EX-99.2 3 a06-6924_1ex99d2.htm EXHIBIT 99













































































































































 

Searchable text section of graphics shown above

 


 

[LOGO]

MARCH 2006

Analyst & Investor Event

 

 

[LOGO]

 

1


 

Note on Forward-Looking Statements

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This presentation, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on management’s current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances.  Readers of this presentation should understand that these statements are not guarantees of performance or results.  Many factors could affect the company’s actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements.  These factors include, among other things, future economic circumstances, industry conditions, company performance and financial results, availability and prices of raw materials, product pricing, competitive environment and related market conditions, operating efficiencies, access to capital, actions of governments and regulatory factors affecting the company’s businesses and other risks described in the company’s reports filed with the Securities and Exchange Commission.  The company cautions readers not to place undue reliance on any forward-looking statements included in this presentation, which speak only as of the date made.

 

This presentation includes certain “non-GAAP” financial measures as defined by SEC rules.   As required by the SEC we have provided a reconciliation of those measures to the most directly comparable GAAP measures and presented in accordance with Generally Accepted Accounting Principles located in the appendix of this presentation.

 

2


 

[LOGO]

MARCH 2006

Analyst & Investor Event

 

Welcome

 

Gary Rodkin

President and CEO

 

 

[LOGO]

 

3


 

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ConAgra Foods: Significant Potential

 

Blocking & Tackling

 

 

 

Underleveraged Brands

 

 

[GRAPHIC]

Cost Structure

 

 

 

Commodity Expertise

 

 

4


 

Blocking & Tackling

 

 

 

Underleveraged Brands

 

 

[GRAPHIC]

Cost Structure

 

 

 

Commodity Expertise

 

 

 

WHY HASN’T IT HAPPENED YET??

 

 

5


 

Operational Performance Trap

 

High
Complexity

 

Volume
Shortfalls

 

Weak
Brand
Position

 

Lower
Margins

 

Profits
Decline

 

Cut R&D
and
Marketing

 

 

 

 

 

 

 

 

 

 

 

Inefficient
Supply Chain/
Logistics
Network

 

Inconsistent
Customer
Service

 

High
Inventory/
Service
Costs

 

Increase
Trade

 

Lose
Share

 

Lower
Innovation/
Product
Visibility

 

6


 

The New CAG:

 

A true operating company

that delivers sustainable

profitable growth

 

7


 

Building the New ConAgra Foods

 

Culture

 

 

 

 

[GRAPHIC]

 

8


 

Culture: A Root Cause of Underperformance

 

Independent Operating Company Heritage

 

Silo Mentality

 

Resistance to “Corporate”

 

Size, Not Scale

 

9


 

Culture: Implementing Change

 

Simplicity

 

Collaboration

 

 

 

Results

 

 

 

Accountability

 

Execute with Excellence

 

10


 

Building the New ConAgra Foods

 

Culture

 

 

 

 

[GRAPHIC]

 

 

Portfolio

 

 

11


 

Fewer, Bigger, Better

 

More and Better Marketing

 

12


 

More and Better Marketing

 

[LOGO]

 

13


 

More...

 

 

 

 

 

[CHART]

 

14


 

Commercial

 

15


 

More & Better

 

[LOGO]

 

[GRAPHIC]

 

16


 

Fewer, Bigger, Better

 

More and Better Marketing

 

Platform Innovation

 

17


 

Platform Innovation: Brands

 

[LOGO]

 

18


 

Platform Innovation: Categories

 

[GRAPHIC]

 

19


 

Platform Innovation: Technology

 

[LOGO]

 

[LOGO]

[GRAPHIC]

 

[GRAPHIC]

 

 

 

[LOGO]

 

[LOGO]

[GRAPHIC]

 

[GRAPHIC]

 

20


 

Fewer, Bigger, Better

 

More and Better Marketing

 

Platform Innovation

 

In-Store Execution

 

21


 

In-Store Execution

 

[GRAPHIC]

 

22


 

Fewer, Bigger, Better

 

 

More and Better Marketing

 

Platform Innovation

 

In-Store Execution

 

Divest Non-Core Operations

 

23


 

Divest Non-Core Operations

 

•       Packaged Meats

[LOGO]

•       Cheese

 

•       Seafood

 

 

24


 

Refrigerated Meats: Clear Divestiture Candidate

 

15% CAG Sales

 

Minimal EBIT

 

Complex and Inefficient

 

Poor Execution and Customer Service Levels

 

Likely Constant Drag on CAG Financial Metrics

 

25


 

Refrigerated Meats: Clear Divestiture Candidate

 

15% CAG Sales

 

Minimal EBIT

 

Complex and Inefficient

 

Poor Execution and Customer Service Levels

 

Likely Constant Drag on CAG Financial Metrics

 

CONSTANT DISTRACTION

 

26


 

Packaged Meats to be Divested

 

Drastically underperformed in important metrics

 

 

 

Packaged Meats

 

Other CAG

 

Recent Sales Trend

 

(10

)%

+1

%

Recent Gross Margin %

 

< 10

%

25

%

 

… and are a drag on ConAgra’s performance and valuation

 

27


 

Meat Portfolio Complexity

 

Eight key meat brands utilized across multiple products and various distribution channels

 

 

 

Products

 

Key Brands

 

Hot Dogs

 

Meats

 

Lunch
Meats

 

Dinner
Meats

 

Deli
Meats

 

Whole
Turkey

 

Whole
Ham

 

Culinary

 

Butterball

 

X

 

X

 

X

 

X

 

X

 

X

 

 

 

X

 

Cook’s

 

 

 

 

 

 

 

X

 

 

 

 

 

X

 

 

 

Eckrich

 

X

 

X

 

X

 

X

 

X

 

 

 

 

 

X

 

Armour

 

X

 

X

 

X

 

X

 

X

 

 

 

X

 

X

 

Hebrew National

 

X

 

 

 

X

 

X

 

X

 

 

 

 

 

X

 

Healthy Choice

 

X

 

X

 

X

 

X

 

X

 

 

 

 

 

X

 

County Line

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

Decker

 

X

 

X

 

X

 

X

 

 

 

 

 

 

 

X

 

Other

 

X

 

X

 

X

 

X

 

X

 

X

 

 

 

X

 

Industrial and Non Branded

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

 

2,300+ SKUs:  Significantly more than key competitors

 

28


 

Inefficient and Complex Meat Supply Chain

 

Over 20 plants and 24 co-packing facilities

 

Locations

 

[CHART]

 

Some locations produce non-meats products and multiple brands

 

Note:  Includes all locations supplying meat products; Numbers do not add due to manufacture of multiple brands at single locations

 

29


 

Cheese and Seafood Divestitures

 

Low Gross Margins

 

Significant Working Capital Investments

 

1000+ SKUs Creates Complexity

 

30


 

Impact of Divestitures on ConAgra Foods

 

Improved Business Fundamentals

 

•                    Streamlined Portfolio

 

•                    Catalyst for:

 

•       Reduced complexity

 

•       Faster progress on other key initiatives

 

Enables Aggressive Attack on Costs

 

31


 

Building the New ConAgra Foods

 

Culture

 

 

 

Portfolio

[GRAPHIC]

 

 

Cost Structure

 

 

32


 

Cost Structure

 

•                  Procurement

 

•                  Manufacturing

 

•                  Transportation and Warehousing

 

•                  G&A

 

Generate Savings Exceeding $500MM/yr by FY09

before the impact of inflation

 

Significant Working Capital Improvements

 

Fuel for Reinvestment

 

33


 

Major Financial News Today

 

Lowering the Earnings Base to $1.10-$1.15*

 

•                  Portfolio changes

•                  Brand investment

 

Cost Reduction Programs with Implementation Costs

 

More Sustainable Dividend Level

 

* See Appendix A for reconciliation

 

34


 

New Earnings Base for FY07 (Rounded)

 

 

 

FY07 EPS

 

EPS – Current Trajectory*

 

$1.35 - $1.40

 

 

 

 

 

Impact of divestitures

 

($.25)

 

 

 

 

 

Increased Marketing, R&D investment

 

($.08 - $.10)

 

 

 

 

 

Cost reduction

 

GRAPHIC$.08 - $.10+

 

 

 

 

 

FY07 Earnings Base

 

$1.10 - $1.15

 

 

*      EPS – Current Trajectory approximates earnings per share before items impacting comparability including, but not limited to, restructuring and impairment charges and gains and losses on sales of assets.  The timing of these events and therefore the impact on Fiscal 2007 earnings per share cannot be reasonably estimated at this time.

 

Note: excludes EPS impact of deployment of divestiture proceeds

 

35


 

Growth Assumptions: FY08 and FY09

 

Sales: Ramp to 2-3% annual growth

 

EPS: Achieve 7-9% annual growth

 

•                  Goal: Return to current EPS run rate during FY09

 

•                  Significant additional opportunity beyond FY09

 

•                  to eventually achieve peer group average EBIT margins

 

36


 

Organizational Structure: Streamlining

 

 

 

 

 

Gary Rodkin
President and CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

Greg Heckman
President and
COO
Commercial
Products

 

Dean Hollis
President and
COO
Consumer
Foods

 

Jim Hardy
EVP
Product Supply

 

Doug Knudsen
President
Sales

 

Owen Johnson
EVP & Chief
Administrative
Officer, Corp
Secretary

 

 

 

 

 

 

 

 

Frank Sklarsky
EVP and
Chief Financial
Officer

 

Rob Sharpe
EVP
Legal Affairs &
External Affairs

 

Dr. Al Bolles
SVP
Product
Quality &
Development

 

Jacqueline McCook
EVP and
Chief Growth

Officer

 

37


 

 

 

 

 

Gary Rodkin
President and CEO

 

New To CAG or job - Last 3 months

 

 

 

 

 

 

 

 

 

Greg Heckman
President and
COO
Commercial
Products

 

Dean Hollis
President and
COO
Consumer
Foods

 

Jim Hardy
EVP
Product Supply

 

Doug Knudsen
President
Sales

 

Owen Johnson
EVP & Chief
Administrative
Officer, Corp
Secretary

 

 

 

 

 

 

 

 

Frank Sklarsky
EVP and
Chief Financial
Officer

 

Rob Sharpe
EVP
Legal Affairs &
External Affairs

 

Dr. Al Bolles
SVP
Product
Quality &
Development

 

Jacqueline McCook
EVP and
Chief Growth
Officer

 

38


 

 

 

Gary Rodkin

President and CEO

 

 

 

 

 

 

 

Consumer
Foods
P&L

 

Enterprise Functions

 

 

Commercial
Products
P&L

 

39


 

Incentive Programs

 

Annual Short-term Incentives: Multiplier Effect for Achieving Cost Savings Targets

 

Long-term Incentives: Structured Around a Combination

 of EBIT Growth and ROIC Improvement

 

[CHART]

 

40


 

Former Vision

 

America’s

Favorite

Food Company

 

41


 

New Focus

 

The New CAG:

 

A true operating company

that delivers sustainable

profitable growth

 

42


 

Summary of the New ConAgra Foods

 

•

 

Restructure and rewire organization

 

Integrated enterprise

 

•

 

Focus the portfolio

 

Better ROI

 

•

 

Aggressively attack cost structure

 

Improved margins

 

•

 

Savings fuel top-line investment

 

Drive marketing and innovation

 

 

Execute with Excellence

 

43


 

Meeting Agenda

 

Consumer
Foods

 

Sales
Strategies

 

Commercial
Products

 

Productivity
&
Operations

 

Financial Goals
&
Objectives

 

44


 

[GRAPHIC]

 

[LOGO]

 

MARCH 2006

Analyst & Investor Event

 

Consumer Foods

 

 

Dean Hollis

 

President & COO,
Consumer Foods

 

[GRAPHIC]

 

[LOGO]

 

45


 

Consumer Foods

 

[LOGO]

 

Brand Portfolio

 

Product Fundamentals

 

Profiles of Progress

 

46


 

Consumer Foods: $7+ Billion in Sales

 

Meals & Entrees

 

Condiments & Sides

 

Snacks & Desserts

 

 

 

 

 

[LOGO]

 

[LOGO]

 

[LOGO]

 

47


 

Brand Portfolio

 

15 brands >$100MM

 

Leading national brands

 

[LOGO]

 

48


 

15 brands >$100MM

 

Leading national brands

 

Strong regional brands

 

[LOGO]

 

49


 

15 brands >$100MM

 

Leading national brands

 

Strong regional brands

 

Strategic Private Label participation

 

[GRAPHIC]

 

50


 

HOWEVER, significant opportunities remain …

 

Only 15% SKU’s > 80% ACV Distribution

 

New Product Sales less than 1/2 Industry Average

 

Total A&P ½ Competitive Average

 

51


 

Brand Portfolio:  Re-Framing the Portfolio

 

Key Evaluation Criteria

 

1

 

2

 

3

 

4

 

5

Category Growth and Market Share Potential

 

Brand / Price
Power

 

Supply Chain
Considerations

 

Strategic
Potential and
Fit

 

Financial
Performance

 

% Revenue

 

 

 

% Profit

 

 

 

 

 

43%

 

Prioritize

 

52%

 

 

 

 

 

18%

 

Pick Battles

 

15%

 

 

 

 

 

27%

 

Maintain

 

26%

 

 

 

 

 

12%

 

Manage for Cash

 

7%

 

Prioritizing the Portfolio to focus and invest for Sustainable, Profitable Growth

 

52


 

Brand Portfolio:  Building the Plan

 

To build our plan, three questions to address:

 

1      How will we grow?

 

Innovation

 

[GRAPHIC]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renovation

 

[GRAPHIC]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Execution

 

Blocking and Tackling

 

 

 

 

 

 

 

53


 

To build our plan, three questions to address:

 

1      How will we grow?

 

2      What levers will we pull?

 

 

 

 

 

 

 

Innovation

 

Fix the Mix

 

•     Prioritize the Portfolio
•     SKU Optimization
•     Merchandising

• Sales and Margin Up

 

 

 

 

 

Renovation

 

Driving
Demand

 

•     Insights
•     Consumer Pull
•     Customer Push

• Improved ROMI

 

 

 

 

 

Execution

 

Efficient
Supply

 

•     Procurement
•     Manufacturing
•     Logistics

• Lower Cost Basis

 

54


 

To build our plan, three questions to address:

 

1      How will we grow?

 

2      What levers will we pull?

 

3      For what outcome?

 

 

 

 

 

Innovation

 

Fix the Mix

 

Sales

 

 

 

 

 

Renovation

 

Driving
Demand

 

Margins

 

 

 

 

 

Execution

 

Efficient
Supply

 

ROI

 

Focus on these levers and corresponding outcomes will differ based on brand prioritization

 

55


 

Brand Portfolio:  Relevant to Consumer Trends

 

•     Health and wellness

 

[LOGO]

 

 

 

•     Flavor adventure

 

 

 

 

 

•     Uncompromised quality

 

 

 

 

 

•     Trusted value brands

 

 

 

 

 

•     CONVENIENCE

 

 

 

56


 

Product Fundamentals: Health and Wellness

 

•                  Positive nutrition in Kid Cuisine and Chef Boyardee

 

•                  Growing Organics with Orville, Hunt’s, Pam, and Light Life

 

•                  The Max pizza delivers whole grain for school lunches

 

•                  Advancements in sodium reduction

 

•                  Alternative solutions for trans fat

 

[GRAPHIC]

 

57


 

Product Fundamentals: Adventures in Flavor

 

•                  Ethnic diversity of LaChoy, Rosarita, and Rotel

 

•                  Healthy Choice leads with Flavor Adventures

 

•                  New bold popcorn flavors

 

•                  New flavor varieties on Egg Beaters

 

[GRAPHIC]

 

58


 

Product Fundamentals: Unsurpassed Quality

 

•                  Hebrew National = highest quality / Kosher “certified”

 

•                  Egg Beaters – real eggs, real difference

 

•                  Reddi-wip – made with real cream

 

•                  Marie Callender’s Crocks - fresh frozen meats and vegetables

 

•                  Snack Pack Pudding – milk #1 ingredient

 

[GRAPHIC]

 

59


 

Product Fundamentals: Trusted Value Brands

 

•                  Deep understanding of consumer drivers

 

•                  Enhanced convenience

 

•                  Responsible nutrition

 

•                  Contemporary new offerings

 

[GRAPHIC]

 

60


 

Product Fundamentals: Convenience = Margin Up

 

•                  Microwaveable meal solutions in minutes

 

•                  Meals with emphasis on “family” time

 

•                  Healthy meals for active lifestyles

 

•                  Portion controlled snacking

 

[GRAPHIC]

 

61


 

Profile of Progress:  Egg Beaters

 

Expanding Frame of Reference:  Targeting Shell Egg Users

 

•                  New advertising message

 

•                  Relevant new items

 

•                  Retail shelf adjacency

 

[GRAPHIC]

 

62


 

Commercial

 

63


 

Profile of Progress:  Slim Jim

 

Better Connecting with Core Consumers

 

•                  Targeted advertising, sponsorships and grass roots promotions

 

•                  New distribution across all channels

 

•                  Multiple “points of interruption” across the store

 

[GRAPHIC]

 

64


 

Profile of Progress:  Chef Boyardee

 

Driving Purchase Frequency and Buy Rate

 

•                  Improved nutritionals across the line

 

•                  New varieties expanding consumption

 

•                  Shelf merchandising improves shopability

 

[GRAPHIC]

 

65


 

Commercial

 

66


 

Profile of Progress:  Reddi-wip

 

Increasing Usage Occasions

 

•                  In-store tie-ins with seasonal “host foods”

 

•                  New advertising and in-store promotions reinforcing everyday usage

 

•                  New distribution opportunities, initially in club channel

 

[GRAPHIC]

 

67


 

Profile of Progress:  Healthy Choice

 

Franchise Growth Via Consumer Immersion

 

•                  Product improvements driving sales +30%

 

•                  “Green is Good” increasing HHP +16%

 

•                  New product pipeline re-loaded in FY07

 

[GRAPHIC]

 

68


 

The New ConAgra Foods

 

Finally, Prioritizing the Brand Portfolio

 

Focused on Meaningful Consumer Trends

 

Serious about Renovation and Innovation

 

Execute with Excellence

 

69


 

[GRAPHIC]

[LOGO]

MARCH 2006

Analyst & Investor Event

 

Sales Strategies

 

Doug Knudsen

President, Sales

 

[LOGO]

 

70


 

What’s Different ?

 

PAST

 

PRESENT

 

 

 

5 Different Sales Organizations

 

“ONE” Unified Sales Force

 

 

 

Multiple Systems / Limited Tools

 

“ONE” System with Integrated Sales Tools

 

 

 

“Push” Sales Focus

 

“Pull” Focus / Consumption Based

 

 

 

Trade Promotion Dependent

 

Balanced Mix (Marketing / Trade)

 

 

 

Volume Based Incentive

 

Net Sales / Profit Based Incentive

 

Transition From Sales Managers to “Business Managers”

 

71


 

Sales Organization Priorities

 

Base Volume Growth

 

Trade Spending Effectiveness

 

Channel Opportunities

 

72


 

Base Volume Growth - Gold Store Initiative

 

•                  Objectives

•                  Drive BASE category growth for customers

•                  Increase everyday demand for ConAgra Foods brands

•                  Reduce reliance on trade spending

 

•                  Opportunities

•                  Fix the Mix - ideal assortment

•                  Improved shelf presence / adjacencies

•                  Increased secondary placements

•                  Optimum Everyday Pricing

 

73


 

Gold Store Initiative

[GRAPHIC]

All Brands MUST Grow

 

FOCUS                  Sales Execution on Top 10 Categories

 

OBJECTIVE

 

Grow Key Categories

 

•        Grow Priority Brands

 

•        Flawless In-Store Execution

 

Microwave Popcorn

 

 

 

Canned Pasta

 

 

 

 

 

 

 

 

 

Meat Snacks

 

 

 

Liquid Eggs

 

 

 

 

 

 

 

 

 

Whipped Toppings

 

[LOGO]

 

Cooking Sprays

 

[LOGO]

 

 

 

 

 

 

 

Canned Tomatoes

 

 

 

Frozen Meals

 

 

 

 

 

 

 

 

 

Premium Hot Dogs

 

 

 

Sloppy Joe Mix

 

 

 

74


 

Egg Beaters Objectives

 

•

Liquid eggs adjacent to shell eggs

 

 

 

 

•

Full line distribution base and flavors – 7 SKU’s

[LOGO]

 

 

 

•

Everyday shelf price - $2.99

 

 

 

 

 

Egg Beaters Growth:  +10-15%

[GRAPHIC]

 

75


 

Whipped Topping Objectives

 

•

Adjacent to rfg pudding at eye level

 

 

 

 

•

Minimum 5 SKU’s

 

 

 

 

•

Cooler Program with Host Foods

[LOGO]

 

 

 

 

• Cocoa, Pies, Berries, Ice Cream

 

 

 

 

 

Reddi-Wip Growth: +10-12%

[GRAPHIC]

 

 

 

 

[GRAPHIC]

 

 

76


 

Chef Boyardee Objectives

 

•

Core Four at eye level

 

 

 

 

•

40 oz. Center Shelf

 

 

 

[LOGO]

•

Chef Brand Block

 

 

 

 

•

Minimum 18 SKU’s

 

 

 

 

 

Chef Growth: +6-9%

[GRAPHIC]

 

77


 

Trade Spending Effectiveness

 

•                  $1.6B+ Annual Investment (Ex Divestitures)

 

•                  Recently implemented Trade Promotion Management (TPM) system

 

•                  Fully integrated module of SAP

•                  Disciplined process and controls

•                  Visibility to profitability by customer

•                  Analytics by customer, brand and event level

 

•                  (STEP Tool) Strategic Trade Effectiveness Program

 

•                  What-if scenarios using history and statistics

•                  Models sales, profitability and ROI by event

•                  Post-event analysis (Measure, Learn & Change)

 

78


 

Improving Trade Effectiveness

 

 

 

From

 

To

 

Impact

 

 

 

 

 

 

 

[GRAPHIC]
$500MM Brand

 

$0.79 & $0.89
Features

 

5/$5 Features

 

Sales +8%
+ + + ROI

 

 

 

 

 

 

 

[GRAPHIC]

 

$1.99 TPRs

 

2/$4 Features

 

 

$100MM Brand

 

 

 

 

 

Sales +10%

 

 

4 Weeks

 

1 Week

 

+ + + ROI

 

 

Promoted

 

Promoted

 

 

 

79


 

Trade Spending Effectiveness

 

Opportunities

 

•                  Shift lowest 10% ROI events

 

•                  Target Customer’s most effective merchandising vehicle

 

Goal: 3% Reduction = $50MM

 

TRADE WILL BE EFFECTIVELY MANAGED

 

80


 

Channel Opportunities

 

ConAgra Foods Sales by Major Retail Channel (%)

 

Fastest Growing Channels

 

[CHART]

 

81


 

Channel Opportunity:  Membership / Club

 

 

Index = 75% to competitive set

Membership/Club

 

 

 

[GRAPHIC]

[GRAPHIC]

 

82


 

Channel Opportunity:  Emerging Formats

 

Emerging Formats

 

 

 

[LOGO]

[GRAPHIC]

 

83


 

Channel Opportunity:  Convenience Stores

 

Convenience Stores

 

 

 

[LOGO]

[GRAPHIC]

 

84


 

Convenience Stores

 

[LOGO]

 

 

Before

 

After

 

 

 

 

 

[LOGO]

 

[GRAPHIC]

 

[GRAPHIC]

 

85


 

The New ConAgra Foods

 

Base Volume Growth

Trade Spending Effectiveness

Channel Opportunities

Execute with Excellence

 

86


 

[GRAPHIC]

[LOGO]

 

 

MARCH 2006

 

 

Analyst & Investor Event

 

 

Commercial Products

 

 

 

 

 

Greg Heckman

 

 

 

 

 

President & COO,

 

 

Commercial Products

 

 

[LOGO]

 

87


 

Food Products Sales Channel Breakdown

 

Consumer
Foods

 

Sales
Channels

 

Commercial
Products

 

 

 

 

 

80%

 

Retail Outlets

 

10%

 

 

 

 

 

15%

 

Foodservice

 

60%

 

 

 

 

 

5%

 

Food Mfg/Industrial

 

30%

 

88


 

Commercial Products: $4+ Billion in Sales

 

Recognized Business To Business Brands

 

Significant Scale

 

Solid Track Record

 

Expansive Customer Portfolio

 

Focused Growth Agenda

 

89


 

Recognized Business to Business Brands

 

[LOGO]

 

 

 

[LOGO]

 

 

 

 

 

•  Wheat Flours

 

 

 

•  Onion

•  Oat Products

 

 

 

•  Garlic

•  Barley Products

 

[LOGO]

 

•  Vegetables

 

 

 

 

•  Chili Peppers

 

 

•  French Fries

 

 

 

 

•  Mashed Potatoes

 

 

[LOGO]

 

•  Hash Browns

 

 

 

 

•  Dough-Enrobed Hand Helds

 

 

•  Seasoning Blends

 

•  Appetizers

 

[LOGO]

•  Flavors

 

 

 

 

•  Bases

 

 

 

•  Agricultural Commodities

•  Spices

 

 

 

•  Energy Commodities

 

 

 

 

•  Commodity Services

 

 

 

 

•  Risk Management

 

90


 

Significant Scale

 

[LOGO]

 

•   #1 in North America, #2 globally

 

 

 

 

 

•   #3 in North American wheat milling

 

 

 

 

 

•   #1 in North American dehydrated onion, garlic and chili peppers

 

 

 

 

 

•   Complete portfolio of Agricultural and Energy commodities and services

 

91


 

ConAgra Trade Group: Linking Supply & Demand

 

 

Economic Analysis &

 

 

Market Transparency

 

 

 

 

 

 

 

Trading &

Flywheel

Transactional

Merchandising

of

Platform

 

Earnings

 

 

 

 

 

 

 

 

Logistical

 

 

Services

 

 

Benefits to CAG:

Opportunities to lower input costs

Earnings diversification

 

92


 

Solid Track Record

 

[CHART]

 

 

93


 

Expansive Customer Portfolio

 

Foodservice

 

Food Manufacturing

 

Industrial

 

Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[LOGO]

 

[LOGO]

 

[LOGO]

 

[LOGO]

 

 

94


 

Focused Growth Agenda

 

Expand on Strengths

 

 

 

 

 

Relevant Innovation

 

[CHART]

 

 

 

Customer Solutions

 

 

 

95


 

Expand on Strengths

 

[LOGO]

 

•   Global footprint anchors growth

 

 

 

[LOGO]

 

•   Whole grain portfolio on trend

 

 

 

[LOGO]

 

•   Industry leadership in product quality

 

 

 

[LOGO]

 

•   Customized value with speed

 

 

 

[LOGO]

 

•   Energy and agriculture converging

 

96


 

Relevant Innovation

 

[LOGO]

 

 

 

 

 

“MyFries” with i3 Advantage

 

 

indulgent — intelligent — innovative

 

 

 

 

 

•   100% satisfaction with up to 25% less fat

 

 

 

 

[GRAPHIC]

•   No compromise on taste or texture

 

 

 

 

 

•   New process technology

 

 

 

 

 

•   Launching this year

 

 

 

97


 

[LOGO]

 

 

 

 

 

•   Multiple flavors

 

 

 

 

[GRAPHIC]

•   QSR launch this year

 

 

 

 

 

•   Featured at the Olympics

 

 

 

98


 

 

[LOGO]

 

 

 

 

 

•   Ultragrain® 100% Whole Grain

 

 

 

 

[GRAPHIC]

•   Multiple applications

 

 

 

 

 

•   Industry changing

 

 

 

99


 

[LOGO]

 

 

 

 

 

•   Controlled Moisture®

 

 

 

 

 

•   Fire-Roasted Grilled Vegetables

 

 

 

 

[GRAPHIC]

 

 

 

•   Gardenfrost® Purees

 

 

 

 

 

•   Mediterranean, Latin and Asian flavors

 

 

 

 

 

•   Unique soft-frozen delivery

 

 

 

100


 

[LOGO]

 

 

 

 

 

•   Amplify® salt enhancement technology

 

 

 

 

[GRAPHIC]

•   Allows reduction of sodium without sacrificing taste

 

 

 

 

 

•   Sodium reduced up to 50% depending on application

 

 

 

101


 

Customer Solutions

 

Consumer Insights

 

 

 

 

 

Culinary COE

 

 

 

 

 

Technical Services/Support

 

[GRAPHIC]

 

 

 

Product/Service Combinations

 

 

 

 

 

Commodity Service Provider

 

 

 

102


 

The New ConAgra Foods

 

Extend Core Competencies

 

Sustain Momentum

 

Capture Opportunities

 

Leverage ConAgra Foods

 

 

Execute with Excellence

 

103


 

[GRAPHIC]

[LOGO]

 

MARCH 2006

 

Analyst & Investor Event

 

Driving Supply Chain

 

Excellence

 

 

 

Jim Hardy

 

 

 

Executive Vice President,

 

Supply Chain

 

[LOGO]

 

104


 

Product Supply

 

Link and Leverage

 

 

Opportunity Ahead

 

105


 

Before

 

All Reported to Different Leaders, No Integration

 

 

 

Logistics

 

 

Procurement

 

[GRAPHIC]

 

 

[GRAPHIC]

 

 

 

Customer Service

 

 

 

 

[GRAPHIC]

 

Engineering

 

Manufacturing

 

 

[GRAPHIC]

 

[GRAPHIC]

 

 

106


 

After

 

Fully Integrated Supply Chain Organization

 

Procurement

Logistics

 

 

[GRAPHIC]

[GRAPHIC]

 

 

 

 

Manufacturing

 

 

 

[GRAPHIC]

 

 

 

 

 

[GRAPHIC]

 

 

 

Engineering

 

 

 

 

[GRAPHIC]

 

Represents $9B of cost post divestitures

 

Customer

 

 

 

Service

 

 

 

 

 

 

 

107


 

Enterprise Product Supply Vision

 

World Class Organization

 

Continuous Improvement

 

Zero Loss Culture

 

 

Gross Margin Expansion

 

108


 

Strategic Priorities

 

Get the Fundamentals Right

 

Re-engineer the Organization

 

Rationalize our Asset Base

 

Drive Sustainable Business Improvements

 

109


 

Product Supply

 

Opportunity Ahead

 

110


 

Variable Cost Focus

 

 

 

 

Annual
Spend

 

Annual
Productivity

 

Annual
Savings

 

 

 

$B

 

%

 

$

 

Procurement

 

$5.5-$6B

 

GRAPHIC3%

 

GRAPHIC$150-$175MM

 

 

 

 

 

 

 

 

 

Manufacturing Productivity

 

$2B

 

GRAPHIC3-5%

 

GRAPHIC$75+MM

 

 

 

 

 

 

 

 

 

Logistics

 

$1B

 

GRAPHIC3%

 

GRAPHIC$25-$40MM

 

 

$250-$300MM/yr by FY09

 

Continually Battling Inflation

 

111


 

Variable Cost Savings—Procurement

 

Opportunity

 

•   < 10% of indirect spend negotiated by procurement

 

•   Too many specifications

 

•   Complex product designs

 

•   No visibility to inbound freight costs

 

Action Plan

 

•   Consolidate total spend and better leverage strategic suppliers

 

•   Partner with R&D to eliminate complexity

 

•   Develop a formula pricing purchasing strategy

 

Opportunity:

$150-$175MM Annual Savings

 

112


 

Variable Cost Savings—Manufacturing

 

Opportunity

 

•   Current Overall Equipment Effectiveness (OEE) 50%

 

•   No standard enterprise process

 

•   < 20% of operations are 7 day

 

Action Plan

 

•   Implement OEE program & drive to 85%

 

•   Develop & implement a ConAgra performance system

 

•   Optimize operating strategy

 

Opportunity:

$75MM+ Annual Savings

 

113


 

Variable Cost Savings—Logistics

 

Opportunity

 

•   Not leveraging our scale

 

•   Too much inventory

 

•   Too many product touches

 

•   Limited regional manufacturing capability

 

Action Plan

 

•   Significantly reduce finished goods inventories

 

•   Expand regional manufacturing capability

 

•   Consolidate Mixing Center network and better leverage freight scale

 

•   Drive efficient customer programs

 

Opportunity:

$25-$40MM Annual Savings

 

114


 

Fixed Cost Savings / Plant Rationalization

 

Divestitures

 

 

 

 

 

•   Sell 22 plants

 

 

 

 

Drives 30% improvement

+

 

   in Capacity Utilization

 

 

 

Core Plant Rationalization

 

 

 

 

 

•   Close 10-12 plants : Phase I

 

 

 

 

 

•   Phase II: Stay Tuned

 

 

 

 

Opportunity:

$100MM Permanent Reduction in Fixed Costs by FY09

 

115


 

Product Supply Cost Savings

 

Variable Cost Focus

 

 

 

 

 

 

 

 

 

 

Annual
Spend

 

Annual
Productivity

 

Annual
Savings

 

 

 

$B

 

%

 

$

 

 

 

 

 

 

 

 

 

Procurement

 

$5.5-$6B

 

GRAPHIC3%

 

$150-$175MM

 

 

 

 

 

 

 

 

 

Manufacturing Productivity

 

$2B

 

GRAPHIC3-5%

 

$75+MM

 

 

 

 

 

 

 

 

 

Logistics

 

$1B

 

GRAPHIC3%

 

$25-$40MM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$250-$300MM/yr by FY09

 

 

Fixed Cost Focus

 

 

 

Manufacturing

$100MM

 

Rationalization

 

 

 

 

 

$100MM permanent reduction in
fixed costs by FY09

 

 

Continually Battling Inflation & Driving out Fixed Costs

 

116


 

The New ConAgra Foods

 

Leverage the Integration of the Supply Chain

 

Link Product Supply to Critical Business Strategies

 

Pursuing a Rich Portfolio of Cost Savings Opportunities

 

 

Execute with Excellence

 

117


 

 

[LOGO]

MARCH 2006

Analyst & Investor Event

 

 

[LOGO]

 

118


 

[GRAPHIC]

[LOGO]

 

MARCH 2006

 

Analyst & Investor Event

 

Financial Objectives & Goals

 

 

 

Frank Sklarsky

 

EVP and Chief Financial Officer

 

[LOGO]

 

119


 

Topics for Discussion

 

•   Major Factors Influencing Outlook

 

•   Special Charges

 

 

 

•   New Earnings Base

 

•   Capital Spending

 

 

 

•   FY07 - FY09 Goals

 

•   Capital Allocation

 

•   Leading Indicators

 

120


 

Major Factors Influencing Outlook: Divestitures

 

 

 

$ EPS

 

 

 

 

 

Approximate lost earnings, incl. costs allocated/absorbed

 

GRAPHIC$0.05-$0.06

 

 

 

 

 

G&A Costs Absorbed

 

GRAPHIC$0.12

 

 

 

 

 

COGS Impact

 

GRAPHIC$0.07-$0.08

 

 

 

 

 

Total Near Term Dilution

 

GRAPHIC$0.25

 

 

Dilution estimate does not reflect:

 

•   Application of divestiture proceeds

 

•   Benefit of cost reduction initiatives

 

121


 

Impact of Divestitures on Financial Profile

 

 

 

Run Rate

 

 

 

 

 

Before

 

After

 

Divestiture

 

 

 

Divestitures

 

Divestitures

 

Impact

 

 

 

 

 

 

 

 

 

Net Sales*

 

GRAPHIC$14.4B

 

GRAPHIC$11.6B

 

($2.8B)

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

21% - 22%

 

24% - 25%

 

GRAPHIC+300 bps

 

 

 

 

 

 

 

 

 

EBIT Margin (%)*

 

GRAPHIC9.5%

 

GRAPHIC10%

 

GRAPHIC0.5 pts

 

 

•    Divested businesses reported as discontinued operations

 

•    Excludes special charges and other items impacting comparability

 

* See Appendix A for reconciliation

 

122


 

Major Factors Influencing Outlook

 

•      Supply Chain: Variable Cost Focus

•      Ramp to 3%+ COGS productivity savings, annually

•      Represents gross savings, before impact of inflation

 

•      Supply Chain: Fixed Cost Focus – Plant Rationalization

•      Achieve $100MM by FY09

•      Savings carry over into future years

 

•      Supply Chain: Net Target

•      Contribute net $100MM+ to bottom line by FY09

 

123


 

•   General & Administrative costs

•   Ramp savings to more than $100MM/yr

 

•   Trade Spend efficiency

•   2% - 3% pts reduction or $30MM - $50MM over next 2 years

•   Drive improvement in volume, mix, revenue realization

 

•   Working Capital

•   Generate incremental $50MM - $75MM cash flow benefit per year for next 3 years

 

124


 

Increased Marketing Investment

 

 

 

 

 

 

 

 

 

Old Revenue Base

 

New Revenue Base

 

 

 

 

 

 

 

 

 

Prioritize

$425MM to

$350MM

 

 

 

$450MM

 

“All Brands

 

Pick

 

 

Created Equal”

 

Battles

 

 

 

 

 

 

4% on

 

 

Maintain

9% - 10% on

Everything

 

 

 

Prioritized Brands

 

 

 

Manage

 

 

 

 

for Cash

 

 

 

 

 

 

 

 

 

 

 

 

Prior Model

 

New Model:

 

 

 

 

Focus & Target!

 

 

125


 

New Earnings Base for FY07 (Rounded)

 

 

 

FY07 EPS

 

 

 

 

 

EPS – Current Trajectory*

 

$1.35 - $1.40

 

 

 

 

 

Impact of divestitures

 

($.25)

 

 

 

 

 

Increased Marketing, R&D investment

 

($.08 - $.10)

 

 

 

 

 

Cost reduction

 

GRAPHIC$.08 - $.10+

 

 

 

 

 

FY 2007 Earnings Base

 

$1.10 - $1.15

 

 

*                 EPS – Current Trajectory approximates earnings per share before items impacting comparability including, but not limited to, restructuring and impairment charges and gains and losses on sales of assets. The timing of these events and therefore the impact on Fiscal 2007 earnings per share cannot be reasonably estimated at this time.

 

 

Note: excludes EPS impact of deployment of divestiture proceeds

 

126


 

FY07-FY09 Goals

 

 

 

Adj. Profile*
FY07

 

FY08 – FY09

 

FY09
Goal

 

 

 

 

 

 

 

 

 

Net Sales

 

GRAPHIC$11.6B

 

Ramp to 2% - 3% annual growth

 

$12B+

 

 

 

 

 

 

 

 

 

EBIT Margin**

 

GRAPHIC10%

 

Ramp to 75 - 100 bps/yr improvement

 

12%+

 

 

 

 

 

 

 

 

 

EPS

 

$1.10 - $1.15

 

Achieve 7% - 9% annual growth

 

$1.35 - $1.40

 

 

 

 

 

 

 

 

 

ROIC**

 

GRAPHIC10%

 

Gradually move to 12%+

 

12%+

 

 

•      Goals:

•     Capture $500MM of cost opportunities (pre-inflation)

•     Return to current EPS run rate during FY09

•      Significant additional opportunity beyond FY09

•     to eventually achieve peer group average EBIT margins

 

* Excludes impairment, restructuring and other special charges

** See Appendix A for reconciliation

 

127


 

EBIT Growth Model: Directional Patterns

 

Near Term:

 

SG&A savings more significant

 

1 -2 Yrs And After:

 

Gross Margin more significant

 

 

[CHART]

 

128


 

Impairment, Restructuring, & Other Special Charges

 

FY06 – FY09 ($MM)

 

 

 

Non-Cash

 

Cash

 

Total

 

CAPEX

 

 

 

Charges

 

Charges

 

Charges

 

Requirements

 

 

 

 

 

 

 

 

 

 

 

Supply Chain Rationalization (pre-tax)

 

$100MM

 

$70MM

 

$170MM

 

$165MM

 

 

 

 

 

 

 

 

 

 

 

G&A Reductions (pre-tax)

 

 

 

$50MM to $100MM

 

 

 

 

 

 

 

 

 

 

 

Divestitures

 

— $60MM pre-tax, $170MM after-tax est. charges —

 

 

129


 

Capital Spending

 

 

 

FY07

 

FY08

 

FY09

 

 

 

 

 

 

 

 

 

CAPEX ($MM) Organic Running Rate

 

$

350

 

$

400

 

$

400

 

 

 

 

 

 

 

 

 

CAPEX ($MM) Rationalization / other special items

 

$

100

 

$

50

 

$

25

 

 

 

 

 

 

 

 

 

Total ($MM)

 

$

450

 

$

450

 

$

425

 

 

More bias toward rationalization near term, followed by greater investment in growth and margin improvement

 

130


 

Capital Allocation Goals

 

•  Healthy balance sheet

 

•  Solid investment grade credit rating

 

•  Flexibility to make investments

 

•  CapEx for rationalization and process excellence

 

•  Brand building

•  A&P, R&D, Innovation

 

•  ROIC-based capital allocation

•  Benchmark vs. benefit of share repurchases

 

131


 

Dividend Adjustment

 

Dividend now becomes $0.72 per share, or 18¢ per quarter starting with June payment

 

 

•   Sustainable payout ratio

 

•   Attractive yield

 

•   Flexibility to invest in business

 

132


 

Capital Allocation Model

 

Free Cash Flow
from ongoing
operations

 

Divestiture proceeds 
& other one-time
inflows

 

 

 

 

 

 

 

 

 

Debt Actions

 

Share Repurchases

 

Acquisitions

 

 

 

 

 

 

 

 

 

•  Lower significance near-term

 

Authority Remaining in

 

•  Lower significance near-term

Funding of Dividends

 

•  Maturity extensions

•  Coupon/risk reduction

 

Existing
Program

 

•  High payback “bolt-on” possible

 

 

133


 

Leading Indicators of Progress

 

Gross Margin Expansion

 

A&P / R&D Spend on Consumer Foods

 

Growth & Market Share of Priority Brands

 

Overall Manufacturing Efficiency

 

G&A as a % Sales

 

134


 

Major Unknowns Influencing FY07 - FY09 Results

 

•                  Timing of divestitures

•                  Further enables corresponding cost reduction programs

 

•                  Amount of divestiture proceeds

 

135


 

[LOGO]

 

MARCH 2006

Analyst & Investor Event

Summary

 

 

Gary Rodkin

 

President and CEO

 

[LOGO]

 

136


 

Operational Excellence

 

Simplification

 

Consistent Bottom Line Through Top Line Growth

 

Stronger
Base
Foundation

 

Higher
Margins

 

Growing
Profits

 

Higher R&D
and
Marketing
Investment

 

 

 

 

 

 

 

 

 

 

 

Rationalized
Supply Chain

 

Consistently
Great Customer
Service

 

Lower
Inventory/
Service
Costs

 

Gain
Share

 

Grow
Volume

 

Consumer/
Customer
Bigger/Better
Innovation

 

Execute with Excellence

 

137


 

The New CAG:

 

A true operating company that delivers sustainable profitable growth

 

138


 

[LOGO]

 

MARCH 2006

Analyst & Investor Event

 

[LOGO]

139


 

Appendix A:  Forward-Looking Annual Sales Reconciliation

 

CONAGRA FOODS, INC.

Reconciliation of  FY07 Net Sales Run Rate

($USD, in millions)

 

 

 

 

Consumer
Products

 

Commercial
Products

 

Divestitures

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

7,300

 

$

4,300

 

$

2,800

 

$

14,400

 

 

140


 

Appendix A:  Forward-Looking FY07 EBIT Reconciliation

 

CONAGRA FOODS, INC.

Impact of Divestitures on Financial Profile

($USD, in millions)

 

 

 

FISCAL YEAR 2007 Run Rate

 

 

 

Before
Divestitures*

 

Divestiture Impact

 

After Divestitures

 

 

 

 

 

 

 

 

 

Net sales

 

$

14,400

 

$

2,800

 

$

11,600

 

Costs of goods sold

 

11,275

 

2,525

 

8,750

 

Gross Profit

 

$

3,125

 

$

275

 

$

2,850

 

Gross Margin %

 

21.7

%

9.8

%

24.6

%

 

 

 

 

 

 

 

 

Earnings Before Interest and Taxes (EBIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes and equity method investment earnings

 

$

1,080

 

$

200

 

$

880

 

Add Interest expense, net

 

280

 

—

 

280

 

Add Equity method investment earnings

 

30

 

—

 

30

 

Earnings Before Interest and Taxes (EBIT)

 

$

1,390

 

$

200

 

$

1,190

 

EBIT divided by Net Sales

 

9.7

%

7.1

%

10.3

%

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes and equity method investment earnings divided by Net Sales

 

7.5

%

7.1

%

7.6

%

 

*Amounts do not reflect the impact of divestitures and other items impacting comparability including, but not limited to, restructuring and impairment charges and gains and losses on sales of assets.  The timing of these events and therefore the impact on Fiscal 2007 run rate cannot be estimated at this time.

 

141


 

Appendix A:  Forward-Looking FY07 ROIC Reconciliation

 

Impact of Divestitures on Financial Profile

($USD, in millions)

 

 

 

FISCAL YEAR 2007 Run Rate

 

 

 

Before
Divestitures*

 

Divestiture Impact

 

After Divestitures

 

 

 

 

 

 

 

 

 

Return on Invested Capital

 

 

 

 

 

 

 

Earnings before interest and taxes

 

$

1,390

 

$

200

 

$

1,190

 

Income tax expense at projected 36% effective tax rate

 

500

 

72

 

428

 

Return

 

890

 

128

 

762

 

Total Common Stockholders’ Equity (Equity)

 

5,450

 

(300

)

5,150

 

Notes payable

 

0

 

0

 

0

 

Current installments of long-term debt

 

20

 

0

 

20

 

Senior long-term debt

 

3,450

 

0

 

3,450

 

Subordinated Debt

 

400

 

0

 

400

 

Total Equity and Interest-bearing Debt

 

9,320

 

(300

)

9,020

 

Less: Cash

 

625

 

680

 

1,305

 

Invested Capital

 

$

8,695

 

$

(980

)

$

7,715

 

Return on Invested Capital

 

10.2

%

NA

 

9.9

%

Income from continuing operations*

 

$

710

 

NA

 

$

585

 

Return on Total Common Stockholders’ Equity

 

13.0

%

NA

 

11.4

%

 

*Amounts do not reflect the impact of divestitures and other items impacting comparability including, but not limited to, restructuring and impairment charges and gains and losses on sales of assets. The timing of these events and therefore the impact on Fiscal 2007 run rate cannot be estimated at this time.

 

142