CAGNY 2021
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 and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. In particular, our predictions about future net sales and earnings could be affected by a variety of factors, including: the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees; disruptions or inefficiencies in the supply chain, including any impact of the COVID-19 pandemic; competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions, advertising activities, pricing actions, and promotional activities of our competitors; economic conditions, including changes in inflation rates, interest rates, tax rates, or the availability of capital; product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions or dispositions of businesses or assets; changes in capital structure; changes in the legal and regulatory environment, including tax legislation, labeling and advertising regulations, and litigation; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, and energy; effectiveness of restructuring and cost saving initiatives; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure or breach of our
information technology systems; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war. The company undertakes no obligation to publicly revise any forward-looking statements to reflect any future events or circumstances.
CAGNY 2021
2
JEFF HARMENING
Chairman and CEO
TODAY'S KEY MESSAGES
BUILDING on our sustained momentum
EXECUTING our Accelerate Strategy
BULLISH on our prospects for generating profitable growth and superior shareholder returns
CAGNY 2021
4
WE'VE BEEN WINNING
Building Momentum
Pre-PandemicContinued Strong Execution
Amid Pandemic
1H F21:
sales growth +8%1
Strengthened organic net
Improved market share
performance +13%2
Continued strong results
on margins and cash +17%2
Organic Net Sales
Adjusted Operating Profit
Adjusted Diluted EPS
1 Non-GAAP measure. See appendix for reconciliation
2 Constant currency growth rate. Non-GAAP measure. See appendix for reconciliation
5
OUR ACCELERATE STRATEGY
*Non-GAAP measures
1 Constant currency growth rate
6
Core markets make up
95%
of total F20 Net Sales
PRIORITIZING 8 CORE MARKETS
WINNING IN NORTH AMERICA AS #1 PRIORITY
7
of F20 Net Sales
GLOBAL PLATFORMS
INVE AS D T V I A N N G TA IN GE A D RE P A L S AT W FO IT R H MS WITH
HIGHEST GROWTH POTENTIAL
GLOBAL GROWTH POTENTIAL
CAGNY 2021
8
of F20 Net Sales
LOCAL GEMS
ATTRACTIVE LOCAL AND REGIONAL GROWTH DRIVERS
CAGNY 2021
9
✓ Growth accretive
✓ Bolt-on
PORTFOLIO RESHAPING
BUILDING ON OUR STRONG TRACK RECORD OF GROWTH-ENHANCING M&A
Accretive Acquisitions
✓ Present in our core markets
✓ Existing or new growth platforms that leverage our capabilities
Strategic Divestitures
✓ Targeting roughly 5% of sales
✓ Growth dilutive platforms with lower ROI
BOLDLY BUILDING BRANDS
MEETING CONSUMERS WHERE THEY ARE WITH
PURPOSE-DRIVEN BRANDS
CREATING NEW SOLUTIONS TO REAL CONSUMER PROBLEMS
RELENTLESSLY INNOVATING
Core Platform
InnovationInternal Start-Up Accelerator
301 INC Investment Arm
UNLEASHING OUR SCALE
Enhancing Core Capabilities
Across our Business
Management
BEING A FORCE FOR GOOD
Our Priorities
CLIMATE COMMITMENTS
By 2030:
By 2050:
Advance regenerative | Reduce greenhouse | Achieve net-zero |
agriculture on | gas emissions | greenhouse gas |
1MM acres | by 30% | emissions |
WHERE TO PLAYHOW TO WIN
ACCELERATE GROWTH
Goal: Drive Top-Tier Shareholder Returns
IVAN POLLARD
Chief Marketing Officer
OUR BELIEFS ABOUT BRAND BUILDING
Brands | Big Ideas | Execution |
Matter | Count | is Crucial |
OUR PLAYBOOK FOR BOLDLY BUILDING BRANDS IS EVOLVING
Clear Brand Anatomies,
Built with PurposeExecuting with a New, Modern Playbook
Connected CommerceCultural CapitalCompelling Creative
Upskill marketers 3x the Speed
Quantum Marketing
Intelligent Investment
Evolution of Insights
THE SIZE OF OUR INVESTMENT IS INCREASING
TOTAL MEDIA SPENDING
F19
F20
F21 Est.
$ in Millions
THE SHAPE OF OUR INVESTMENT IS EVOLVING
FOLLOW THE CONSUMER AND USE THE BEST TOOL TO GET THE JOB DONE
MIX OF MEDIA SPENDING
F19
F21 Est.
Bars represent proportion of total media spend in each fiscal year
THE CREATION OF CONNECTED COMMERCE:
BOX TOPS FOR EDUCATION
ACTION
Digitized Box Tops Program
IMPACT
LEVERAGING CULTURAL CAPITAL
FOR GOOD: WHEATIES
ACTION
Featuring Influencers and their Causes
IMPACT
Source: Wheaties Nielsen xAOC FYTD vs. LY through 1/2/21
Source: Newsweek December 2020
Growth
#1
Consumer
Goods
#6
Overall
THE ELEVATION OF COMPELLING
CREATIVITY: HÄAGEN-DAZS
ACTION
New Modern Campaign
Source: Häagen-Dazs Europe & Australia Nielsen/IRI June to August 2020 vs. LY
IMPACT
Growth
Growth
Chief Financial Officer
KOFI BRUCE
ACCELERATE GROWTH
Goal: Drive Top-Tier Shareholder Returns
Organic Net Sales* +2 to +3%
*Non-GAAP measures
1 Constant currency growth rate. Non-GAAP measures
Adj. Operating Profit*
+MSD1
FCF Conversion* 95%+
Cash Returns to
Shareholders ~80-90%Adj. Diluted EPS* +MSD to +HSD1
INCREASING NET SALES GROWTH EXPOSURE
WITH PORTFOLIO RESHAPING
NET SALES GROWTH EXPOSURE
+2 to +3%
Existing Portfolio
Portfolio Reshaping Impact
Target Exposure
MARGIN EXPANSION TO SUPPORT +MSD ADJ. OPERATING PROFIT GROWTH
Adj. Op. Profit Margin*
(% of Net Sales)
17.3%
F18
16.6%
16.9%
F19
*Non-GAAP measure. See appendix for reconciliation
F20
F21 Est.
Levers to Expand Margins
EXCELLENT CASH MANAGEMENT PROVIDES
BALANCE SHEET FLEXIBILITY
(3-Year Rolling, $ in Billions)
$8.0
$7.7
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
F15-F17
160% 150% 140%
Delivering on
F16-F18
F17-F19
F18-F20
130%Long-term FCF
120%Conversion
110%
Target ≥ 95%
100%
90%
80%
70%
Free Cash Flow*Free Cash Flow Conversion*
*Non-GAAP measures. See appendix for reconciliation
LONG-TERM CAPITAL ALLOCATION PRIORITIES
Achieved Target Leverage* of 3.0x in F21
Enables Execution on our
Long-term Priorities
F18 Pro Forma
F19
3.2x
2.9x
F20
Q2 F21
*Net Debt to Trailing 12-Month Adjusted-EBTIDA Ratio. Non-GAAP measure. See appendix for reconciliation
• CAPEX ~4% of Net Sales
• Grow Dividends with Earnings
• Strategic M&A
• Share Repurchases
ACHIEVING OUR FISCAL
2021 PRIORITIES
3
1
Compete
Fuel Investments
Reduce
Compete Effectively, Everywhere We Play
Drive Efficiency to Fuel Investments in Brands and Capabilities
Reduce Debt Leverage to Increase Financial Flexibility
REAFFIRMING SECOND HALF FISCAL 2021 ASSUMPTIONS
*Non-GAAP measures
TODAY'S KEY MESSAGES
BUILDING on our sustained momentum
EXECUTING our Accelerate Strategy
BULLISH on our prospects for generating profitable growth and superior shareholder returns
OUR ACCELERATE STRATEGY
*Non-GAAP measures
1 Constant currency growth rate
CAGNY 2021
A REMINDER ON NON-GAAP GUIDANCE
Our outlook for organic net sales growth and adjusted operating profit margin are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the effect of foreign currency exchange rate fluctuations, acquisitions, divestitures, and a 53rd week, when applicable. We are not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measure without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of changes in foreign currency exchange rates or the timing of acquisitions and divestitures throughout fiscal 2021. The unavailable information could have a significant impact on our fiscal 2021 GAAP financial results.
RECONCILIATION OF FISCAL 2021 ORGANIC NET SALES GROWTH
*Table may not foot due to rounding
Organic
(FISCAL YEAR)
OrganicOrganic Foreign Acquisitions Reported NetVolume Price/MixNet Sales Exchange & Divestitures Sales Growth
F21 Q2 | 4 pts | 3 pts | 7% | - | - | 7% |
F21 1H | 6 pts | 3 pts | 8% | - | - | 8% |
RECONCILIATION OF FIRST HALF FISCAL 2021 ADJUSTED OPERATING PROFIT CONSTANT-CURRENCY GROWTH RATE
*Table may not foot due to rounding
(FISCAL YEARS, $ IN MILLIONS)
2021
1H
2020
ChangeOperating profit as reported Mark-to-market effects Investment activity, net Product recall Restructuring charges Project-related costs
$ 1,770.3 $ 1,473.6
(62.3) (19.0)
(7.6) 3.7
7.1
1.9 24.8
- 0.7
20 %
-
Adjusted operating profit
$ 1,698.0
$ 1,495.2
Foreign currency exchange impact Adjusted operating profit growth, on a constant-currency basis
14 % 1 pt
13 %
RECONCILIATION OF FIRST HALF FISCAL 2021 ADJUSTED DILUTED EPS AND RELATED CONSTANT-CURRENCY GROWTH RATES
Per Share Data
Diluted earnings per share, as reported
Mark-to-market effects**
Investment activity, net** Product recall** Restructuring charges** Tax item
Adjusted diluted earnings per share Foreign currency exchange impact Adjusted diluted earnings per share growth, on a constant-currency basis
*Table may not foot due to rounding **See reconciliation of tax rate excluding items for tax impact of individual items
(FISCAL YEARS)
1H
2021
2020
$
2.14 $ 1.80
(0.08) (0.01)
(0.02) 0.01
- -
- 0.03
- (0.09)
$
2.06 $
Change
19 %
1.74
18 % 1 pt
17 %
RECONCILIATION OF FIRST HALF FISCAL 2021 INCOME TAXES ON ADJUSTING ITEMS
(FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA)
Pretax Earnings**
As reported Mark-to-market effects Investment activity, net Product recall Restructuring charges Project-related costs Tax item
As adjusted Effective tax rate:
As reported
As adjusted
Sum of adjustment to income taxes
Average number of common shares - diluted EPS
Impact of income tax adjustments on adjusted diluted EPS
*Table may not foot due to rounding **Earnings before income taxes and after-tax earnings from joint ventures
2021
1H
2020
Income Taxes
Pretax Earnings**
$
1,624.8 $
(62.3)
(19.0)
7.1
1.9
- -$
1,552.4 $
360.2 $
(14.3)
(4.4)
0.8
0.5
- -342.8 $
Income Taxes
1,295.9 $ 222.7
(7.6) (1.7)
3.7 4.4
-
24.8 4.3
0.7 0.1
- 53.1
-1,317.5 $ 282.8
22.2% 17.2%
22.1% 21.5%
$
(17.4)
$ 60.2
619.7 611.8
$
(0.03)
$ 0.10
RECONCILIATION OF ADJUSTED OPERATING PROFIT MARGIN
(FISCAL YEARS)
Percent of Net Sales
2020 | 2020 | |
Full-year | Q3 | |
Operating profit margin as reported | 16.8 % | 15.6 % |
Restructuring charges | 0.3 | 0.3 |
Mark-to-market effects | 0.1 | 0.2 |
Product recall | 0.1 | - |
Asset impairments | - | - |
Divestitures loss | - | - |
Acquisition transaction and integration costs | - | - |
Investment activity, net | - | |
Legal recovery | - | |
Project-related costs | - | |
Adjusted operating profit margin | 17.3 % | |
*Table may not foot due to rounding |
2019 | 2018 | |
Full-year | Full-year | |
14.9 % | 15.4 % | |
0.5 | 0.5 | |
0.2 | (0.2) | |
- | - | |
1.2 | 0.6 | |
0.2 | - | |
0.1 | 0.2 | |
(0.1) | - | |
- | (0.1) | - |
- | - | |
16.1 % | 16.9 % |
0.1
0.1 16.6 %
RECONCILIATION OF FREE CASH FLOW AND FREE CASH FLOW CONVERSION
Net earnings, including earnings attributable to redeemable and noncontrolling interests Restructuring charges** Mark-to-market effects** Product recall**
CPW restructuring costs Investment activity** Project-related costs** Tax items
Asset impairments**
Acquisition transaction and integration costs** Divestitures loss (gain)**
Hyperinflationary accounting** Net tax benefit
Legal recovery**
Venezuela currency devaluation**
Adjusted net earnings, including earnings attributable to redeemable and noncontrolling interests
Net cash provided by operating activities, as reported Purchases of land, buildings, and equipment
Free cash flow
Free cash flow, rolling 3-year
Free cash flow conversion, rolling 3-years
(FISCAL YEARS, $ IN MILLIONS) | |||
Full-year | |||
2020 2019 2018 | 2017 | 2016 | 2015 |
$1,701 | $1,737 | $1,259 | |
154 | 161 | 218 | |
(9) | (40) | 56 | |
- | - | - | |
- | - | - | |
- | - | - | |
28 | 37 | 8 | |
- | - | 79 | |
- | - | 177 | |
- | - | 10 | |
9 | (66) | - | |
- | - | - | |
- | - | - | |
- | - | - | |
- | - | 8 | |
$1,884 | $1,829 | $1,815 | |
$2,415 | $2,764 | $2,648 | |
($684) | ($729) | ($712) | |
$1,731 | $2,035 | $1,936 | |
$5,702 | $5,930 | $6,329 | |
103% | 108% | 115% |
$2,211
$1,786
$2,163
39
63
19
28 (22)
17
-
5
11
3
(18)
1
1
(53)
(73)
- - - - - - -
160
20
16
3
(7) (523)
(11)
-
$2,242
$1,980
$1,853
$3,676
$2,807
$2,841
($461)
($538)
$3,215
$2,269
$2,218
$7,703
$6,219
$5,984
127%
109%
*Table may not foot due to rounding
**All adjustments are Net of Income Taxes. See reconciliation of Income Taxes on Adjusting Items
61
- 2 - 8 41 65 58 - -
- -
($623)
108%
RECONCILIATION OF NET DEBT-TO-ADJUSTED EBITDA RATIO
(FISCAL YEARS, $ IN MILLIONS)
Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported
Income taxes 618.0
Interest, net 440.2
Depreciation and amortization 582.1
EBITDA
After-tax earnings from joint ventures Mark-to-market effects
Investment activity, net Project-related costs Product recall Restructuring charges Asset impairments Divestitures loss Acquisition integration costs Hyperinflationary accounting Legal recovery
Adjusted EBITDA
Total debt
Cash
Net debt
Net debt-to-adjusted EBITDA ratio
*Table may not foot due to rounding
**On a pro-forma basis
Trailing 12 Months Ending 2021 Q2
$ 2,433.1
$
$ $
4,073.4
(122.1)
(30.0)
(14.3)
$
$
2020 | 2019 | 2018** |
Full-year | Full-year | Full-year |
2,210.8 $ | 1,786.2 $ | 2,284.4 |
480.5 | 367.8 | 104.3 |
466.5 | 521.8 | 527.8 |
594.7 | 620.1 | 642.6 |
3,559.1 | ||
(84.7) | ||
(32.1) | ||
- |
3,752.5 $
3,295.9 $
(91.1) (72.0) 24.7 36.0 8.4 (22.8)
0.8
1.5 1.3 11.3
26.4
19.3 50.2
27.3
-
77.6 82.7
- - - - -- - - - -
3,961.5
$
3,765.6 $
207.4 96.9
-
(16.2)
30.0
25.6
3.2
- - - -
3,566.0 $ 3,633.2
13,964.4 $ 13,539.5 $ 14,490.0 $ 15,818.6
2,582.8 1,677.8 450.0
$
11,381.7
$ 11,861.7 $ 14,040.0 $
399.0 15,419.6
2.9
3.2
3.9
4.2
RECONCILIATION OF INCOME TAXES ON ADJUSTING ITEMS
Pretax Earnings**
As reported
Tax items Restructuring charges Mark-to-market effects Product recall Investment activity, net Project-related costs Asset impairments Divestitures loss (gain) Acquisition transaction and integration costs Hyperinflationary accounting Legal recovery
Net tax benefit
Venezuela currency devaluation As adjusted
*Table may not foot due to rounding
**Earnings before income taxes and after-tax earnings from joint ventures
(FISCAL YEARS, $ IN MILLIONS)
Full-year
2020
2019
2018
2017
2016
2015
Income
PretaxTaxes Earnings**
$2,600
$481
$2,082
Income Pretax Income Pretax | Income Pretax | Income Pretax Income |
Taxes Earnings** Taxes Earnings** | Taxes Earnings** | Taxes Earnings** Taxes |
$368
$2,136
- 53
50 11
25 6
19 2
8 5
2 0
- 78 36
73 15 8
(23)
(5)
1
-
- - - - - - - $2,704
- - - - - - - $559
207
48
30
14
26
3
6 -
(16) (5)
- 83 (32)
$57
(41) 21 (10)
$2,271
- 224 (14)
$655
- 70 (5)
$2,404
- 230 (63)
$755
-$1,762 $587 - (79)
69 344 126
(23) 90 33
- - $2,424
7 - $528
- $2,378
- 11 97 - 84
- -
- 523
- $612
- 3 32 - 25
- -
- - - - - $2,539
- 44 - 14
- 16 - 4 - - - - - $740
- $2,480
- (148)
- 58
-
-
-
-
- - - - - $740
- 21 - (82)
- - - 8 $2,492
- 13 260 - 16
- 5 83 - 6 - - - - $761
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General Mills Inc. published this content on 12 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 February 2021 14:48:03 UTC.