Mondelēz International GMA July 31, 2016
Forward-looking statements This presentation contains a number of forward-looking statements. Words, and variations of words, such as will, expect, estimate and similar expressions are intended to identify our forward-looking statements, including, but not limited to, statements about: our investments and the results of those investments; productivity and productivity savings and improvement; our supply chain transformation; and our sustainability targets. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those indicated in our forward-looking statements. Such factors include, but are not limited to, risks from operating globally including in emerging markets; continued volatility of commodity and other input costs; unanticipated disruptions to our business; the restructuring program and our other transformation initiatives not yielding the anticipated benefits; and changes in the assumptions on which the restructuring program is based. Please also see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our most recently filed Annual Report on Form 10-K. Mondelēz International disclaims and does not undertake any obligation to update or revise any forward-looking statement in this presentation, except as required by applicable law or regulation.
OUR DREAM: CREATE DELICIOUS MOMENTS OF JOY
Creativity is coming up with the Idea.
Innovation is implementing the Idea.
Creation is Unleashing the IMAGINE IF. to do the Extraordinary.
A global snacks powerhouse 2015 Global Market Share Ranking² Beverages, Cheese & Grocery 15% Snacks 85% Biscuits Chocolate #1 #1 Gum #2 Candy #1 1. Percentages are based on our 2015 Adjusted Net Revenues of $28,009 million; this reflects 2015 Reported Net Revenues of $29,636 million less our historical coffee business 2015 Net Revenues of $1,627 million 2. Source: Euromonitor
with leading brands in each snacks category
Strong execution of transformation agenda in 2015 Focused Portfolio Created coffee joint venture Acquired and integrated bolt-on acquisitions Reduced Costs Invested for Growth Strengthened Financial Profile Drove world-class net productivity Reduced overhead costs Increased advertising & consumer support Improved growth and share performance in H2 2015 Expanded growth platforms and RTM capabilities Generated strong free cash flow Lowered cost of debt Returned $4.6 billion to shareholders in 2015
Supply Chain Reinvention creating competitive advantage Priorities Step change leadership talent, capability and engagement Innovative global platforms & network transformation Consumer & Customer Driven Supply Chain Drive productivity and cash programs to fuel growth Best-in-class Health, Safety and Sustainability Three Year Financial Goals $3B Gross Productivity Cost Savings (~$1B/per year; ~4.5% of COGS) $1.5B Net Productivity Cost Savings (~$0.5B/per year; ~2.3% of COGS) $1B Cash Flow
Acquisitions drove supply chain complexity 1990 2000 2010 2012 Significant number of SKUs, formats and formulas Fragmented supplier base Sub-scale plants with low efficiency assets
Priority 1: Step change leadership talent & capabilities Created New End to End Supply Chain Organization Upgraded talent in 45% of 115 critical leadership roles Clear Compelling Business need Quest to be the Best Created 7 Discipline Leadership Teams for Capability Building Focus on 100% Engagement
un leash ment the act or state of releasing and removing restraint to allow bold actions
2015 was the FIRST Global Engagement Survey our Unleashment barometer that included nearly all 100,000 MDLZ employees ~70% of employees are ISC
ISC had outstanding engagement with some sites exceeding 90% and one at 97%! Our focus: 100% engagement 0 incidents, 0 defects, 0 losses 18+ pts higher than external benchmarks #1 scoring function in MDLZ!
Priority 2: Consumer-inspired Product Platforms on Advantaged & Globally Standard Technology Platforms IMAGINE IF, ON EVERY PLATFORM, WE COULD ACHIEVE (OREO EXAMPLE): Scale Speed Agility 30% reduction in capital cost $10MM in operating cost savings per line +500 bp gross margin New capacity in 1/3 the time Modular design for 7 days going to going innovation Global expansion in less than 6 months Standard Lego box onetime design Standard equipment & operations Supplier-enabled scale and speed Imagine Doing it at same time for Three Categories in Record time
Example: Oreo platform results Making Past Packing In 24 months our global platform teams are delivering the breakthrough Now Making Packing
Global platform transformation process Document best practices Develop modular design Develop breakthrough processes Leverage low-cost suppliers Pilot new integrated design Qualify and roll out globally
Our Supply Chain Reinvention has required a major focus on 100% Engagement to Unleash the Creation reduce costs Simplification + Platform Standardization + E2E Supply Network Redesign Delivers Speed for Global Innovation Delivers Breakthrough Productivity Savings 30%+ cost savings 2-3x output of current North American assets 20%+ cost savings Increased range of package sizes 20%+ cost savings Significantly reduced manufacturing time
Priority 3: Consumer & Customer Driven Supply Chain Design 1 GROWTH CAPACITY 2 PROCUREMENT EXCELLENCE 3 NETWORK TRANSFORMATION 4 CUSTOMER SERVICE AND LOGISTICS OPTIMIZATION SCR VISION New capacity for key growth platforms Advantaged assets in advantaged locations Improved what, where and how we buy Increased supplier collaboration Reinvest in core Streamline Facilities Operational Excellence Strategically shift investment into the most attractive facilities CAPEX largely focused on growth Improved service delivery and redesigned logistics system Dramatically improved inventory position Consumer focused portfolio Outstanding Customer Service Cost advantaged supply chain 5 SIMPLIFICATION & HARMONIZATION Consistent and lasting simplification approach across categories - E2E simplification (from material specs to SKUs) - Above and below the skin simplification including SKU rationalization - Simplification targets Shopper and Customer Driven Dramatically improved use of cash and capital The potential scenarios that are discussed in this deck are subject, where applicable, to the fulfillment of any bargaining obligation that Mondelēz International may have with its unions.
Redesigning supply chain to deliver world-class efficiency 2013 to 2018E New Brownfield & Greenfield Sites 16 Power Brands on Advantaged Assets ~70% by 18 Advantaged Lines Installed ~ 70
Changing our network around the world
Changing our network around the world
Changing our network around the world
Changing our network around the world
Changing our network around the world
Changing our network around the world
Changing our network around the world
6_81 Changing our network around the world
Changing our network around the world
Changing our network around the world
Changing our network around the world
Priority 4: Stepping up productivity delivery Integrated Lean Six Sigma Procurement Transformation Simplicity
IL6S delivers best-in-class reliability and efficiency Integrated Lean Six Sigma 2015 Key Achievements 62 sites 75% reduction in safety incidents 2000+ greenbelts & blackbelts 25,000+ colleagues trained Key Future Objectives Expand to 40 more sites
Procurement transformation driving savings Procurement Transformation 2015 Key Achievements Procurement leads sourcing of all goods and services by global spend towers Key Future Objectives Leverage scale, 12 COGS towers and 11 ZBB towers Drive sustainable savings
Mondelēz International Procurement Team Wins World Procurement Award for Transformation!
Applying simplicity initiatives across categories Simplicity 2015 Key Achievements 3,000 skus reduced Shelf and consumer back design Streamlining EU Biscuits On-track for 60% reduction in complexity by end- 2016 Key Future Objectives Apply learnings to all regions Create high-scale platforms Key for productivity and speed
Funding future investments through cash management Receivables Terms compliance Sales phasing Term negotiations Inventory Raw and pack Finished goods Infrastructure Processes & technology Payables Payment terms rationalization Frequency extension Supply chain financing Target +$1 billion in incremental cash over three years
Delivering world-class productivity levels Net Productivity as Percentage of COGS More than 3.5% 2.5% 2.8% 1.1% 1.8%
On track to achieve Best in Class Cash Management Cash Conversion Cycle (in days) Based on balances as of year-end Generated ~$1.3B incremental cash 2014-2015 Reduced Cash cycle 32 days in 2 years In 2015, we lowered our cost of debt and returned $4.6B to shareholders
Priority 5: Sustainability 2020 & Safety Plant Safety -- Total Incident Rate (TIR)
Successfully executing on SCR initiative Talent & Capabilities Manufacturing Platforms Network Redesign Upgraded talent and core leadership Qualified biscuit, chocolate and gum Lines of the Future Installing lines to drive conversion cost savings Installing Lines of the Future Greenfield and brownfield sites in startup Productivity Delivering world-class net productivity of more than 3.5% of COGS Safety & Sustainability At world-class safety levels Launched Sustainability 2020 goals
What is your. Imagine if? Daniel Myers EVP Integrated Supply Chain