM • Net Share Repurchases = $1,539MM F16 F17 19
Slide 20: 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 • COGS HMM = $390MM, More Than Offsetting 3% Input Cost Inflation • Savings from Announced Projects = $700MM, Up $160MM vs LY *Non-GAAP measure. 20
Slide 21: Fiscal 2018 Guidance
Fiscal 2018 Guidance ($ in Millions, Except per Share) Fiscal 2017 Fiscal 2018 Results Growth Net Sales $15,620 -1 to -2%¹ Advertising & Media Expense $624 Higher Total Segment Operating Profit* $2,953 Flat to +1%² Adjusted Operating Profit Margin* 18.1% Higher Interest Expense $295 Flat Tax Rate Ex
Slide 22: Fiscal 2018 Plans
Fiscal 2018 Plans Jeff Harmening Chief Executive Officer
Slide 23: U.S. Retail Sales Trends Improved in Q4
U.S. Retail Sales Trends Improved in Q4 General Mills F17 U.S. Retail Sales (% vs. LY, excludes Yogurt) • Better Merchandising and Lower Price Gaps in Q4 • Expect Continued Improvement in Fiscal 2018 -3.7% -5.1% -4.9% -6.3% Q1 Q2 Q3 Q4 Source: Nielsen XAOC 23
Slide 24: What's Changing in Fiscal 2018
What’s Changing in Fiscal 2018 • Global Prioritization of our Biggest Growth Platforms • Increasing Brand Investment • Increasing Level of New Product Innovation • “In the Zone” on Promotion • Winning with Growing Channels and Customers 24
Slide 25: Fiscal 2018 Growth Priorities
Fiscal 2018 Growth Priorities • Grow Cereal Globally (Including CPW) • Improve U.S. Yogurt Through Innovation • Invest in Differential Growth Opportunities • Häagen-Dazs • Snack Bars • Old El Paso • Natural & Organic • Manage Foundation Brands with Appropriate Investment 25
Slide 26: Global Cereal: Investing Behind Wellness News
Global Cereal: Investing Behind Wellness News Portfolio Campaigns Cheerios K-12 and Colleges & Universities “Ownable” Wellness Celebrating Cheerios’ Gluten Free and Granola News: Whole Grain, Ingredients, Health Portfolio Driving MSD Growth Gluten Free, Fiber Benefits, and Causes 26
Slide 27: Global Cereal: Investing Behind Taste News
Global Cereal: Investing Behind Taste News Product News Innovation Marshmallow News Tap Into Reese’s Significant Supporting Geographic on Lucky Charms Brand Love Expansion of Toast Expansion Crunch Franchise 27
Slide 28: Fundamental Innovation Drives U.S. Yogurt Growth
Fundamental Innovation Drives U.S. Yogurt Growth U.S. Yogurt Category Retail Sales ($ in Millions) • Innovation is Key to U.S. Yogurt Development • New Segments Drive Greek Growth Adult Health Kid • We’re Focused on Light Developing Fundamental Blended Innovation F92 F17 Source: Nielsen U.S. Food 28
Slide 29: Introducing Oui
Introducing Oui • Whole Milk Yogurt Inspired by Our Traditional French Recipe • Simple Ingredients, Remarkable Taste • Heavy Launch Support, Including TV, Digital, In-store Sampling • Building “Simply Better” Segment 29
Slide 30: Shift Portfolio Toward Growing Yogurt Segments
Shift Portfolio Toward Growing Yogurt Segments Organic Snacking 30
Slide 31: Invest in Differential Growth Opportunities
Invest in Differential Growth Opportunities Häagen-Dazs Snack Bars Old El Paso Natural & Organic 31
Slide 32: Invest in Differential Growth Opportunities: Häagen-Dazs
Invest in Differential Growth Opportunities Häagen-Dazs Geographic Impulse Innovation Expansion Largest Segment Driving News on Large Markets in Category Pints and Mini Cups Still Untapped 32
Slide 33: Invest in Differential Growth Opportunities: Snack Bars
Invest in Differential Growth Opportunities Snack Bars Nature Valley U.S. Lärabar Europe & Australia Increasing Innovation Platform Innovation Leveraging U.S. Media +DD Targeting +30% Distribution Innovation Playbook on Total Franchise 33
Slide 34: Invest in Differential Growth Opportunities: Old El Paso
Invest in Differential Growth Opportunities Old El Paso Drive Awareness and Trial Increase Stand N Stuff Distribution Through Media 34
Slide 35: Invest in Differential Growth Opportunities: Natural & Organic
Invest in Differential Growth Opportunities Natural & Organic Annie’s Distribution Innovation (Average Points of Distribution) +33% F16 F17 Source: Nielsen XAOC 35
Slide 36: Manage Foundation Brands with Appropriate Investment
Manage Foundation Brands with Appropriate Investment • “In the Zone” on Merchandising in Key Season • Targeted News to Drive Consumer Interest 36
Slide 37: E-commerce is an Opportunity for General Mills
E-commerce is an Opportunity for General Mills • Advantaged Capabilities • Strong Relationships with Leading E-commerce Retailers • Market Shares Over-index Online 37
Slide 38: Today's Summary
Today’s Summary • F17 Q4 Finished In Line with Expectations • Investing in Brands and Capabilities in F18 to Improve Topline Growth • Moderating Pace of Margin Expansion • Remain Committed to Consumer First Strategy and Balanced Shareholder Return Model Sales Margin Cash Cash Growth Expansion Conver
Slide 39: 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 40: Reconciliation of Fiscal 2017 Adjusted Diluted EPS
Reconciliation of Fiscal 2017 Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Full Year Per Share Data 2017 2016 Change Diluted earnings per share, as reported $ 2.77 $ 2.77 Flat Mark-to-market effects* (0.01) (0.07) Divestitures (gain) loss, net* 0.01 (0.10) Restructur
Slide 41: 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 42: Reconciliation of Fourth Quarter Fiscal 2017 Organic Net Sales Growth
Reconciliation of Fourth Quarter Fiscal 2017 Organic Net Sales Growth (Fiscal Year) Q4 2017 Reported Organic Organic Organic Foreign Acquisitions & Net Sales Volume Price/Mix Net Sales Exchange Divestitures Growth North America Retail (8) pts 4 pts (4) % - 1 pt (3) % Convenience Stores & 2 pts (2) p
Slide 43: Reconciliation of Fourth Quarter Fiscal 2017 Total Segment Operating Profit
Reconciliation of Fourth Quarter Fiscal 2017 Total Segment Operating Profit (Fiscal Years, $ in Millions) Q4 2017 2016 % Change North America Retail $507.7 $465.2 9% Convenience Stores & Foodservice 105.8 105.7 Flat Europe & Australia 37.0 56.4 (34) Asia & Latin America 22.3 26.9 (17) Total Segment
Slide 44: Reconciliation of Fiscal 2017 Constant-currency Total Segment Operating Profit Growth
Reconciliation of Fiscal 2017 Constant-currency Total Segment Operating Profit Growth (Fiscal Year) 2017 Percentage Change Percentage Change Impact of in Total Segment in Total Segment Foreign Operating Profit on a Operating Profit as Currency Constant-currency Reported Exchange Basis Q4 3% (1) pt 4
Slide 45: Reconciliation of Fourth Quarter Fiscal 2017 Adjusted Diluted EPS
Reconciliation of Fourth Quarter Fiscal 2017 Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Q4 Per Share Data 2017 2016 Change Diluted earnings per share, as reported $ 0.69 $ 0.62 11 % Mark-to-market effects* 0.01 (0.06) Divestitures loss* - 0.04 Restructuring costs*
Slide 46: Reconciliation of Fiscal 2017 Organic Net Sales Growth
Reconciliation of Fiscal 2017 Organic Net Sales Growth Fiscal Year 2017 Reported Organic Organic Organic Foreign Acquisitions & Net Sales Volume Price/Mix Net Sales Exchange Divestitures Growth North America Retail (9) pts 4 pts (5) % - (2) pts (7) % Convenience Stores & - (3) pts (3) % - - (3) % Fo
Slide 47: Reconciliation of Fiscal 2017 Total Segment Operating Profit
Reconciliation of Fiscal 2017 Total Segment Operating Profit (Fiscal Years, $ in Millions) Full Year 2017 2016 % Change North America Retail $2,303.6 $2,351.2 (2)% Convenience Stores & Foodservice 401.2 378.9 6 Europe & Australia 164.2 200.3 (18) Asia & Latin America 83.6 69.1 21 Total Segment Opera
Slide 48: Reconciliation of Q4 Fiscal 2017 Constant-currency Operating Profit Growth by Segment
Reconciliation of Fourth Quarter Fiscal 2017 Constant-currency Operating Profit Growth by Segment (Fiscal Year) Q4 2017 Percentage Change Impact of Percentage Change in in Segment Foreign Segment Operating Profit Operating Profit as Currency on a Constant-currency Reported Exchange Basis North Ameri
Slide 49: Reconciliation of Fiscal 2017 Constant-currency Operating Profit Growth by Segment
Reconciliation of Fiscal 2017 Constant-currency Operating Profit Growth by Segment (Fiscal Year) 2017 Percentage Change Impact of Percentage Change in in Segment Foreign Segment Operating Profit Operating Profit as Currency on a Constant-currency Reported Exchange Basis North America Retail (2) % Fl
Slide 50: Reconciliation of Fiscal 2017 Canada Operating Unit Net Sales Growth
Reconciliation of Fiscal 2017 Canada Operating Unit Constant-currency Net Sales Growth (Fiscal Year) 2017 Impact of Percentage Change in Percentage Change Foreign Canada Net Sales in Canada Net Sales Currency on a Constant-currency as Reported Exchange Basis Q4 (2) % (4) pts 2% Full Year (2) % Flat
Slide 51: Reconciliation of Fiscal 2017 Constant-currency After-tax JV Earnings
Reconciliation of Fiscal 2017 Constant-currency After-tax JV Earnings (Fiscal Year) Full Year 2017 Percentage Change Impact of Percentage Change in in After-tax Earnings Foreign After-tax Earnings from from Joint Ventures Currency Joint Ventures on a as Reported Exchange Constant-currency Basis (4)
Slide 52: Reconciliation of Fiscal 2017 Adjusted Gross Margin
Reconciliation of Fiscal 2017 Adjusted Gross Margin (Fiscal Years) Full Year 2017 2016 % of % of Net Sales Net Sales Gross margin as reported 35.6 % 35.2 % Mark-to-market effects (0.1) (0.4) Restructuring costs 0.3 0.5 Project-related costs 0.3 0.3 Adjusted gross margin 36.1 % 35.6 % 52
Slide 53: Reconciliation of Free Cash Flow and Cash Conversion
Reconciliation of Free Cash Flow and Cash Conversion (Fiscal Years, $ in Millions) Full Year 3 Year 2017 2016 2015 2015 - 2017 Net Earnings, Including Earnings Attributable to Redeemable and Noncontrolling Interests $1,701 $1,737 $1,259 $4,697 Mark-to-market effects* (9) (40) 57 8 Divestitures (gain
Slide 54: Reconciliation of Tax Rate Excluding Items and Income Taxes on Adjusting Items
Reconciliation of Tax Rate Excluding Items and Income Taxes on Adjusting Items (Fiscal Years, $ in Millions) Full Year 2017 2016 2015 Pretax Income Pretax Income Pretax Income Earnings* Taxes Earnings* Taxes Earnings* Taxes As reported $2,271.3 $655.2 $2,403.6 $755.2 $1,761.9 $586.8 Mark-to-market e
Slide 55: Reconciliation of Fourth Quarter Fiscal 2017 Tax Rate Excluding Items
Reconciliation of Fourth Quarter Fiscal 2017 Tax Rate Excluding Items (Fiscal Years, $ in Millions) Q4 2017 2016 Pretax Income Pretax Income Earnings* Taxes Earnings* Taxes As reported $539.9 $144.2 $454.6 $87.5 Mark-to-market effects 6.8 2.6 (59.7) (22.1) Divestitures loss - - 52.4 28.8 Restructuri