K Kellogg Sept 2017 Investor Presentation

Kellogg Company September 6, 2017
Kellogg Company
Barclays Global Consumer Staples Conference
Boston
September 6, 2017
Forward-Looking Statements
This presentation contains, or incorporates by reference, forward-looking statements with projections concerning, among other things, the Companys global
growth and efficiency program (Project K), the integration of acquired businesses, the Companys strategy, zero-based budgeting, and the Companys 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 Companys actual results or activities may differ materially from these predictions. The Companys future results could also be affected by a variety of
factors, including the ability to implement Project K (including the exit from its Direct Story Delivery system) as planned, whether the expected amount of costs
associated with Project K will differ from forecasts, whether the Company will be able to realize the anticipated benefits from Project K in the amounts and times
expected, the ability to realize the anticipated benefits from Revenue Growth Management, the ability to realize the anticipated benefits and synergies from the
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; 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 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 nonGAAP financial measures. Please refer to the Appendices for a reconciliation of these nonGAAP 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.
Barclays Global Consumer Staples Conference September 6, 2017 2
Page 1 of 18
Agenda
Transforming Kellogg Company
Transforming U.S. Snacks
Improving Financial Performance
Opportunities Within Industry Trends
On-Trend Changing Return to low

Emerging
Food & Snacking Retail single-digit
Markets
Packaging Landscape growth *
Page 2 of 18
On-Trend Food & Packaging Special K

Special K Repositioning and Renovating:
Net Sales Change, All Categories, From Weight Loss To Inner Strength
Currency-Neutral Comparable Basis, Excluding Venezuela
Rest of
Portfolio
Total
Company
Primary
Source of
Decline
2016
On-Trend Food & Packaging Kashi Company

Kashi Company, RTE Cereal Consumption Sales, Change Vs. Prior Year
5
2014 2015 2016
Renovated food and packaging
0
YTD 2017* Growing in Natural channel
-5
Growing consumption and
-10
gaining share in mainstream
-15 channels
-20
-25
Source: Nielsen, xAOC

* YTD 2017 is through Aug. 19
Page 3 of 18
Snacking Building a Global Snacks Powerhouse

Net Sales, Reported Basis
$13 Billion
Going Forward:
Cereal Leverage Pringles global brand
& Other
Sustain momentum in U.S.
$6 Billion power brands
Redeploy DSD resources to

Cereal support more U.S. brands
& Other Snacks
Continue global expansion
Snacks
2000 2016
Retail Landscape Win Where the Shopper Shops
Changing Retail Landscape Snacking Anywhere Anytime

Expanding in E-Commerce Expanding in high-
Transitioning out of DSD frequency stores
Building new capabilities Increase share of
single-serve
New pack formats for
entry price-points
Page 4 of 18
Emerging Markets Building Scale and Growing

Kellogg Emerging Markets, Volume in Tons
Parati, 2017
Joint Ventures
4.5%
CAGR
2013-2016
x-JVs and Parati
2012 2016
Transformation 2020 Growth Plan
Page 5 of 18
Agenda
U.S. Snacks Right to Grow
Consumer Trends Toward Snacking

Big, Differentiated Brands
Track Record of Innovation
Advanced Data & Analytics
Page 6 of 18
U.S. Snacks Roadmap
Refocus Transform Accelerate
2016 2017-1H 2018 2018/2019

Restructure Network Exit DSD Expand Across Channels
Launch ZBB Build New Warehouse Sales Org Drive Joint Value Creation
Establish RGM Capability Launch Agile Marketing Increase Brand Investment
Distort Resources Define New Playbook End to End Focus
Refocus Strong Progress Made
Improved Marketing ROI Leading with Innovation Focused Investment
Marketing ROI Total Kellogg Snacks Snacks Core 4 Brands Growth

Indexed to Industry Benchmark Innovation Share indexed to Category Share 2016 vs. 2015
234 3.8%
148 156
100 2.2%
204
Industry Kellogg Snacks Kellogg Snacks

2015 2016
Benchmark 2015 2016 Total US Snacks Categories Core 4 Kellogg Snacks
Brands
Source: Marketing Mix Analytics, Internal Data Source: Nielsen, xAOC, 52 weeks Source: Nielsen, xAOC, 52 weeks; Core 4 brands include Cheez-It,
Club, Rice Krispies Treats, and Pringles
Page 7 of 18
Transform DSD Transition On Track
Customer Alignment Agreed on list-price adjustment, transition timing, joint

business planning
Core Assortment Aligned on-shelf assortment, culled tail SKUs, agreed shelf space
Now 100%
Conversion to Warehouse Shipping only to customers warehouses, Warehouse
halted DSD deliveries
Completion of Transition Close distribution centers, execute operational hypercare

Pivot to pull-model commercial activities, increase brand investment
DSD Transition What To Expect Next

2017 1H 2018 2H 2018 On
SKU Rationalization Reduced tail SKUs Less complex portfolio
Focused Transitional pull-back on Decline in secondary Scaled & focused

merchandising & tertiary displays primary displays
List-price adjustment List-price adjustment
Increased Brand Investment Increase Brand Investment Higher velocity SKUs
Stronger Higher retailer margins Bigger in-store events and Growth in consumption,
primary displays share, and net sales *
Scaled One Route to Market Scaled One Route to Market
Initial overhead reductions Full overhead reductions Operating profit

More Profitable Improving operating profit
margin in line with
Improving operating KNA average *
margin * profit margin *
* Refers to currency-neutral comparable basis
Page 8 of 18
Transform Improved Margin Structure

U.S. Snacks, Operating Profit Margin, in Percent, Comparable Basis *
19
17 DSD Transition
+450 bp
from 2015
Zero-Based Budgeting
15 2H
Improvement
Project K
13
12.5%
11
11.4%
9
5
2015 2016 2017 2018
* Please refer to appendices for reconciliation of non-GAAP measures to the most directly comparable GAAP measure.
Accelerate Redeploy Resources For Growth
1. 2. 3. 4. 5.
Increase New Ways Customer
Channel End to End
Brand of Joint Value
Expansion Focus
Investment Marketing Creation
More support for Agile ROI Higher retailer margins Pack-formats Reduced
more brands Occasion-based Increased in-store Resourcing complexity
Mass-precision investment Improved service

targeting Scaled-up promotions Reduced waste
Power of K scale
Page 9 of 18
1.
Accelerate Increase Brand Investment
+DD Increase in Brand Building

Increased Investment Prioritize by Demand and ROI
65%+ of spend in Digital and Social

Digital Expansion Campaigns that behaviorally lever
the digital medium
Cheez-It, Pringles, Rice Krispies Treats

New Brand Campaigns Master Brand Campaign on Keebler, Special K
2.
Accelerate New Ways of Marketing
Occasion Based Mass Precision Real Time

Demand Landscape Targeting Capability Optimization
Identifies white space

opportunity
Right Message,
Right Consumer,
Right Time
Precision Identified White Space Tailored Consumer Experiences Investment Pressure by Design
Insight Driven Demand Increased Brand Relevance Improved Return on Investment
Page 10 of 18
3.
Accelerate Customer Joint Value Creation
Growing Consumption Together
Priority Brand Activation

Data-Driven Big Bets
In-store Reinvention
Unique Shopper Experiences
4.
Accelerate Channel Expansion & Pack Formats
Immediate Consumption
Kellogg Single Serve Category Development
Shared Consumption
Index:
80 Index:
47
On the Go Bulk Pack
Index:
Index: 74 Index:
155 64
On the Go Bulk Variety Pack

On the Go - Pantry Pack
Source: Nielsen AOD xAOC + Convenience Calendar Year 2016

Page 11 of 18
5.
Accelerate End to End Focus
End to End Supply Chain
Improved Service Levels
Reduced Waste
Kellogg
& Power of K Commercial Scale
Customer
New and Ongoing Efficiencies
Improved Profit Margins
U.S. Snacks Summary

Go-to-Market
Transform Commercial Capabilities
Profit Margins
Sustainable
Stronger shelf Sales and Profit
Higher retailer margins
Accelerate
Increased Brand investment
Growth
Right pack for right channel
Page 12 of 18
Agenda
Reaffirming 2017 Guidance
Net Sales ~ (3)%

Currency-Neutral Comparable Basis*
Operating Profit +7-9%

Earnings Per Share +8-10%

Cash Flow $1.1-$1.2 bn

Cash From Ops., Less Capital Expenditure
* Please refer to appendices for reconciliation of non-GAAP measures to the most directly comparable GAAP measure.
Page 13 of 18
Priority Restore Top-Line Growth
On-Trend Changing Return to low

Emerging
Food & Snacking Retail single-digit
Markets
Packaging Landscape growth *
Stabilizing DSD resources Omni-Channel Increased

Special K & redeployed to approach scale
Kashi pull-investment
Getting pack Greater
Next nutrition Snacking trends formats right snacking
trend in Cereal leveraged presence
globally with big Single route to
brands market Organic
growth, plus
Increasing acquisitions, * All referenced metrics are on a currency-
single-serve plus JVs ** neutral comparable basis.
offerings and ** Joint Ventures are not included in

consolidated results.
growth
Margin Expansion Initiatives On Track
Project K Zero-Based Budgeting Return on Investment
Network Restructuring Discretionary Spending Revenue Growth Management

Global Business Services Process and Tools New Marketing Model
Organizational Design Policies
Go-to-Market Model Budgeting from Zero
Savings $600-700 million Savings $450-500 million Higher ROI on

run-rate in 2019 run-rate in 2018 commercial investment
Page 14 of 18
Visibility to +350 Basis Points

Operating Profit Margin, Comparable Basis, Excluding Venezuela
+350 bp
from 2015 + Project K
+ ZBB
+ RGM/Marketing Model
- Invest in Food
- Volume and Country Mix
- Input Costs / FX
2015 2016 2017 2018
Strong Cash Flow *
Drivers: Priorities:
Net Income Increasing on higher margins

Dividend
**
Core Working Capital Steady improvement, led by
payables; opportunities in inventory Bolt-On Acquisitions
Restructuring Cash Outlays Diminish after 2017 Share Repurchases
Capital Expenditure Settling back to 3-4% of net sales Investment-Grade Debt
* Cash Flow defined as cash from operating activities, less capital expenditure.
** Core Working Capital is an internal Kellogg metric defined as last 12 months average trade receivables and inventory, less 12 months average trade payables,
divided by last 12 months net sales.
Page 15 of 18
Growing the Right Way
In Summary
Driving to return to top-line growth
Delivering strong profit-margin expansion
Page 16 of 18
Kellogg Company
Barclays Global Consumer Staples
Conference
Q&A
September 6, 2017
Appendices
Exhibit 1
Kellogg Company and Subsidiaries

Reconciliation of Non-GAAP Amounts - U.S. Snacks Reported Operating
Margin to Comparable Operating Margin
Year ended 2016 and 2015
2016 2015
Reported operating margin 10.1% 11.9%
Project K and cost reduction activities -2.4% -1.6%
Other costs impacting comparability 0.0% 2.1%
Comparable operating margin 12.5% 11.4%
Page 17 of 18
Appendices
Exhibit 2
Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP amounts - 2017 Full Year Guidance*
Net sales Operating profit EPS

Currency-Neutral Comparable Guidance Approx. (3.0%) 7.0% - 9.0% $4.03 - $4.09
Foreign currency impact (1.3%) (1.6%) Approx. ($.06)
Comparable Guidance Approx. (4.3%) 5.4% - 7.4% $3.97 - $4.03
Impact of certain items that are excluded from Non-GAAP guidance:

Project K and cost reduction activities (pre-tax) - (2.8%) - (6.3%) ($1.28) - ($1.14)
Integration costs (pre-tax) - 0.3% ($.03) - ($.02)
Acquisitions/dispositions (pre-tax) 1.4% 1.0% $0.08
Income tax benefit applicable to adjustments, net** $.37 - $.33
* 2017 full year guidance for net sales, operating profit, and earnings per share are provided on a non-GAAP, comparable, and currency-neutral basis only because
certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be
predicted without unreasonable efforts by the Company. The Company is providing quantification of known adjustment items where available.
** Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.
Appendices
Exhibit 3
Reconciliation of Non-GAAP amounts - Cash Flow Guidance

(millions)
Approximate
Full Year 2017
Net Cash provided by (used in) operating activities $1,600 - $1,700
Additions to properties ($500)
Cash Flow $1,100 - $1,200
Page 18 of 18

K Kellogg Sept 2017 Investor Presentation

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Kellogg Company September 6, 2017

Barclays Global Consumer Staples Conference September 6, 2017 2

Transforming Kellogg Company

Transforming U.S. Snacks

Improving Financial Performance

Barclays Global Consumer Staples Conference September 6, 2017 3

Opportunities Within Industry Trends

On-Trend Changing Return to low

Barclays Global Consumer Staples Conference September 6, 2017 4

On-Trend Food & Packaging Special K

Barclays Global Consumer Staples Conference September 6, 2017 5

On-Trend Food & Packaging Kashi Company

Source: Nielsen, xAOC

Barclays Global Consumer Staples Conference September 6, 2017 6

Snacking Building a Global Snacks Powerhouse

Redeploy DSD resources to

Barclays Global Consumer Staples Conference September 6, 2017 7

Retail Landscape Win Where the Shopper Shops

Changing Retail Landscape Snacking Anywhere Anytime

Barclays Global Consumer Staples Conference September 6, 2017 8

Emerging Markets Building Scale and Growing

Barclays Global Consumer Staples Conference September 6, 2017 9

Transformation 2020 Growth Plan

Barclays Global Consumer Staples Conference September 6, 2017 10

Transforming Kellogg Company

Transforming U.S. Snacks

Improving Financial Performance

Barclays Global Consumer Staples Conference September 6, 2017 11

U.S. Snacks Right to Grow

Consumer Trends Toward Snacking

Barclays Global Consumer Staples Conference September 6, 2017 12

U.S. Snacks Roadmap

Refocus Transform Accelerate

2016 2017-1H 2018 2018/2019

Barclays Global Consumer Staples Conference September 6, 2017 13

Refocus Strong Progress Made

Improved Marketing ROI Leading with Innovation Focused Investment

Marketing ROI Total Kellogg Snacks Snacks Core 4 Brands Growth

Industry Kellogg Snacks Kellogg Snacks

Barclays Global Consumer Staples Conference September 6, 2017 14

Transform DSD Transition On Track

Customer Alignment Agreed on list-price adjustment, transition timing, joint

Completion of Transition Close distribution centers, execute operational hypercare

Barclays Global Consumer Staples Conference September 6, 2017 15

DSD Transition What To Expect Next

Focused Transitional pull-back on Decline in secondary Scaled & focused

List-price adjustment List-price adjustment

Increased Brand Investment Increase Brand Investment Higher velocity SKUs

Scaled One Route to Market Scaled One Route to Market

Initial overhead reductions Full overhead reductions Operating profit

* Refers to currency-neutral comparable basis

Barclays Global Consumer Staples Conference September 6, 2017 16

Transform Improved Margin Structure

Barclays Global Consumer Staples Conference September 6, 2017 17

Accelerate Redeploy Resources For Growth

Mass-precision investment Improved service

Barclays Global Consumer Staples Conference September 6, 2017 18

+DD Increase in Brand Building

65%+ of spend in Digital and Social

Cheez-It, Pringles, Rice Krispies Treats

Barclays Global Consumer Staples Conference September 6, 2017 19

Occasion Based Mass Precision Real Time

Identifies white space