KELLOGG COMPANY Barclays Global Consumer Staples Conference Boston - - PDF document

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KELLOGG COMPANY Barclays Global Consumer Staples Conference Boston - - PDF document

Kellogg Company September 4, 2019 KELLOGG COMPANY Barclays Global Consumer Staples Conference Boston September 4, 2019 KELLOGG COMPANY | BARCLAYS CONFERENCE| September 4, 2019 Forward-Looking Statements This presentation contains, or


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Kellogg Company September 4, 2019 1 of 16

KELLOGG COMPANY | BARCLAYS CONFERENCE| September 4, 2019

KELLOGG COMPANY

Barclays Global Consumer Staples Conference Boston ∙ September 4, 2019

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Forward-Looking Statements

This presentation contains, or incorporates by reference, “forward-looking statements” with projections concerning, among other things, the Company’s global growth and efficiency program (Project K), the integration of acquired businesses, the Company’s strategy, zero-based budgeting, and the Company’s sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, charges, rates of return, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, workforce reductions, savings, and competitive

  • pressures. Forward-looking statements include predictions of future results or activities and may contain the words “expects,” “believes,” “should,” “will,” “anticipates,”

“projects,” “estimates,” “implies,” “can,” or words or phrases of similar meaning. The Company’s actual results or activities may differ materially from these predictions. The Company’s future results could also be affected by a variety of factors, including the expected benefits and costs of the divestiture of selected cookies, fruit and fruit flavored-snacks, pie crusts and ice cream cones businesses of the Company, the risk that disruptions from the divestiture will divert management's focus or harm the Company’s business, risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects, risks associated with the Company’s provision of transition services to the divested businesses post-closing, the ability to implement restructurings as planned, whether the expected amount of costs associated with restructurings will differ from forecasts, whether the Company will be able to realize the anticipated benefits from restructurings in the amounts and times expected, the ability to realize the anticipated benefits and synergies from business acquisitions in the amounts and at the times expected, the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices; transportation costs; labor costs; disruptions or inefficiencies in supply chain; the availability of and interest rates on short- term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business

  • pportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and

foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to update them publicly. This presentation includes non‐GAAP financial measures. Please refer to the earnings press release, which is available on the Investor Relations page on the Company’s website, www.Kelloggcompany.com, for a reconciliation of these non‐GAAP financial measures to the most directly comparable GAAP financial measures. Management believes that the use of such non-GAAP measures assists investors in understanding the underlying operating performance of the company and its segments.

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Deploy for Growth is Working

  • Change in mindset
  • Decisive actions
  • Improved results

Deploy for Growth is driving:

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Long-Term Algorithm – Net Sales Growth

% of Total Net Sales 1H 2019, and Organic-Basis Net Sales Growth Over Time

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Developed Markets Cereal – Long-Term Outlook

Reasons for Confidence:

  • Category and share already

stabilized in U.K. and Australia

  • U.S. category consumption
  • nly declining (1)% *
  • Consistency in taste-fun

segment, opportunity in wellness segment

  • Harmonized pack sizes,

enhanced offerings in granola

* Source: Nielsen, x-AOC, year to date 8/17/19

% of Total Net Sales 1H 2019, and Organic-Basis Net Sales Growth Over Time

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2H: Resumed Brand Building in U.S. Cereal

* Source: Nielsen, x-AOC, year to date 8/17/19

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Developed Markets Cereal – Toward Stabilization

Kellogg Net Sales, Change Versus Year Ago, Organic Basis

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Developed Markets Snacks – Long-Term Outlook

Reasons for Confidence:

  • Accelerated growth
  • U.S. back in growth, behind 5

biggest brands

  • Pringles momentum worldwide
  • Expanded on-the-go offerings

and distribution

  • Opportunity to expand

wholesome snacks internationally

% of Total Net Sales 1H 2019, and Organic-Basis Net Sales Growth Over Time

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Developed Markets Snacks – Revitalized U.S., Steady Growth Abroad

Developed Markets Snacks

% of Net Sales, 1H 2019, Excluding Subsequently Divested Businesses

Developed Markets Snacks

Net Sales Growth Versus Prior Year, Organic Basis

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Cheez-It – Accelerated Growth in U.S.

Innovation: Brand Building: On the Go:

Source: Nielsen, xAOC; calendar years 2017 and 2018; 2019 is calendar year to date, through 8/17/19

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Rice Krispies Treats – Momentum in U.S.

Innovation: Brand Building: On the Go:

Source: Nielsen, xAOC; calendar years 2017 and 2018; 2019 is calendar year to date, through 8/17/19 KELLOGG COMPANY | BARCLAYS CONFERENCE| September 4, 2019 12

Pop-Tarts – Revitalized in the U.S.

Innovation: Brand Building: On the Go:

Source: Nielsen, xAOC; calendar years 2017 and 2018; 2019 is calendar year to date, through 8/17/19

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RXBAR – Expanding Distribution & Awareness in U.S.

Innovation: Brand Building:

Source: Nielsen, xAOC

Total Distribution Points

4-Week Average

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Pringles – Revitalized in the U.S.

Innovation: Brand Building: On the Go:

Source: Nielsen, xAOC; calendar years 2017 and 2018; 2019 is calendar year to date, through 8/17/19

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International Developed Markets Snacks

  • Sustaining Pringles momentum
  • Revitalizing wholesome snacks

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Developed Markets Frozen – Long-Term Outlook

Reasons for Confidence:

  • Sustained growth by Eggo
  • Sustained growth by

MorningStar Farms

  • Rising consumer demand for

meat alternatives/plant-based protein

  • Exciting expansion planned for

MorningStar Farms

% of Total Net Sales 1H 2019, and Organic-Basis Net Sales Growth Over Time

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Eggo – Growth on Growth in U.S.

Source: Nielsen, xAOC; calendar years 2017 and 2018; 2019 is calendar year to date, through 8/17/19; Kellogg syrup carriers

Innovation: Brand Building:

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MorningStar Farms – Current Growth

Source: Nielsen, xAOC; calendar years 2017 and 2018; 2019 is calendar year to date, through 8/17/19

Innovation:

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MorningStar Farms – Coming Soon

International Expansion: New Packaging:

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Plant-Based Protein – Expanding From Frozen

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Emerging Markets – Long-Term Outlook

Reasons for Confidence:

  • Accelerated growth
  • Expanded geographic

presence

  • More diversified portfolio
  • Extending product lines to

more affordable offerings

  • Improving distribution

% of Total Net Sales 1H 2019, and Organic-Basis Net Sales Growth Over Time

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Emerging Markets – Accelerated Growth

Net Sales, Change Versus Year Ago, Organic Basis

* Total Company refers to all products and categories.

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Emerging Markets – More Diversified Portfolio

% of Total Net Sales 1H 2019, and Organic-Basis Net Sales Growth Over Time

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Emerging Markets – Expanding Affordable Offerings

Cereal: Snacks:

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Emerging Markets Strategy – Russia

Russia

  • Cereal, salty snacks, biscuits
  • Revitalized local cereal brand
  • Gaining share, building scale
  • Improving profitability
  • Expanding into Central & Eastern Europe

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Emerging Markets Strategy – Brazil

Brazil

  • Parati tripled the size of our business

in Brazil

  • Supply-chain transformation
  • Leverage Parati’s expertise and

strength in high-frequency stores

  • Leverage Kellogg for geographic

expansion within and outside Brazil

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Emerging Markets Strategy – Africa

Africa

  • Cereal, snacks, biscuits, noodles
  • Distribution muscle in largest market
  • Launching affordable options in Snacks and Noodles
  • Reorganized under one leadership team

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Emerging Markets – Bigger Part of Our Portfolio

Emerging Markets as % of Net Sales *

* Based on management’s interpretation of data from company reports, and analysts’ published estimates; peers are large-cap, U.S.-based packaged food

  • companies. For illustrative purposes.
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Profit Will Follow

Pie Chart is % of 1H 2019 Company Net Sales; Boxes Indicate Drivers of Expansion in Operating Profit Margin Over Time

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Getting Back On Our Wheels

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One Year Later

  • Further Shaped Portfolio for Growth
  • Momentum in revitalized World-Class Brands
  • Reaching more occasions and channels
  • Improved service and in-store execution
  • Returned to organic net sales growth