emerging stronger · 2020. 9. 9. · kellogg company 9/9/2020 kellogg company | barclays 2020 2...

Kellogg Company 9/9/2020

KELLOGG COMPANY | BARCLAYS 2020 1

®

Emerging StrongerBarclays Global Consumer Staples Conference

Virtual

September 9, 2020

KELLOGG COMPANY | BARCLAYS CONFERENCE 2020 2

Agenda

Emerging StrongerSteve Cahillane

Chairman & CEO

Strengthening our e-CommerceMonica McGurkChief Growth Officer

Strengthening our Emerging MarketsAmit Banati

Chief Financial Officer



KELLOGG COMPANY | BARCLAYS CONFERENCE 2020

This presentation contains, or incorporates by reference, “forward-looking statements”, with projections concerning, among other things, the Company’s restructuring programs, the integration of acquired businesses, the Company’s strategy, 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 actual results or activities may differ materially from these predictions. The Company’s future results could be affected by a variety of other factors, including uncertainty of the magnitude, duration, geographic reach, impact on the global economy and current and potential travel restrictions of the COVID-19 outbreak, the current, and uncertain future, impact of the COVID-19 outbreak on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), and cash flows and liquidity, 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 opportunities, 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 risks and uncertainties.

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. Managementbelieves that the use of such non-GAAP measures assists investors in understanding the underlying operating performance of the company and its segments.

3

Forward-Looking Statements

®

TM


Emerging StrongerSteve Cahillane, Chairman & Chief Executive Officer

4

http://www.kelloggcompany.com/




Deploy For Growth Was Already Building Momentum

Good Progress in 2019: Entered 2020 With Momentum:


Pivoting to Balanced Financial Delivery

2014-2017

Project K &

ZBB

2018-2019

DeployFor

Growth

ReducedCost Structure

RestoredTop-LineGrowth

2020-Ongoing

DeployFor

Growth

Balance Top-Line Growth with

Profitability & Cash Flow




COVID Accelerates the Pivot to Balanced Delivery

2014-2017

Project K &

ZBB

2018-2019

DeployFor

Growth

ReducedCost Structure

RestoredTop-LineGrowth

2020-Ongoing

DeployFor

Growth

Balance Top-Line Growth with

Profitability & Cash Flow

COVID Crisis

Safety, Supply, Community,

Financial Flexibility

Consumer Reappraisal,Share Gains,E-Commerce

SustainBalancedDelivery

Ongoing


Executing Well Through the Crisis

Aiding Our CommunitiesKeeping Employees Safe Supplying Food to the World




COVID – Acceleration of Already Positive TrendNet Sales – Organic Growth *

* Organic net sales growth excludes the impact of foreign currency translation, acquisitions, divestitures, and changes in shipping days.


COVID – Accentuation of Stronger PortfolioPie Chart is % of Total Net Sales in 2019; Bar Charts Represent Organic Net Sales Growth*

* Organic net sales growth excludes the impact of foreign currency translation, acquisitions, divestitures, and changes in shipping days.




Outsized First-Half Results


Enhanced Financial Flexibility

* Cash flow: Defined as net cash provided by operating activities reduced by expenditures for property additions.

** Net Debt: Defined as the sum of long-term debt, current maturities of long-term debt, and notes payable, less cash, marketable securities and other cash equivalents.




Increased Competitiveness

Source: Nielsen, xAOC. Year-to-date and 13 weeks through 8/22/20 for the U.S., 7/25/20 for Canada, 7/11/20 for the U.K., and 8/22/20 for Australia.

Improving Share Performance in CerealChange in Share of Category Retail Sales, in Percentage Points, Versus Year Ago


Strong Consumer Reappraisal

Source: Nielsen Panel, U.S.; Compares Household Penetration of the 52-week period ended 8/08/20 with the Household Penetration of the 52-week period ended 2/22/20

Increased Household Penetration During PandemicPercentage Point Change in 52-Week Household Penetration between 8/08/20 and 2/22/20




Strong 2H Commercial Activity

INNOVATION BRAND MESSAGING


ADVISORY GROUP MEMBER

16

Heart & Soul – Increasingly Important



®

TM


Strengthening our e-CommerceMonica McGurk, Chief Growth Officer

17


✓ Recruited high performing digital talent

✓ Invested in digital tools & capabilities

✓ Launched digital training across functions

✓ Created global eCom strategy with local flexibility

Pre-COVID Digital Investments Paying Off




E-Commerce – We Were Ready for the Acceleration

Sources: Nielsen, 1010data, IRI, Retailer ePOS


E-Commerce – Accelerated Growth in All Regions





E-Commerce – Penetration Above Market Averages

Kellogg Sales Through e-Commerce ChannelsEstimated Percent of Retail Sales, First Half 2020

Sources: Nielsen, 1010data, IRI, Retailer ePOS and IGD


E-Commerce – Gaining Share in Key Categories

22

Kellogg Outperforming Category in >90% of eCom Business

Estimated Retail Sales Growth in e-Commerce Channels First Half 2020, in Percent, Versus Year Ago





Digital Strength – Positioned to Win in Future

▪ Powerful tool for household retention

▪ Driving important share gains across categories

▪ Accelerating in emerging markets

▪ New digital capabilities to support customers

®

TM


Strengthening our Emerging MarketsAmit Banati, Chief Financial Officer

24




Emerging Markets – Key Growth Driver

Kellogg Emerging Markets SalesOrganic Net Sales Growth, in Percent


Emerging Markets – Diversified Footprint & Portfolio

Kellogg Emerging MarketsComposition of Net Sales, 1H 2020




Emerging Markets – Expanding Affordable Offerings

Cereal: Snacks:


Scaling Up Across Africa

• Ground operations in Africa’s three largest economies

• Kellogg net sales in Africa were $0.1 billion in 2014…and are approaching $1.0 billion in 2020




Kellogg Africa – Strength of Portfolio

Broad food

portfolio serves

consumers

across price

tiers in Cereal,

Noodles, and

Snacks


Kellogg in Africa – Key Competitive Advantages

Strong brands Deep and efficient Route-to-Market

Backward integrated local supply chain

Strong local management




West Africa Partnership – Competitive “Moat”

Strong brands Deep and efficient Route-to-Market

Backward integrated local supply chain

Strong local management

• Cereal, pasta, noodles, and snacks plants

• Flexi-packaging facility

• Flour mill


West Africa Partnership – Best-in-Class Distribution

Retailers: +500,000

Distributors: +4,000

Sub-Distributors(Market): +50,000

Consumer



®

TM


Emerging StrongerSteve Cahillane, Chairman & Chief Executive Officer

33


In Summary

➢ Good momentum going into 2020

➢ Executing well through the crisis

➢ Investing now for the long-term

➢ Emerging a stronger Company



®

TM


Q&A

35

emerging stronger · 2020. 9. 9. · kellogg company 9/9/2020 kellogg company | barclays 2020 2...

Documents