UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 2010
KRAFT FOODS INC.
(Exact name of registrant as specified in its charter)
| Virginia | 1-16483 | 52-2284372 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| Three Lakes Drive, Northfield, Illinois | 60093-2753 | |
| (Address of Principal executive offices) | (Zip Code) |
Registrant’s Telephone number, including area code: (847) 646-2000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
As disclosed in our press release dated September 8, 2010, Kraft Foods Inc. is hosting an Analyst Day in New York City on September 15, 2010. The presentations are scheduled to begin at 8:00 a.m. Eastern Daylight time. Members of management will be making presentations that may include material non-public information, including information related to our strategic business plans, goals, growth initiatives and outlook, and forecasts for future performance and industry development. We issued a press release summarizing the presentations, which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The presentations will be available via a live audio webcast within the Investor Center section of our Web site, www.kraftfoodscompany.com. An archived rebroadcast and the presentation slides will be available for one year following the webcast. The presentation slides, including Regulation G reconciliations, used in the presentations are attached as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.
Pursuant to General Instruction B.2., to Form 8-K, the information set forth in this Item 7.01, including the exhibits attached hereto relating to this Item 7.01, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | The following exhibits are being furnished with this Current Report on Form 8-K. |
| Exhibit |
Description | |
| 99.1 | Kraft Foods Inc. Press Release, dated September 15, 2010. | |
| 99.2 | Kraft Foods Inc. Presentation Slides, dated September 15, 2010. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KRAFT FOODS INC. | ||||||
| Date: September 15, 2010 |
/s/ Carol J. Ward | |||||
| Name: | Carol J. Ward | |||||
| Title: | Vice President and Corporate Secretary | |||||
Exhibit 99.1
| Contacts: | Michael Mitchell (Media) | Christopher M. Jakubik (Investors) | ||
| +1-847-646-4538 | +1-847-646-5494 | |||
| news@kraft.com | ir@kraft.com |
KRAFT FOODS LAYS OUT ITS NEW GLOBAL GROWTH STRATEGY
| • | Building a Global Snacks Powerhouse and Unrivaled Portfolio of Brands People Love |
| • | Top-Tier Financial Performance Driven By Unique Combination of Assets |
| • | Cadbury Acquisition Yields $1 Billion in Revenue Synergies By 2013 |
NEW YORK – Sept. 15, 2010 – Kraft Foods Inc. (NYSE: KFT) presented its new global growth strategy at a meeting of analysts and investors in New York today. The comprehensive review of the company’s power brands, global categories and regional business units detailed the plan by which Kraft Foods will deliver organic revenue growth of 5 percent or more, margins in the mid- to high-teens and earnings per share (EPS) growth of 9 to 11 percent, making it a top-tier performer in the global food industry.
“Today’s Kraft Foods is a global snacks powerhouse with an unrivaled portfolio of leading regional and local brands,” said Irene Rosenfeld, Chairman and CEO. “This unique and complementary combination, together with our significant presence in high-growth developing markets, will deliver consistent growth in the top tier of our peer group.
“At Kraft Foods, we’re hitting our sweet spot,” she added. “We’ve built a solid foundation for growth. By leveraging our scale, making strategic investments in marketing, sales and innovation and establishing a world-class cost structure, we will take our performance to the next level.”
Unique Combination of Snacks and Heritage Brands
With the acquisition of Cadbury earlier this year, Kraft Foods became the undisputed world leader in Snacks, a high-growth, high-margin category that now accounts for more than half of the company’s total revenue.
The company has an exceptional portfolio of global Snacks power brands – led by Milka and Cadbury chocolates, Oreo and LU biscuits and Trident gum – with leading market shares in every major region, a full pipeline of innovation and a clear opportunity to grow its presence in the point-of-purchase “hot zone.”
1
Kraft Foods now offers dozens of brands of chocolate, gum, candy, and snack-size cookies, crackers and nuts through multiple distribution channels, from traditional groceries to convenience stores.
Complementing the company’s Snacks portfolio are well-loved iconic regional and local brands in the beverage, grocery, cheese and convenient meals categories. Roughly 80 percent of these “heritage” brands hold No. 1 or No. 2 positions in their respective categories and are household names among consumers who tend to be extremely brand-loyal. They also carry high margins and generate strong cash flow.
Kraft Foods will continue to invest in marketing and innovation for the larger regional “power brands,” including Oscar Mayer meats, Jacobs coffee and Tang powdered beverages. At the same time, the company will cultivate local brands, such as A-1 steak sauce in North America, Dairylea cheese in the U.K. and Vegemite spreads in Australia, through flexible business models and nimble marketing.
This combination of global powerhouse snacks brands and iconic heritage brands provides Kraft Foods with a unique capability to invest profit from stable cash-generating businesses into high-margin categories and fast-growing Developing Markets.
Financial Transformation
The combination of Kraft Foods and Cadbury provides the scale necessary to grow sales and distribution in new and existing markets, delivering $1 billion in incremental revenue synergies – in addition to $750 million in cost synergies – by 2013.
More than half of Kraft Foods’ revenue now comes from markets outside of North America, such as Brazil, China, India and Mexico, where GDP and demand growth are strongest. Accordingly, by 2013, the proportion of business in Developing Markets will increase from a quarter of total revenue to roughly one-third.
Additional savings over the next three years from procurement, manufacturing and logistics will drive productivity gains in excess of 4 percent of cost of goods sold. These productivity gains, combined with flat overhead growth and pricing to offset input costs, will contribute to the expansion of gross margin.
“This combination of factors gives us great confidence that our company will generate organic revenue growth of 5 percent or more, margins in the mid- to high-teens and EPS growth of 9 to 11 percent,” said Tim McLevish, chief financial officer. “Delivering on these commitments will make Kraft Foods a sustainable top-tier performer in the global food industry.”
2
A live audio webcast of the presentations, including slides, is available in the Investor Center section of company’s web site, www.kraftfoodscompany.com, where it will be archived for one year following the webcast.
About Kraft Foods
Kraft Foods is building a global snacks powerhouse and an unrivaled portfolio of brands people love. With annual revenues of approximately $48 billion, the company is the world’s second largest food company, making delicious products for billions of consumers in approximately 170 countries. The portfolio includes 11 iconic brands with revenues exceeding $1 billion – Oreo, Nabisco and LU biscuits; Milka and Cadbury chocolates; Trident gum; Jacobs and Maxwell House coffees; Philadelphia cream cheeses; Kraft cheeses, dinners and dressings; and Oscar Mayer meats. Approximately 70 brands generate annual revenues of more than $100 million. Kraft Foods (www.kraftfoodscompany.com; NYSE: KFT) is a member of the Dow Jones Industrial Average, Standard & Poor’s 500, Dow Jones Sustainability Index and Ethibel Sustainability Index.
Forward-Looking Statements
This press release contains a number of forward-looking statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “goals,” “may,” “aim,” “will” and similar expressions are intended to identify our forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding revenue synergies, revenue growth, margins, earnings per share, expectations for top-tier performance, anticipated marketing and innovation, investments and savings and productivity gains. These forward-looking statements involve risks and uncertainties, many of which are beyond our control, and important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, increased competition, pricing actions, continued volatility of commodity prices, increased costs of sales, our failure to successfully integrate and recognize the synergies from our combination with Cadbury and tax law changes. For additional information on these and other factors that could affect our forward-looking statements, see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our registration statement on Form S-4, as amended from time to time, filed in connection with our Cadbury offer, our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.
# # #
3
 Hitting Our Sweet
Spot September 15, 2010
Kraft Foods
Exhibit 99.2 |
 Forward-looking
statements 2
This slide presentation contains a number of forward-looking statements. The words
“believe,” “expect,”
“anticipate,”
“optimistic,”
“intend,”
“plan,”
“goals,”
“may,”
“aim,”
“will”
and similar
expressions are intended to identify our forward-looking statements. Examples of
forward- looking statements include, but are not limited to, statements we make
regarding revenue growth, earnings per share, market share, portfolio mix, our
strategies, margins, cost savings and synergies, brand equities, new products, growth
strategies, future operating results, cash flows, pricing, anticipated marketing
campaigns, the Cadbury integration and return on invested capital. These
forward-looking statements involve risks and uncertainties, many of which are
beyond our control, and important factors that could cause actual results to differ materially
from those in the forward-looking statements include, but are not limited to,
increased competition, pricing actions, continued volatility in commodity costs,
increased costs of sales, our indebtedness and our ability to pay our indebtedness,
risks from operating globally, our failure
to
successfully
execute
in
emerging
markets,
our
failure
to
integrate
successfully
and
recognize the synergies from our combination with Cadbury and tax law changes. For
additional information on these and other factors that could affect our
forward-looking statements, see our risk factors, as they may be amended from time
to time, set forth in our filings with the SEC, including our registration statement on
Form S-4, as amended from time to time, filed in connection with our Cadbury offer,
our most recently filed Annual Report on Form 10-K and subsequent reports on Forms
10-Q and 8-K. We disclaim and do not undertake
any obligation to update or revise any forward-looking statement in this document, except
as required by applicable law or regulation. |
 Agenda
•
Hitting our sweet spot
•
Seizing our global snacks opportunity
–
Biscuits
–
Chocolate
–
Gum and Candy
•
Winning in each region
–
North America
–
Europe
–
Developing Markets
•
Transforming our financial performance |
 <show
video> 4 |
 Irene
Rosenfeld Chairman and CEO |
 |
 Kraft Foods in
2006 7
Grocery
~65%
ICC
~10%
Discounter/
Club/Mass/
Other
~25%
(1)
As reported originally in Kraft Foods 2006 Form 10-K filed with the SEC on March 1,
2007. Amounts have not been revised to reflect the current Kraft Foods structure
and accordingly are not in line with current presentation. Snacks
29%
Convenient
Meals
16%
Cheese
19%
Beverages
21%
Grocery
15%
Sector Mix
(1)
North
America
67%
Developing
Markets,
Oceania,
North Asia
13%
European
Union
20%
Geographic Mix
(1)
Channel Mix |
 Rebuilding the
foundation 8
2006
2010
“Turnaround”
•
Improve portfolio mix
•
Fix the base
•
Peer-average growth |
 Fixed the base
9
2006
2009
•
Inferior product quality,
limited advertising support
•
Centralized structure
•
Limited exposure to
outside ideas
•
Overhead cost disadvantage
•
80% of top leaders new to
company or position
•
Accountable Business Units
•
~2/3 of Base Kraft Foods
revenue rated preferred/superior
•
Base Kraft Foods A&C spending
+$600 million versus 2006
•
Base Kraft Foods overheads held
essentially flat as a percent of
net revenue since 2006 |
 Improved portfolio
mix 10
(European rights)
Acquisitions
Divestitures |
 Started to deliver
growth in line with peer averages
11
(1) Based on fiscal year. Source: Thomson First Call.
Operating EPS Growth
(1)
2006
2007
2008
2009
1
Danone
31.0%
1
Nestle
17.3%
1
ConAgra
32.9%
1
Hershey
15.4%
2
Nestle
15.0%
2
Coca-Cola
13.9%
2
Sara Lee
19.3%
2
General Mills
13.1%
3
PepsiCo
12.8%
3
PepsiCo
12.7%
3
Coca-Cola
16.7%
3
Heinz
10.3%
4
Coca-Cola
8.7%
4
Kellogg
10.0%
4
General Mills
10.7%
4
Kraft Foods
8.0%
5
Campbell
6.4%
5
Heinz
9.7%
5
Heinz
10.5%
5
Campbell
6.2%
6
Kellogg
6.4%
6
Campbell
7.1%
6
PepsiCo
8.9%
6
Kellogg
5.7%
7
Hershey
3.9%
7
Danone
6.2%
7
Kellogg
8.3%
7
PepsiCo
0.8%
8
Kraft Foods
3.2%
8
General Mills
6.0%
8
Campbell
7.2%
8
Nestle
0.7%
9
General Mills
2.7%
9
ConAgra
3.6%
9
Nestle
4.0%
9
Danone
(0.8)%
10
ConAgra
2.2%
10
Kraft Foods
(6.2)%
10
Kraft Foods
3.3%
10
Coca-Cola
(2.9)%
11
Heinz
(7.3)%
11
Hershey
(12.2)%
11
Danone
1.2%
11
Sara Lee
(15.2)%
12
Sara Lee
(20.1)%
12
Sara Lee
(30.3)%
12
Hershey
(9.6)%
12
ConAgra
(20.0)% |
 Cadbury was the
final piece of the puzzle 12
Fixed the Base
Delivering
Growth
Improved
Portfolio Mix |
 Today’s Kraft
Foods 13
(1)
2009 Pro Forma amounts are based on the acquisition of Cadbury and the divestiture of the
Pizza business. (2)
Biscuits and Confectionery were previously reported combined and known as Snacks. With
the Cadbury acquisition, the Biscuits and Confectionery sectors have been separately
broken out. The Biscuits sector primarily includes cookies, crackers and
nuts. The Confectionery sector includes chocolate, gum and candy. KFNA
49%
KFDM
26%
KFE
25%
Grocery
~55%
ICC
~20%
Discounter/
Club/Mass/
Other
~25%
Confectionery
(2)
29%
Convenient
Meals
10%
Cheese
14%
Beverages
17%
Grocery
8%
Biscuits
(2)
22% |
 Shifting from
Turnaround to Growth 14
2006
2010
Future
“Growth”
“Turnaround”
•
Improve portfolio mix
•
Drive power brands
•
Fix the base
•
World-class capabilities
•
Peer-average growth
•
Top-tier growth |
 A global snacks
powerhouse and unrivaled portfolio of brands people love
15 |
 Three strategies
drive growth 16
Delight Global
Snacks Consumers
Unleash the
Power of Our
Iconic Heritage
Brands
Create a Performance-Driven,
Values-Led Organization |
 •
Snacks is an advantaged
growth category
•
Snacks carry inherently higher
margins
•
We are ideally positioned to
capitalize on these advantages
Being a global snacks powerhouse accelerates
long-term growth
17
Delight Global
Snacks Consumers |
 Snacks is an
advantaged growth category 18
•
Aligned with consumer trends
–
On-the-go consumption
–
Simple indulgences
–
Health & Wellness
(Crackers, Gum) |
 Snacks is an
advantaged growth category 19
•
Aligned with consumer trends
•
Sales are expandable
–
Highly responsive to
merchandising
–
Multiple channels of distribution
–
Flexible pack sizes |
 Snacks is an
advantaged growth category 20
•
Aligned with consumer trends
•
Sales are expandable
•
Consumption in developing
markets likely to rise with GDP
growth
* Source: Euromonitor
Snacks kg per capita* |
 Snacks carry
inherently higher margins 21
% Private Label
(1)
Lower levels of private label
penetration
Gum
Packaged
Food
Global
12%
1%
4%
9%
U.S.
18%
<1%
1%
9%
Chocolate
Biscuits
*Source: For Gum, Chocolate and Biscuits, Euromonitor 2009. For Packaged Good,
Euromonitor 2008. |
 Snacks carry
inherently higher margins 22
% Revenue from ICC
Total
Confectionery
(1)
34%
KFNA
U.S.
(2)
5%
Lower levels of private label
penetration
Greater percentage of sales
in Immediate Consumption
Channels
(1) Source: IRI
(2) Source: Nielsen |
 Snacks carry
inherently higher margins 23
Lower levels of private label
penetration
Greater percentage of sales
in Immediate Consumption
Channels
Extensive distribution
infrastructure |
 Snacks carry
inherently higher margins 24
Lower levels of private label
penetration
Greater percentage of sales
in Immediate Consumption
Channels
Extensive distribution
infrastructure
Consistent global consumer
behavior enables marketing
and innovation scale |
 Today’s Kraft
Foods is uniquely positioned to capitalize on these advantages
25
Source: Euromonitor
2009
(1)
"Snacking" includes Sweet and Savory Snacks, Snack Bars, Confectionery,
Biscuits, Packaged/Industrial Cakes and Packaged/Industrial Pastries.
(2)
Includes Kraft Foods and Cadbury.
% Global
Share
Kraft Foods
(2)
10.1%
PepsiCo
7.6
Mars-Wrigley
6.1
Nestlé
3.9
Hershey
2.1
Ferraro
2.0
Kellogg
1.4
Share
of
Global
Snacking
(1) |
  Today’s Kraft
Foods is uniquely positioned to capitalize on these advantages
26
North
America
Europe
Latin
America
Asia
Pacific
Eastern
Europe
Middle East
& Africa
Global
Developing Markets
Market Share Position
Source: Euromonitor
2009, Kraft Foods analysis
Biscuits
#1
#1
#1
#1
#1
#1
#1
Chocolate
NM
#1
#2
#1
#1
#1
#1
Gum
#2
#2
#1
#3
#2
#1
#2
Candy
#3
#2
#2
#2
#1
#2
#1
Nuts
#1
NM
NM
NM
NM
NM
#1 |
 Skew investments
to Snacks Power Brands
Drive growth through global
innovation platforms
Become the world’s leader in
“Hot Zone”
Undisputed leader of global snacks
27
Delight Global
Snacks Consumers |
 Diversified
portfolio of Snacks Power Brands will drive sustainable growth
28
Mid-to-high single-digit top-line growth
Mid-teens margins
28
Biscuits & Nuts
Chocolate
Gum & Candy |
 Category-leading, “must-have”
brands for retail customers
High margin, strong cash flow
businesses
Enables scale advantage versus
competition
Iconic brands outside of Snacks are integral
to our strategy
29
Unleash the
Power of Our
Iconic Heritage
Brands |
 Invest
strategically in Regional Power Brands
Apply entrepreneurial mindset
to Local Brands
Driving success in two ways
30
Unleash the
Power of Our
Iconic Heritage
Brands |
 Invest
strategically in regional Power Brands 31
Mid
single-digit
top-line
growth
High-teens
margins
North
America
Developing
Markets
Europe |
 Apply
entrepreneurial mindset to Local Brands 32
North
America
Developing
Markets
Europe
Low
single-digit
top-line
growth
High-teens
margins |
 Snacks and Regional
Power Brands will drive top-tier organic revenue growth
33
Note: 2010 includes 12 months of Cadbury results. Snacks includes other Kraft
Foods Snacks businesses beyond core categories (e.g., Handi-Snacks, Marshmallows,
etc.). Snacks
Regional
Power Brands
Local Brands
Mid-to-High
Single Digit
Growth
Mid
Single Digit
Growth
Low
Single Digit
Growth
Organic Net
Revenue Growth
5%+ CAGR
75% of portfolio
90% of growth |
 Seizing growth
opportunities with world-class execution
Unmatched consumer
connections
Strong leadership, deep
bench
Business-relevant
societal issues
World-class cost
structure
34
Create a Performance-Driven,
Values-Led Organization |
 Business positioned
to benefit from a virtuous cycle
35
Set growth
objectives off a
solid base
Manage input costs by
maintaining strong
brand equities
Focus and prioritize
investments to drive
top-tier revenue
growth
Leverage scale to drive
productivity and reduce
overhead costs
Reinvest upside to
accelerate synergies,
drive future growth |
 Our strategies will
deliver sustainable, top-tier growth
Delight Global
Snacks Consumers
Unleash the
Power of Our
Iconic Heritage
Brands
Organic revenue
growth 5%+
Mid-
to
high-teens
margins
EPS growth
9-11%
Create a Performance-Driven,
Values-Led Organization
36 |
 Agenda
•
Hitting our sweet spot
•
Seizing our global snacks opportunity
–
Biscuits
–
Chocolate
–
Gum and Candy
•
Winning in each region
–
North America
–
Europe
–
Developing Markets
•
Transforming our financial performance
37 |
 Global Category
Teams (GCTs) accelerate Snacks growth
•
Approach based on experience and benchmarking
–
Best of Kraft Foods
–
Best of Cadbury
–
Lessons learned from benchmarking other companies
•
Cornerstone of competitive advantage
–
Facilitates sharing of best practices
–
Enables rapid deployment of ideas globally
38 |
 GCTs focused on
Power Brands, world-class capabilities and innovation
•
Deliver effective brand equity
management within a “glocal”
framework
39
Grow Snacks
Power Brands
Leverage Capabilities
Drive Innovation
Platforms
•
Drive best practices across
markets
•
Build the innovation pipeline
to drive growth |
 GCT structure key
to stepping up growth from new products
40
(1)
3-year trailing basis.
New
Product
Development
as
%
of
Total
Revenue
(1)
~8%
Base Kraft Foods
Pro Forma combined Kraft Foods and Cadbury
~9%
11% |
 Striking the right
balance between global and local
•
Business Units retain P&L authority
•
GCTs compensated based on global category growth
•
BUs and GCTs work together to drive “glocal”
behavior
41 |
 Together, GCTs and
Business Units will drive meaningful revenue synergies
•
Targeting $1 billion of revenue synergies over next
three years
–
~85% of revenue synergies to come from Snacks
–
Key driver of 5%+ organic net revenue growth
•
Multiple areas of opportunity
–
White space within newly expanded geographic footprint
–
Highly complementary sales and distribution capabilities
–
Brand extensions / packaging innovations
42 |
 |
 1
Mark Clouse
Senior Vice President and
Global Biscuits Category
Team Leader |
 Global Biscuits is a
$68B category with strong growth, especially in developing markets
2
Biscuits Retail Value
($ in billions)
CAGR
(Cst
Fx
'07-'09)
$17
$14
$8
$16
$13
$68
Asia Pacific
Latin America
CEEMA
W. Europe
N. America
Global
6%
2%
3%
8%
10%
9%
(1) Central and Eastern Europe, Middle East and Africa.
Source: Euromonitor
2009 based on fixed USD exchange rates
(1) |
 $9.1
$2.0
$1.4
$1.3
$1.0
$0.8 $3.8
19%
4%
3%
3%
2%
1%
9%
We’re the undisputed global leader in Biscuits,
more than the next five players combined
3
Total Biscuits
Net Revenues
Global Share
Key Brands
(2009 $ in billions)
Campbell
Kraft
Foods
Kellogg
United
Biscuit
PepsiCo
Nestlé
Retailer
Brands
Source: Euromonitor
2009 for global shares and Kraft Foods internal analysis
(1)
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
|
 4
Kraft Foods Biscuits Top Ten Country Share Performance
Kraft Foods
Leading Branded Competitor
USA
$4.1
1
45%
Kellogg
23%
France
1.2
1
27
United Biscuit
6
Canada
0.5
1
51
Dare
13
China
0.4
1
24
Ting Hsin
8
Venezuela
0.3
1
49
Puig
17
Italy
0.3
2
11
Barilla
36
Spain
0.2
1
28
Cuetara
10
Brazil
0.2
3
12
M. Dias Branco
SA
17
Belgium
0.2
1
37
United Biscuit
12
Czech Republic
0.2
1
50
IDC Holdings
12
Position
Share
Name
Share
Country
Revenue
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
Source: Nielsen
($ in billions)
(1)
No. 1 in 8 of Top 10 markets, representing
75% of global revenues |
 Biscuits will
continue to fuel Kraft Foods’ leadership in Snacks
•
Global scale as competitive advantage
•
Combined Snacking scale with Cadbury market access
and chocolate brands
•
Strong Health and Wellness bundles
•
Talent with “Biscuits in their blood”
5 |
 Focus on Power
Brands, world-class capabilities and innovation
Grow Snacks
Power Brands |
 “Glocal”: The best of local and global
Global Appeal
“Glocal”
Model
Global Impact
The Ritual: Twist, Lick, and Dunk
The Product
The Moment
9 Million Fans #1 Snack
Local Flavors
and Formats
Global
Innovation
Bundles
Over 100
Countries,
growing
over 15%
Global Package
and Product
Equities
Local IMC
and
Activation
Spotlight: Oreo
is the No. 1 cookie in
the world |
 Focus on Power
Brands, world-class capabilities and innovation
Leverage
Capabilities
Insights
Operations
Talent
R&D
Route-to
-Market
Grow Snacks
Power Brands |
 Building global
operations capabilities as a tangible competitive advantage
9
•
Key challenge is the complex and broad
range of offerings in Biscuits
•
Unmatched global scale enables unique
opportunities for Kraft Foods’
advantage
Develop efficient and sustainable
manufacturing technology
Global network to fast adapt quality
and cost savings processes
Scale investments to create efficiency
smaller players can not match
Operations |
 Focus on Power
Brands, world-class capabilities and innovation
Leverage
Capabilities
Insights
Operations
Talent
R&D
Route-to
-Market
Drive Innovation
Platforms
Wholesome
Snacks
Chocolate
Bakery
Sweet
Treats
Hunger
Satisfaction
Grow Snacks
Power Brands |
 Innovation
platforms allow us to win in multiple markets
Platforms
Growth Strategy
Focus Brands
•
Expand largest global cookie brands
to snacking icons
•
Provide compelling savory snacking
alternatives to address hunger
needs anytime and anywhere
•
Create unique wholesome bundles
with great taste and benefits for
adults and kids
•
Leverage iconic chocolate brands to
new chocolate and biscuit products
Sweet
Treats
Hunger
Satisfaction
Wholesome
Snacking
Chocolate
Bakery |
 Two Brands / One
Global Platform Harmonized Bundle
Harmonized Target and Communication
World-Class Activation
Spotlight: On-the-go crackers going global |
 Significant revenue
synergies 13
Route to Market
White Space
Opportunities
Choco-Bakery
Technology
White Space
Opportunities |
 Accelerating growth
to build ~$12B Biscuits business
14
$9.1B
~$12B
Biscuit Platforms –
Net Revenue Growth
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
|
 1
Jim Cali
Senior Vice President and
Global Gum and Candy
Category Team Leader |
 Global Gum and Candy
is a $74B category with strong growth, especially in gum
2
Gum and Candy Retail Value ($ billions)
$74
$15
$19
$11
$12
$17
Candy
Gum
Total
4%
6%
5%
2%
5%
3%
2%
5%
3%
8%
8%
8%
7%
9%
7%
4%
4%
4%
CAGR
(Cst
Fx
'06-'09)
Gum
Candy
(1) Central and Eastern Europe, Middle East and Africa.
Source: Euromonitor
2009 based on fixed USD exchange rates
(1) |
 Challenging for
leadership in gum and candy globally
3
Total Gum & Candy
Net Revenues
$5.2
$5.6
$3.1
$1.4
$0.8
$0.7
$0.6
Global Share
14%
14%
7%
3%
2%
2%
2%
Key Brands
Kraft
Foods
(1)
Mars-
Wrigley
Lotte
Hershey
Haribo
Nestlé
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
Source: Euromonitor
2009 for global shares and Kraft Foods internal analysis
(2009 $ in billions)
(1)
Perfetti
Van Melle |
 No. 1 or No. 2 in
all Top 10 gum markets, representing 75% of global revenue
4
Kraft Foods
USA
$0.7
2
37%
Mars-Wrigley
56%
Mexico
0.3
1
87%
Mars-Wrigley
3%
Brazil
0.3
1
71%
Arcor
11%
Japan
0.2
2
26%
Lotte
52%
France
0.2
1
50%
Mars-Wrigley
33%
Russia
0.1
2
21%
Mars-Wrigley
73%
Canada
0.1
2
45%
Mars-Wrigley
51%
Turkey
0.1
1
59%
Perfetti
VM
31%
Spain
0.1
1
44%
Mars-Wrigley
42%
Argentina
0.1
1
67%
Arcor
32%
Position
Share
Name
Share
Leading Branded Competitor
Revenue
(1)
Country
Kraft
Foods
Gum
Top
Ten
Country
Share
Performance
(2)
($ in billions)
(1)
2009 Pro Forma net revenues based on the Cadbury acquisition.
(2)
Latest 4-week market share based on local Nielsen / IRI reports, May/June 2010.
|
 Become the
world’s leading gum and candy company
•
Highly attractive category fundamentals
•
Leverage global scale and growth momentum
•
Strong Developing Market position and potential
•
Advantaged route-to-market scale with total Snacks
portfolio
5 |
 Focus on Power
Brands, world-class capabilities and innovation
6
Grow Snacks
Power Brands |
 Spotlight:
Trident –
World’s #1 brand,
growing double-digits
Brazil
Mexico
USA
Spain
2009 Revenues
$230
$180
$420
$100
Share
(1)
48%
46%
20%
44%
Chg (‘05-'09)
+910 bps
+1,570 bps
+570 bps
+250 bps
(1) Source: Nielsen / IRI
Permissible
Pleasure
Functional
Extension
Base
Renovation
Wellness
7 |
 Low Brand
Maturity: India
High Brand Maturity:
Mexico
Product centric advertising and
core flavor
Emotional communication and
innovation builds new occasion
Spotlight:
Halls
–
World’s
#1
brand,
growing
across
both high and low development markets
Net Revenue 20%+ July ‘10 YTD
Share
+510
bps
since
2007
(1)
Net Revenue up nearly 30% July ‘10 YTD
Share
+1,630
bps
since
2005
(1)
8
(1) Source: Nielsen |
 Focus on Power
Brands, world-class capabilities and innovation
9
Leverage
Capabilities
Grow Snacks
Power Brands
Insights
Operations
Talent
R&D
Route-to
-Market |
 Building global
insights as a tangible competitive advantage
10
Globally led insight platforms drive multi-market
learning, accelerate innovation and drive total category
Category Segmentation
…
20 markets globally
Consumer Portraits …
understand need states
and usage occasions
Iterative New Product
Design and Screening |
 Focus on Power
Brands, world-class capabilities and innovation
11
Leverage
Capabilities
Drive Innovation
Platforms
Grow Snacks
Power Brands
Oral Care
Wellness
Pleasure
Freshness
Halls
Insights
Operations
Talent
R&D
Route-to
-Market |
 Driving growth
across 7 Gum and Candy innovation platforms
12
Innovation
Platforms
Growth Strategy
Focus Brands
•
Grow share -
mouth freshness and confidence
•
Example : Dentyne Pure
(US), Fresh n’
Clean
(EU)
•
Grow occasions -
mouth and cosmetic care
•
Example: Trident White, Trident Extra Care
•
Create new Gum occasions and adult penetration
•
Example: Trident Vitality
•
Capture greater share of “sweet”
occasions
•
Example: Trident Layers, Stride Shift, Chiclets
•
Increase occasions supporting global position
•
Example: Halls Aqua
•
Capture affordable indulgence moments
•
Example: Cadbury Eclairs
Pleasure /
Sweet Snacking
Freshness
Oral Care
Wellness
Halls
Indulgent
Candy |
 13
Driving Advantage
Impact
Unlock New Need State
U.S. Launch Q1 2011
Ingredient Technology
U.S. Launch Q2 2010
Stride
Growth +200 bps
Rollout 2010 -11
New Format
U.S. Launch Q4 2009
Year 1 sales $130 MM
Rollout 2011
Consumer Insights Provide Base for Innovation |
 U.S. Market
Share (1)
(1)
Includes food, drug, mass merchants (excluding Wal-Mart) and convenience stores.
Source: IRI
Innovation supported 10 share points of
growth in U.S. Gum category
14
25
27
29
31
33
35
37
39
2004
2005
2006
2007
2008
2009
H1 2010
Trident
is
growth driver
Successful
platform
product launch
by competitor
Trident
Layers,
Stride Shift
&
Mystery
Stride
launch |
 Significant revenue
synergies 15
Scale to strengthen
position vs. competition
Route-to-Market:
Leverage Cadbury
“Hot Zone”
expertise |
 Accelerate growth
to build $6.5 billion gum and candy business
16
$5.2B
~$6.5B
Gum and Candy Platforms –
Net Revenue Growth
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
(1) |
 1
Tim Cofer
Senior Vice President and
Global Chocolate Category
Team Leader |
 Global Chocolate is
an $90B category with strong growth, especially in developing markets
2
Chocolate Retail Value ($ in billions)
CAGR
(Cst
Fx
'07-'09)
5%
3%
3%
12%
13%
5%
(1) Central and Eastern Europe, Middle East and Africa.
Source: Euromonitor
2009 based on fixed USD exchange rates
(1) |
 We are a global
leader in Chocolate 3
Total Chocolate
Net Revenues
$8.2
$8.0
$6.4
$3.9
$3.8
$2.2
$2.0
Global Share
15%
15%
13%
7%
7%
3%
4%
Key Brands
Kraft
Foods
(1)
Mars-
Wrigley
Nestlé
Ferrero
Lindt
Hershey
Retailer
Brands
(2009 $ in billions)
(1)
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
Source: Euromonitor
2009 for global shares and Kraft Foods internal analysis |
 No. 1 or No. 2 in
all Top 10 markets, representing 60% of global revenue
4
Kraft
Foods
Chocolate
Top
Ten
Country
Share
Performance
United Kingdom
$1.6
1
36%
Mars-Wrigley
24%
Germany
0.6
2
(2)
12%
Ferrero
21%
Australia
0.6
1
49%
Mars-Wrigley
17%
Brazil
0.6
2
36%
Nestlé
(3)
45%
Russia
0.4
2
20%
Mars-Wrigley
22%
France
0.4
2
16%
Ferrero
22%
Canada
0.3
2
18%
Nestlé
20%
India
0.2
1
70%
Nestlé
25%
Ireland
0.2
1
46%
Mars-Wrigley
20%
South Africa
0.2
1
45%
Nestlé
27%
Position
Share
Kraft Foods
Name
Share
Leading Branded Competitor
Country
Revenue
(1)
(1)
2009 Pro forma net revenues based on the Cadbury acquisition.
(2)
Ranked #2 excluding Retailer brands.
(3)
Includes Garoto
business.
Source: Nielsen 2009
($ in billions) |
 Become the
world’s most loved, fastest-growing chocolate company
•
Global scale as competitive advantage
•
Strong emerging market position
•
“Fabric of the nation”
power brands
•
Strong innovation pipeline, RD&Q and marketing
capabilities
•
Route-to-market scale of total Snacks
•
Talent with “chocolate in their veins”
5 |
 Focus on Power
Brands, world-class capabilities and innovation
6 |
 Spotlight:
Milka is a proven growth engine, up
46% to $1.6 billion in last 3 years
7
Recent Innovation
Flowpack
Big Foot
Iconic Brand Image
Premium
Say it with Milka
Brand Values
Innocence,
Naturalness, Joyful
and Confident |
 Spotlight:
Cadbury is a Power Brand beyond compare
Source: Nielsen
MAT June 2010 (Aus, India, RSA, IE), MAT July (UK)
Country
Share
Market
Position
•
British icon beyond compare; Top 3 Consumer “Power Brand”
status above BBC, Facebook, Marks & Spencer and Coca-Cola
•
Continued robust growth +5% (latest 52 Weeks)
34%
#1
47%
#1
•
Australia’s most trusted brand again in 2009 (Reader’s Digest)
70%
#1
•
Explosive growth continues +28% (latest 52 weeks)
•
3 out of every 4 chocolate bars purchased are Cadbury
44%
#1
•
Voted #1 Favorite Confectionery brand 3 years running
(2007-2009 Sunday Times)
Brand Comments
8
43%
#1
•
Top 10 Consumer Brand in Ireland in 2010 (Irish Times) |
 Focus on Power
Brands, world-class capabilities and innovation
9
Leverage
Capabilities
Grow Snacks
Power Brands
Insights
Operations
Talent
R&D
Route-to
-Market |
 10
Permissibility
Wafer
Aeration
Fewer Calories
Unique Tastes &
Textures
Multi-Texture
Multi-Flavour
Fusions
Magical Experience
Modernize
Core Classics
Special Indulgence
Modern Convenience
Best Chocolate
New Formats
Bitesize
Pocket Pack
Choco-Bakery
Building global R&D capabilities as a tangible
competitive advantage |
 Focus on Power
Brands, world-class capabilities and innovation
11
Leverage
Capabilities
Drive Innovation
Platforms
Grow Snacks
Power Brands
Insights
Operations
Talent
R&D
Route-to
-Market
Sharing &
Bite Size
Gifting &
Seasonals
Value-Added
Tablets
Countlines
Affordability |
 Tablets
Countlines
Sharing &
Bite Size
Gifting &
Seasonals
Affordability
12
Platforms
Growth Strategy
•
Strengthen leadership position
•
Drive category growth via expansion into
new textures, occasions and segments
•
Rapidly expand across markets, brands and
more sharable formats
•
Leverage our strong brands and advantaged
RTM capability across new geographies
•
Expand consumption in high growth
developing markets
•
Offer iconic brands at more affordable prices
•
Bring novelty to the seasons
•
Re-ignite locally loved year-round gifting brands
Innovation platforms allow us to win in multiple
markets and counter competitive threats |
 Rejuvenate
the Core
More Special
Lighter Feel
Break the rules in packaging
Modernise and extend
through new formats
More indulgent,
multi-layer, mousse texture
Lighter textures
More generous inclusions
Kraft Foods continues to extend leadership in
Tablets via consistent innovation success
35g
13 |
 Significant revenue
synergies 14
Premium
Expansion
Gifting
Fast-Adapts
Tablets
Fast-Adapts
Countlines
Expansion
Bite Size
Expansion
Affordability
Expansion |
 Accelerate growth
to build $10 billion global chocolate business
15
$8.2B
$10B+
Chocolate Platforms –
Net Revenue Growth
(1)
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
|
 1
Irene Rosenfeld
Chairman and CEO |
 Agenda
•
Hitting our sweet spot
•
Seizing our global snacks opportunity
–
Biscuits
–
Chocolate
–
Gum and Candy
•
Winning in each region
–
North America
–
Europe
–
Developing Markets
•
Transforming our financial performance
2 |
 Winning in each
region •
Focus on Power Brands to drive growth
•
Local Brands provide scale and
cash flow
•
Strengthen capabilities in both grocery
and ICC channels
•
Leverage consumer insights for
collaborative marketing programs
•
Drive End-to-End productivity
•
Manage overheads
3 |
 Portfolio
composition varies by region Category
Portfolio
Composition
2009 Pro
Forma
(1)
Europe
$11.9B Revenue
Snacks
~66%
Local
~18%
Regional
~16%
North
America
$23.6B Revenue
Snacks
~32%
Local
~33%
Regional
~36%
Developing
Markets
$12.6B Revenue
Snacks
~70%
Local
~18%
Regional
~12%
4
(1) 2009 Pro Forma amounts are based on the Cadbury acquisition and the divestiture of
the Pizza business. |
 1
Tony Vernon
Executive Vice President and
President, Kraft Foods
North America |
 Beverages
15%
Biscuits/Nuts
24%
Confectionery
8%
Grocery
13%
Convenient
Meals
19%
Cheese
21%
Improved portfolio mix
2
Grocery
19%
KFNA 2006
(1)
2006 Net Revenues
$23.1 billion
KFNA Today
(2)
2009 Net Revenues
$23.6 billion
Beverages
14%
Snacks
24%
Convenient
Meals
22%
Cheese
21%
Snacks: 32%
(1)
As originally reported in Kraft Foods 2006 Form 10-K filed with the SEC on March 1,
2007. Amounts have not been revised to reflect the current kraft Foods structure
and accordingly are not in line with current presentation. (2)
2009 Pro Forma amounts are based on the acquisition of Cadbury and the divestiture of the
Pizza business. |
 Snacks
Convenient
Meals
Cheese
Beverages
3
Grocery
Unrivaled collection of iconic brands |
 Strong positions in
snack categories 4
Cookies
#1
45%
2.7x
2%
Crackers
#1
46%
1.6x
9%
Gum
#2
35%
0.6x
4%
Nuts
#1
27%
4.5x
37%
Position
Private
Label
% Share
Relative to
Nearest
Branded
Competitor
Kraft Foods
% Share
Source: Nielsen |
 Strong market shares
with below-average private label exposure
5
Beverages
•
Powdered Soft Drinks
#1
50%
7.0x
23%
•
Aseptic
#1
65%
4.6x
2%
•
Coffee
#2
27%
0.8x
10%
Cheese
•
Cream Cheese
#1
66%
66.1x
30%
•
Processed Slices
#1
53%
5.7x
31%
•
Natural Cheese
#1
18%
2.9x
45%
Convenient Meals
•
Lunch Combinations
#1
88%
7.2x
0%
•
Cold Cuts
#1
35%
2.6x
16%
•
Hot Dogs
#2
22%
0.9x
5%
•
Bacon
#1
25%
1.6x
22%
Grocery
•
Dinners
#1
82%
21.4x
14%
•
Dry Packaged Desserts
#1
80%
32.1x
12%
•
Refrigerated Desserts
#1
62%
3.5x
6%
•
Spoonable
Dressings
#2
38%
0.9x
11%
•
Salad Dressings
#1
23%
1.2x
12%
Position
Private
Label
% Share
Relative to
Nearest
Branded
Competitor
Kraft
Foods
% Share
Source: Nielsen |
 •
GDP slowly
rebounding
•
Recovery remains
jobless
•
Commodities
expected to rise
•
Consumer
confidence remains
low
•
Continued focus on
value
•
Away-from-home
traffic improving,
but below historical
levels
•
“Loss leaders”
used
to drive traffic /
differentiation
•
Recent promotional
tactics creating
market disruption
•
Value-focused
retailers winning
6
Environment will remain difficult
Economy
Consumer
Customer |
 Solid operating
momentum … but work to do
•
Solid base volume trend improvements
–
Product quality advantages
–
Advertising improvements …
both quality and spending levels
•
Organization refocused from category managers to
accountable
brand
advocates
•
Heightened cost management focus delivering results
•
Clear room for improvement on revenue trends
–
Broaden advertising improvements across Power Brands
–
More entrepreneurial marketing of our Local Brands
–
Focus innovation against bigger ideas with more support
7 |
 Profitably grow our
brands 8
•
20 Power Brands
•
20 Local Brands
•
Win with people
Focus Resources |
 40 Brands drive
North America 9
U.S. Retail Portfolio
2010E -
Percentage of Net Revenue and Operating Income
67%
20%
13%
Power
Brands
Local
Brands
Rest of
Portfolio
67%
23%
10%
Power
Brands
Local
Brands
Rest of
Portfolio
Net Revenue
Operating Income |
 Snacks
Convenient
Meals
Cheese
Beverages
10
Grocery
Marketing & Innovation focused on
20 Power Brands |
 New
Advertising (1) August 2010 YTD base dollar volume growth versus full year
2009. Q2-Q3 ‘09
Q4 ‘09
Q1 ‘10
Q2 ‘10
To Come
H2 ‘10
11
15 new Power Brand advertising campaigns
in the last year
Power
Brand
Base
Volume
trend
improvement
200+
bps
(1) |
 Big innovation
focused on Power Brands 12
Oscar Mayer Deli Carved
•
Launching Q3 ‘10
•
Builds on Deli Shaved
platform …
with next
generation quality in
packaged meat
•
Very favorable retailer
response / distribution
•
Extendable platform
Jell-O
Mousse
•
Launched Q4 ‘09
•
New consumer usage
occasion: “Permissible
Indulgence”
•
Top SKU ranked #1 in
category velocity
Ritz Crackerfuls
•
Launched Q2 ‘09
•
Targets significant
‘meal bridge’
consumer need
•
Strong repeat and
incrementality
•
Extendable platform |
 13
|
 14
•
“Open For Fun”
campaign
•
Brand contemporization
•
Marketing spending +25% August
YTD
•
Crackerfuls
innovation expanding
user base
•
Strong base dollar volume
results
(1)
August YTD +13%
•
August YTD revenues +12%
Ritz
Crackers marketing
(1) Nielsen, August 21, 2010. |
 15
•
Unifying brand campaign across
categories levering scale
•
“It doesn’t get better than this”
campaign
•
Marketing spending +20% August
YTD
•
Deli
Carved
innovation
driving
quality trade-up
•
Solid
base
dollar
volume
results
(1)
August YTD +2%
•
August YTD revenues +4%
Oscar
Mayer
marketing
(1) Nielsen, August 21, 2010.
— |
 Capri
Sun
marketing
16
•
Complementary “I can respect
that”
Mom and “Disrespectoids”
Kid campaigns
•
Integrated Sustainability
marketing with Pouch Brigades
•
Marketing halo working for subline
innovations (Sunrise and Roaring
Waters)
•
Strong
base
dollar
volume
results
(1)
August YTD +8%
•
August YTD revenues +11%
(1) Nielsen, August 21, 2010. |
 Kraft/Velveeta
Mac & Cheese marketing
17
•
“You Know You Love It”
Kraft
campaign
•
Integrated ‘Noodle’
marketing:
Iconic brand at Iconic places
•
Focused Velveeta
“Ultimate Get
Together”
campaign
•
Marketing spending +45% August
YTD
•
Kraft
Homestyle
innovation
driving
quality trade-up
•
Strong
base
dollar
volume
(1)
August YTD +5%
•
August YTD revenues + 5%
(1) Nielsen, August 21, 2010.
— |
 Philadelphia
Cream Cheese marketing
18
•
“Spread a little Philly”
campaign
•
Broadened recipe usage campaign
•
Integrated plan with significant
digital elements (e.g., Paula Dean)
•
Marketing spending +30% August
YTD
•
Usage-based innovation pipeline
•
Solid base dollar volume results
(1)
August YTD +2%
•
August YTD revenues +5%
(1) Nielsen, August 21, 2010.
— |
 Increased Power
Brand advertising spending driving mid-single digit growth
19
Mid-
Single
Digit
Growth
Mid-to-
High
Teens
Margins
Power Brand A&C Spending
(% of Net Revenue)
~6.5%
8%-9%
12 of 20
brands >10%
2010E
2013E |
 Snacks
Convenient
Meals
Cheese
Beverages
20
Grocery
20 Local Brands managed smartly for
profitable growth |
 Entrepreneurial
Local Brands approach 21
•
Focused “one-idea”
marketing
•
Non-traditional media
•
Scale-enabled customer relationship
marketing
•
Focused Wall-to-Wall Sales utilization
•
High-potential brand managers with
ownership, entrepreneurial spirit
Low
Single
Digit
Growth
High
Teens
Margins |
 Jet Puffed
Marshmallows marketing 22
•
“One idea”
marketing focus on S’mores
•
Branded partnership pooling resources
•
Traditional and non-traditional vehicles
•
Bundled marketing in Kraft Food & Family
•
Wall-To-Wall in-store leverage for displays
•
Trajectory-changing impact |
 23
Show ad spots for:
Premium Crackers (Canada)
Stride
*
* |
 24
Winning with our people in North America
•
Performance-driven, values-led culture
•
Strong, diverse talent base …
but supplementing with
proven, external leaders
•
Broader best practice sharing and implementation
•
Significantly reduced internal processes
•
Marketers focused on Marketing!
•
Sales focused on Customers!
•
Grow faster than market, key competitors |
 Profitably grow our
brands 25
Focus Resources
Leverage Sales
•
20 Power Brands
•
20 Local Brands
•
Win with people
•
Win in store
•
Customer team
transformation
•
Trade spending
efficiency |
 Win every account,
every store, every household, your Mom
26
Grocery / Wall-to-Wall
ICC / Hot Zone
To Date
•
Coverage in 16,600 stores
•
Automated and customer-
specific in-store agenda
•
Margin accretive investment
based on better merchandising
Refinements to Come
•
Top-down in-store agenda
prioritization
•
Power SKU distribution focus
•
Greater linkage of performance
and compensation
•
Significant convenience store
synergies
•
“Hot Zone”
opportunities
•
Strong channel margins
•
Best practices from Cadbury
and around the world |
 Customer team
transformation •
Further customer segmentation
•
Centralization of administrative tasks
•
Aligned “One Number”
planning approach
27
Outcome: Increased Effectiveness
AND
Lower Cost |
 Trade spending
efficiencies 28
•
Rolled out new system and
tools
•
Driving efficiency:
Optimizing low return
events
Price-deal realignments to
reduce promoted price
variability
•
Changing sales incentive to
improve customer team
alignment with brands
•
Reinvesting efficiencies into
advertising
Trade Spending as
% of Gross Revenue
2010E
2013E
—
— |
 Profitably grow our
brands 29
Focus Resources
Leverage Sales
Expand Margins
•
20 Power Brands
•
20 Local Brands
•
Win with people
•
Store coverage
optimization
•
Customer team
transformation
•
Trade spending
efficiency
•
Productivity step-up
•
Zero overhead
growth
•
Cost synergies |
 Cadbury integration
update 30
•
Integration progressing very well
•
Base business strong
–
H1’10 revenues up mid-single digits
–
H1’10 YTD U.S. gum share +2.4 pp
–
U.S. gum share up 8+ pp in 6 years
•
Distinct innovation culture
–
Trident Layers
–
Stride Mega Mystery
–
Dentyne Pure
•
Bringing innovation mindset and
processes back to base Kraft Foods
businesses
•
Retained key management /
marketers |
 Profitably grow our
brands •
“Big marketing”
on our Power
Brands
•
Entrepreneurial management
of our Local Brands
•
Leverage Sales scale
•
Relentless focus on cost
improvements across the
business
31
Organic
Revenue
growth of
3%-4%
High-teens
Operating
Income
Margins |
 1
Michael Clarke
Executive Vice President and
President, Kraft Foods Europe |
 Beverages
40%
Snacks
38%
Grocery
4%
Convenient
Meals
4%
Cheese
14%
Today’s Kraft Foods Europe
2
2006 Net Revenues
$6.7 billion
2009 Net Revenues
$11.9 billion
Snacks: 67%
Beverages
20%
Biscuits
20%
Chocolate
37%
Gum &
Candy
10%
Cheese
8%
KFE 2006
(1)
KFE Today
(2)
Other
5%
(1)
As originally reported in Kraft Foods 2006 Form 10-K filed with the SEC on March 1,
2007. Amounts have not been revised to reflect the current kraft Foods structure
and accordingly are not in line with current presentation. (2)
2009 Pro Forma amounts are based on the acquisition of Cadbury.
|
 Chocolate
Biscuits
Gum &
Candy
Cheese &
Grocery
Coffee
3
An unrivaled collection of
global, regional and local brands |
 4
Source: Nielsen 2009, shares in categories in countries in which Kraft Foods
competes Leadership positions in key categories …
Chocolate
#1
20
1.2
Biscuits
#1
15
1.6
Gum & Candy
#1
30
1.5
Coffee
#1
22
1.4
Cream Cheese
#1
40
5.4
Category
Position
Kraft
Foods
Share%
Relative to
Nearest
Branded
Competitor |
 …
and #1 in Snacks
5
Company
Share in Snacks
(1)
Kraft Foods
14%
Mars-Wrigley
8%
Ferrero
6%
Nestlé
5%
PepsiCo
5%
(1)
Source: Euromonitor 2009. Total $89 billion Snacking market for Western Europe
(all markets whether KFE competes or not) includes Confectionery (Chocolate, Gum, Candy), Biscuits, Snack Bars and
Sweet / Savory Snacks. |
 Transformed
operations •
Established pan-European category business model
•
Focusing on priority brands and opportunities
•
Driving savings through End-to-End Productivity
•
Reducing overhead costs
6 |
 2.5
pp
(2)
Top-line results are improving …
7
Base Kraft Foods Europe
Organic
Net
Revenue
Growth
(1)
(0.8)%
(0.3)%
Q3’09
Q4’09
Q1’10
Q2’10
2.5%
5.2%
0.4%
Q2’09
H1 2010
3.9%
(3)
(1)
Reported net revenues for each period were the following: Q2’09, (17.4)%;
Q3’09, (11.5)%; Q4’09, 8.0%; Q1’10, 40.5%; Q2’10, 34.1%. See
GAAP to Non-GAAP Reconciliation at the end of this presentation.
(2)
Favorable impact of an accounting calendar change for certain biscuits operations.
(3)
The accounting calendar change had a favorable impact to H1 2010 of 1.3 pp.
|
 …
and margins continue to expand
8
Base
Kraft
Foods
Europe
Operating
Income
Margin
Q3’08
Q3’09
Q4’08
Q4’09
Q1’09
Q1’10
Q2’09
Q2’10
(1)
(1)
(2)
(2)
(2)(3)
(2)(3)
(2)
8.9%
9.2%
7.6%
10.0%
10.2%
8.2%
10.6%
12.2%
(1)
Reported Operating Income Margins were the following: 4.9% Q3’08; and (6.7)%
Q4’08. See GAAP to Non-GAAP Reconciliation at the end of this
presentation. (2)
Operating Income Margins were negatively impacted by expenses incurred in support of cost
savings initiatives, resulting in the following percentage point impacts: (0.0)pp
in Q1’09; (1.5)pp in Q2’09 ; (0.4)pp in Q3’09, (3.4)pp in Q4’09;
(0.3)pp in Q1’10; and (0.7)pp in Q2’10. (3)
Reported Operating Income Margins were 10.7% in Q1’10 and 12.0% in Q2’10. See
GAAP to Non-GAAP Reconciliation at the end of this presentation.
|
 Economy
Customer
•
GDP back to growth
1.0% to 1.5%
Pre-Recession: 2.5%
•
High unemployment
9% to 10%
Pre-Recession: 7.2%
•
EU financial crisis and
Euro devaluation
•
Commodities remain
at a high level
•
Consumer confidence
slowly recovering
•
Continued consumer
focus on:
Convenience
Health & Wellness
Sustainability
•
Trend turnaround
Trading up
Out-of-home
consumption
•
Retailer consolidation
continues
•
Retailer brands with
30% share, part of
consumer repertoire
•
Discounter channel
with 17%+ share,
continues to grow
•
Retailers recognize
need for greater
differentiation
9
Consumer
Positioned to succeed despite a slow
economic recovery
—
—
—
—
—
—
—
—
— |
 Focus
Resources Europe’s favorite Snacking company
10
•
15 Power Brands
•
Snacks platforms
•
Proprietary
propositions in
Coffee and Cheese
•
Local Brands
•
Win with people |
 Chocolate
Biscuits
Gum &
Candy
Cheese &
Grocery
Coffee
11
Focus resources on 15 Power Brands,
10 of which are in Snacks |
 Expand from pure
Chocolate to Snacking 12
•
Power Brand focus
•
Differentiate packaging and
integrated marketing
communications
•
Leverage proprietary
technologies to drive new
product growth
•
Capture revenue synergies |
 Reframe Biscuits
into Snacking 13
•
Power Brand focus
•
Differentiate local heritage
brands, leveraging LU umbrella
brand
•
Accelerate global and regional
growth platforms
•
Capture white space
opportunities
Choco-Bakery |
 Grow Gum and expand
Halls 14
•
Power Brand focus
•
Grow
Gum
via
360
o
communication and innovation
•
Expand usage of Halls
via
range relaunch
and new
products
•
Leverage Kraft Foods scale in
snacks |
 •
Power Brands focus
•
Expand Tassimo
in on-demand
•
Reframe Soluble and strengthen
Roast & Ground
•
Focus on Philadelphia
•
Leverage versatility strategy
and proprietary propositions
15
Leverage proprietary propositions in
Coffee and Cheese
Coffee
Cheese & Grocery |
 16
Net Revenue in H1’10 up
mid-single digits
+200 bps Gross Margin
•
Market leader in all segments
•
Leverage EU growth platforms
& co-branding opportunities
•
Entrepreneurial spirit
Net Revenue in H1’10 up
mid-single digits
+160 bps Gross Margin
•
Market leader in Italy, UK, Spain
•
Common asset base/platforms
•
Invest in proprietary
proposition
H1 2010
H1 2010
Local Brands contributing to growth
Nordic Chocolate
Kraft Process Cheese |
 Win with our
people •
Build performance-driven, value-led culture
–
Pride in our brands
–
External focus
–
Winning spirit
•
Leverage change management capability to integrate
and restructure
•
Strong, diverse talent
•
Recognized leader in Sales and Marketing
17 |
 Leverage
Sales Focus Resources
Europe’s favorite Snacking company
18
•
15 Power Brands
•
Snacks platforms
•
Proprietary
propositions in
Coffee and Cheese
•
Local Brands
•
Win with people
•
Drive availability
•
Shopper insights
•
Merchandising
•
Customer
collaboration |
 Leverage our Sales
strength •
Drive availability
–
Leverage “best of both”
to win in store
and Instant Consumption
–
Invest in feet on the street
•
Leverage shopper insights
•
Win at point of sale
–
Own events, cross category promotions
–
Hot Zone, multi-touch points
•
Effective customer collaboration
–
Joint business planning
–
Tailored initiatives
19 |
 Expand
Margins Leverage Sales
Focus Resources
Europe’s favorite Snacking company
20
•
15 Power Brands
•
Snacks platforms
•
Proprietary
propositions in
Coffee and Cheese
•
Local Brands
•
Win with people
•
Drive availability
•
Shopper insights
•
Merchandising
•
Customer
collaboration
•
Mix improvement
•
End-to-End
productivity
savings
•
Reduce overheads
•
Integration
synergies |
 Reduce costs and
expand margins •
Category model driving mix
–
Resource allocation behind power brands
–
Geographic / portfolio mix improvement
•
End-to-End productivity savings
–
Targeting COGS productivity of 4%
–
Procurement savings step-up (SAVOR)
–
Supply chain re-configuration
•
Continued negative overhead growth
–
Functional transformation programs
–
Country restructuring
•
Synergies from LU & Cadbury acquisitions
21 |
 Driving growth,
margins as Europe’s favorite Snacking company
•
Unrivaled portfolio,
#1 position in Snacks
•
Strategies are working,
building momentum
•
Growth roadmap defined
•
Significant synergy potential
22
Organic
Revenue
growth of
2%-3%
Mid-teens
Operating
Income
Margins |
 1
Sanjay Khosla
Executive Vice President and
President, Kraft Foods
Developing Markets |
 Three years ago,
laid out plan to turn around KFDM to sustainable long-term growth
•
Winning through focus strategy has three pillars:
–
5 Categories, 10 Power Brands
and 10 Priority Markets (5-10-10)
–
Win locally, leverage globally
–
Build depth of international talent
2 |
 2006-2009
CAGR Organic Net Revenue:
(1)
+13%
Operating Income:
+24%
KFDM has delivered excellent results
3
(1)
Reported Net Revenue 2006-2009 CAGR was 16%. See GAAP to Non-GAAP
Reconciliation at the end of this presentation. |
 Focus on Power
Brands
2006-2009 CAGR
nearly 20%
Reduce
Costs
Improve Gross
Profit Margins
Increase A&C
Invest in
Sales
Moved KFDM to a virtuous cycle
4 |
 •
Growing Asia-Pacific
and Latin America
markets
•
Slow recovery in
Central and Eastern
Europe
•
Increasing
purchasing power
•
Rising demand for
on-the-go snacks
•
Both Modern and
Traditional Trade
are growing
5
Favorable environment provides
further opportunity
Economy
Consumer
Customer |
 Focus Resources
Win in Developing Markets through
Snacks leadership
6
•
5-10-10
5 Categories
10 Power Brands
10 Priority
Markets |
 2009 Net
Revenues $12.6 billion
Biscuits
19%
Chocolate
29%
Gum &
Candy
21%
Coffee
9%
Snacks: 69%
Powdered
Beverages
8%
All Other
14%
Today’s Kraft Foods Developing Markets
7
KFDM 2006
(1)
Pro Forma amounts are based on the acquisition of Cadbury.
(2)
Includes certain ready-to-drink beverages that have since been divested or
discontinued. Snacks
44%
Coffee
12%
All Other
27%
2006 Net Revenues
$4.6 billion
Powdered
Beverages
17%
(2)
KFDM Today
(1) |
 8
Chocolate
Biscuits
Gum &
Candy
Powdered
Beverages
Coffee
10 Power Brands will grow strong
double-digit with high gross margins |
 •
Top 10 Priority Markets:
•
Priority Markets drive ~70% of total KFDM growth
•
BRICM to grow strong double digit, delivering ~50%
of KFDM growth
–
Australia
–
Brazil
–
China
–
India
–
Indonesia
–
Mexico
–
Poland
–
Russia
–
South Africa
–
Ukraine
Focus on ten priority markets
9 |
 Terrific geographic
fit with Cadbury 10
Legacy Cadbury
Legacy Kraft Foods
% 2009 Net Revenues by Country
$ in
mil.
(1)
$525
$1,050
$400
$500
$750
$1,500
$425
$400
(1) 2009 Pro Forma net revenues based on the Cadbury acquisition.
|
 Brazil
11
(1)
2009 Pro Forma based on the Cadbury acquisition.
•
2009 Net Revenue:
Pro Forma Combined
(1)
: $1.5B
Base Kraft Foods '06-'09 CAGR
up double-digits
•
Strong leadership position in
Gum and Powdered Beverages
•
#1 brands in all priority
categories
•
H1 2010 revenue up
high-teens
(1)
Key Brands |
 China
12
•
2009 Net Revenue:
Pro Forma Combined
(1)
: $0.5B
Base Kraft Foods '06-'09 CAGR
up low-teens
•
Strong leadership position in
Biscuits
•
H1 2010 revenue up 20%+
(1)
Key Brands
(1)
2009 Pro Forma based on the Cadbury acquisition. |
 India
13
•
2009 Net Revenue:
Pro Forma Combined
(1)
: $0.4B
•
Strong leadership position
in Chocolate
•
H1 2010 revenue up
nearly 25%
(1)
•
Strong route-to-market
capability
Key Brands
(1)
2009 Pro Forma based on the Cadbury acquisition. |
 Win Locally,
Leverage Globally Build Depth of International Talent
Expand Margins
Leverage Sales
Focus Resources
Win in Developing Markets through
Snacks Leadership
14
Empower local
business units
Drive best sales
practices
•
5-10-10
5 Categories
10 Power Brands
10 Priority
Markets
Drive productivity
Reduce overhead
growth |
 Context
•
Oreo
flat in early 2000’s
•
Redefined business model based on key consumer insights
Results
•
Net revenue CAGR 2006-2009 of 30%+
•
H1 2010 revenue up 35%+
•
Gross Profit Margin well above average
New Products
Building
the Base
Spotlight: Oreo
–
World’s #1 cookie delivers
sustained high growth
15 |
 Context
•
2008: Brand not growing
•
2009: “Back to Basics”
with broadened competitive frame
Product quality, flavor innovation, Kids “Movement”, new package
formats, in-store activation
Broader frame of cold beverages, including water
Results
•
Revenue grew nearly 30% in 2009 to ~$700MM
•
H1 2010 revenue up nearly 30%
Spotlight: Tang
–
“Back to Basics”
focus
drives total turnaround
16 |
 Organization
& Infrastructure
Invest to drive best sales practices across
markets
•
Leverage combined company route-to-market
strengths
•
Expand distribution
•
Sales Executive Teams
17 |
 Build depth of
international talent •
Moved with tremendous speed & quality in
integrating organization
•
Align top talent to key categories, brands, markets
•
Drive towards a world-class diverse and
inclusive organization
18 |
 Driving growth and
margins as Developing Markets’
favorite snacking company
•
5-10-10 strategy has track
record of success
•
Win locally, leverage globally
is working well
•
Good progress in building
depth of talent
19
Organic
Revenue
growth of
10%+
Mid-teens
Operating
Income
Margins |
 1
Tim McLevish
Executive Vice President
and CFO |
 Agenda
•
Hitting our sweet spot
•
Seizing our global snacks opportunity
–
Biscuits
–
Chocolate
–
Gum and Candy
•
Winning in each region
–
North America
–
Europe
–
Developing Markets
•
Transforming our financial performance
2 |
 Shifting from
Turnaround to Growth 3
“Growth”
“Turnaround”
•
Improve portfolio mix
•
Drive power brands
•
Fix the base
•
World-class capabilities
•
Peer-average growth
•
Top tier growth
2006
2010
Future |
 Strategies will
deliver a step-up in growth … 4
Create a Performance-Driven,
Values-Led Organization
Delight Global
Snacks Consumers
Unleash the
Power of Our
Iconic Heritage
Brands
Organic Revenue
growth 5%+
Mid-to-High
Teens Profit
Margins
EPS growth
9%-11% |
 …
based on an enhanced growth algorithm
5
•
Organic Revenue growth
–
~2/3 from volume/mix
–
~1/3 from price
•
Pricing primary lever to offset input
cost inflation
•
Volume/mix and productivity to
expand gross margins
•
Overhead leverage and cost synergies
–
Fuel increased A&C
–
Fund Sales and R&D investments
AND
–
Drive higher Operating Income margins
Organic Revenue
growth 5%+
Mid-to-High
Teens Profit
Margins
EPS growth
9%-11% |
 Enhanced growth
algorithm builds on improved base business
6
•
Improved product quality
•
Stronger brand equities
•
Increased innovation
pipeline
Base Kraft Foods
Improvements
Enhancements
•
Focus on higher growth
snack categories
•
Improved geographic mix
•
Improved channel mix
•
Leveraging new Global
Category Team structure |
 Brands and Business
Units will deliver
5%+ organic revenue growth
7
Note: 2010 includes 12 months of Cadbury results. Snacks includes other Kraft
Foods Snacks businesses beyond core categories (e.g., Handi-Snacks, Marshmallows,
etc.). Snacks
Regional
Power
Brands
Local
Brands
Mid-to-High
Single Digit
Growth
Mid
Single Digit
Growth
Low
Single Digit
Growth
Organic Net
Revenue Growth
5%+ CAGR
North America
3-4%
Europe
2-3%
Developing Markets
10%+
Total Kraft Foods
5%+
Long-Term Organic
Revenue Growth Targets
2010E
2013E |
 5%+ revenue growth
target benefits from synergies in the short-term
8
Short-Term
•
Targeting $1 billion of
revenue synergies over
next three years
•
70 bps of organic growth
per year |
 Long-term
momentum benefits from shift to high-growth Developing Markets
9
Short-Term
Long-Term
•
Targeting $1 billion of
revenue synergies over
next three years
•
70 bps of organic growth
per year
2009
(1)
KFNA
49%
KFDM
26%
KFE
25%
(1) 2009 Pro Forma amounts based on the Cadbury acquisition and the divestiture of the Pizza
business. |
 Long-term
momentum benefits from shift to high-growth Developing Markets
10
Short-Term
Long-Term
•
Targeting $1 billion of
revenue synergies over
next three years
•
70 bps of organic growth
per year
KFNA
~45%
KFDM
~33%
KFE
~22%
2013E |
 End-to-end
productivity will drive gross margin gains
11
•
Procurement
(SAVOR)
•
Manufacturing
(Lean Six Sigma)
•
Customer Service &
Logistics
(1) Excludes Cadbury.
Productivity
%
of
COGS
(1)
2.9%
>4%
~4%
2009
Target
2010E |
 Investments in
brand building will increase 12
A&C as a Percentage of Net Revenues
7.5%
9%-10%
~8%
(1)
(1) Pro Forma for the Cadbury acquisition.
2009 Pro Forma
2010E
Target |
 Resetting overhead
costs will accelerate margin expansion
13
•
Europe
–
Negative Overhead
Growth (NOG)
•
North America
–
Zero Overhead Growth
(ZOG)
•
Developing Markets
–
Half Overhead Growth
(HOG)
(1) Excludes Cadbury.
Overheads
%
of
Net
Revenue
(1)
~13.5%
14.7%
~12.0%
2009
Target
2010E |
 Substantial change
to continue across the organization
14
Pan-European
Category
Model
Catalyst
(SAP)
Functional
Transformation
Change Management Initiatives |
 Cost synergies will
further expand profit margins to mid-to-high teens
15
Cost Synergies / Pre-Tax Integration Costs
(Cumulative P&L Impact)
Cost Synergies
Total at least $750 million
~15%
~70%
>90%
2010E
2012E
2011E
~100%
~50%
~80%
Integration Program Costs
Total ~$1.5 billion
(Cumulative) |
 Targeting
top-tier margins 16
1
Coca-Cola
27.6%
2
PepsiCo
18.8%
3
Campbell
16.8%
4
Hershey
16.2%
5
General Mills
16.0%
6
Kellogg
15.9%
7
Danone
15.3%
8
Heinz
14.7%
9
Nestle
14.7%
10
Kraft Foods
13.7%
11
ConAgra
8.9%
12
Sara Lee
7.9%
(1) Source: Company reports.
2009
Operating
Income
Margins
(Fiscal
Year)
(1) |
 Begun to deliver
growth in line with peer averages
17
(1) Source: Thomson First Call.
Operating
EPS
Growth
(1)
2006
2007
2008
2009
1
Danone
31.0%
1
Nestle
17.3%
1
ConAgra
32.9%
1
Hershey
15.4%
2
Nestle
15.0%
2
Coca-Cola
13.9%
2
Sara Lee
19.3%
2
General Mills
13.1%
3
PepsiCo
12.8%
3
PepsiCo
12.7%
3
Coca-Cola
16.7%
3
Heinz
10.3%
4
Coca-Cola
8.7%
4
Kellogg
10.0%
4
General Mills
10.7%
4
Kraft Foods
8.0%
5
Campbell
6.4%
5
Heinz
9.7%
5
Heinz
10.5%
5
Campbell
6.2%
6
Kellogg
6.4%
6
Campbell
7.1%
6
PepsiCo
8.9%
6
Kellogg
5.7%
7
Hershey
3.9%
7
Danone
6.2%
7
Kellogg
8.3%
7
PepsiCo
0.8%
8
Kraft Foods
3.2%
8
General Mills
6.0%
8
Campbell
7.2%
8
Nestle
0.7%
9
General Mills
2.7%
9
ConAgra
3.6%
9
Nestle
4.0%
9
Danone
(0.8)%
10
ConAgra
2.2%
10
Kraft Foods
(6.2)%
10
Kraft Foods
3.3%
10
Coca-Cola
(2.9)%
11
Heinz
(7.3)%
11
Hershey
(12.2)%
11
Danone
1.2%
11
Sara Lee
(15.2)%
12
Sara Lee
(20.1)%
12
Sara Lee
(30.3)%
12
Hershey
(9.6)%
12
ConAgra
(20.0)% |
 mid-teens
growth
$2.00+
9%-11%
7%-9%
Earnings trajectory will significantly improve
18
$2.00
Operating EPS
Kraft Foods + Cadbury
Kraft Foods before
Cadbury Transaction |
 Significantly
stepped up free cash flow 19
Free
Cash
Flow
(1)
($ billions)
(1)
Defined as cash flow from operations less capital expenditures. See
GAAP to Non-GAAP reconciliation a the end of this presentation.
|
 Will maintain
strong capital discipline while supporting strong growth
20
Return
on
Invested
Capital
(1)
(1) Defined as Operating Net Profit After Taxes divided by Invested Capital (average total net
debt plus equity). Operating Net Profit After Taxes includes operating net
income and adds back after-tax interest and amortization expenses, and the change
in deferred taxes. Operating Net Profit After Taxes for 2010E excludes costs related to
the Cadbury acquisition such as transaction advisory fees, UK stamp taxes, Cadbury
inventory revaluation and financing fees, costs to integrate the businesses, as well
as the deferred tax charge resulting from recently enacted U.S. health care legislation. |
 New metrics for
success 21
2006
2010
Future
“Growth”
“Turnaround”
•
Mid-teens margins
•
Organic revenue growth
of 5%+
•
Organic revenue growth
of 4%+
•
Mid-to-high teens margins
•
EPS growth of 7%-9%
•
EPS growth of 9%-11%
•
Improve free cash flow
•
Improve ROIC |
 |
 GAAP to
Non-GAAP Reconciliations |
 2
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Impact of
Divestitures
Impact of
Acquisitions
Impact of
Currency
Organic
(Non-GAAP)
As Reported
(GAAP)
Organic
(Non-GAAP)
June 30, 2010
Kraft Foods Europe
2,793
-
(662)
52
2,183
34.1%
5.2%
June 30, 2009
Kraft Foods Europe
2,083
(7)
-
-
2,076
March 31, 2010
Kraft Foods Europe
2,709
-
(589)
(151)
1,969
40.5%
2.5%
March 31, 2009
Kraft Foods Europe
1,928
(7)
-
-
1,921
December
31,
2009
Kraft Foods Europe
2,687
-
-
(225)
2,462
8.0%
(0.3)%
December 31, 2008
Kraft Foods Europe
2,489
(20)
-
-
2,469
September 30, 2009
Kraft Foods Europe
2,070
(1)
-
199
2,268
(11.5)%
(0.8)%
September 30, 2008
Kraft Foods Europe
2,338
(52)
-
-
2,286
June 30, 2009
Kraft Foods Europe
2,083
(7)
-
376
2,452
(17.4)%
0.4%
June 30, 2008
Kraft Foods Europe
2,521
(79)
-
-
2,442
Net Revenues to Organic Net Revenues
For the Three Months Ended
($ in millions, except percentages) (Unaudited)
% Change |
 3
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Asset Impairment,
Exit and
Implementation Costs -
Restructuring
Asset Impairments /
Other Expenses -
Non-Restructuring
(Gains) / Losses on
Divestitures, net
Excluding
Items (Non-
GAAP)
For the Three Months Ended
September 30, 2008
Kraft Foods Europe
Net Revenues
2,338
$
-
-
-
2,338
$
Operating Income
115
$
35
57
-
207
$
Operating Income Margin
4.9%
8.9%
For the Three Months Ended
December 31, 2008
Kraft Foods Europe
Net Revenues
2,489
$
-
-
-
2,489
$
Operating Income
(166)
$
358
39
(1)
230
$
Operating Income Margin
(6.7)%
9.2%
As Reported
(GAAP)
Integration Costs
Acquisition-Related
Costs
(1)
Cadbury
Base Kraft
Foods (Non-
GAAP)
For the Three Months Ended
March 31, 2010
Kraft Foods Europe
Net revenues
2,709
$
-
$
-
$
(589)
$
2,120
$
Operating Income
289
$
1
$
23
$
(88)
$
225
$
Operating Income Margin
10.7%
10.6%
For the Three Months Ended
June 30, 2010
Kraft Foods Europe
Net revenues
2,793
$
-
$
-
$
(662)
$
2,131
$
Operating Income
335
$
33
$
-
$
(107)
$
261
$
Operating Income Margin
12.0%
12.2%
(1) Acquisition-related costs include transaction advisory fees, U.K.
stamp taxes and the impact of the Cadbury inventory revaluation. Operating
Income Margins ($ in millions, except percentages) (Unaudited)
|
 4
GAAP to Non-GAAP Reconciliation
($ in billions, Unaudited)
2007
2008
2009
Net Cash Provided by Operating Activities (GAAP)
3.6
$
4.1
$
5.1
$
Capital Expenditures
(1.2)
(1.4)
(1.3)
Free Cash Flow (Non-GAAP)
(1)
2.3
$
2.8
$
3.8
$
(1)
May not add due to rounding
Cash Flows
For the Twelve Months Ending December 31,
Kraft Foods Inc. |
 5
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
(1)
Impact of
Divestitures /
Other
Impact of
Acquisitions
Impact of
Currency
Organic
(Non-GAAP)
For the Twelve Months Ended:
December 31, 2007
8.6%
(0.6)pp
0.8pp
3.1pp
5.3%
December 31, 2008
16.9%
(0.8)pp
8.9pp
2.0pp
6.8%
December 31, 2009
(3.7)%
(0.7)pp
0.0pp
(4.5)pp
1.5%
Compound Annual Growth Rate, 2006 - 2009:
6.9%
4.5%
(1)
Includes the results of the frozen pizza business
Net Revenues Growth
(Unaudited)
Kraft Foods Inc. |
 6
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Impact of
Divestitures /
Other
Impact of
Acquisitions
Impact of
Currency
Organic
(Non-GAAP)
For the Twelve Months Ended:
December 31, 2007
18.0%
0.0pp
0.2pp
6.5pp
11.3%
December 31, 2008
38.0%
(0.1)pp
4.7pp
15.9pp
17.5%
December 31, 2009
(3.5)%
(0.5)pp
0.0pp
(12.9)pp
9.9%
Compound Annual Growth Rate, 2006 - 2009:
16.3%
12.9%
Net Revenues Growth
(Unaudited)
Kraft Foods Developing Markets |