Kellogg’s – Company Overview

Business overview Key Management

• Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods
• These convenience foods include cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, Name Position
Steven Cahillane CEO , Chairman of the board
frozen waffles and veggie foods
Amit Banati Chief Financial Officer
• Kellogg products are manufactured in 18 countries and marketed in more than 180 countries Melissa Howell Chief HR Officer
• Their business is broadly divided into two divisions: Kellogg North America and Kellogg International Gary H. Pilnick Vice Chairman
• Kellogg North America includes retail cereal, retail snacks, and frozen and specialty channels businesses in Valuation Overview
both the United States and Canada $m (except share price)
• Kellogg International is divided into businesses in Europe, Latin America, and Asia and Australia (Asia Share price 66.99
Pacific) Fully diluted shares 344.7
• Win in Breakfast; Be a Global Snacks Powerhouse; Double our Emerging Market Engine; and Win Where the Market cap 23,093
Shopper Shops , these four pillars guide all that they do from the pursuit of acquisitions to the launch of Debt (+) 6,326
new products Operatins leases (+) 590
• In January of 2023, Kellogg's shelved its plans to spin off its plant food business and would retain it as part Cash and cash equivalents (-) (347)
of Global Snacking Co. On March 15, 2023, Kellogg's announced that North America Cereal Co. branch was Minority interest (+) 427
formally named WK Kellogg Co Pension (+) 389
• Kellogg’s company was founded by Will Keith Kellogg on 19 February 1906 Enterprise value 30,478
• Headquarterd in Battle Creek , Michigan , United States
FY 2020 FY 2021 FY 2022
EV/EBITDA (x) 13.6 13.7 14.4
Revenue Breakdown
P/E (x) 18.3 15.4 24.0
By geography By segment
FY 2021 FY 2022 FY 2021 FY 2022 Revenue Breakdown
Others Others
8% 9% FYE December($m) FY 2020 FY 2021 FY 2022
AMEA AMEA
18% 19% Frozen
8%
Frozen
7%
Revenue 13,770 14,181 15,315
Latin
America
Latin
Growth (%) 0% 3.0% 8.0%
7%
America
7% EBITDA 2,240 2,219 2,113
Europe Margin (%) 16.3% 15.6% 13.8%
17% Europe Cereal

North
15%
North
Cereal 35% Net income 1,264 1,495 962
36%
America America Snacks
Snacks
58% 59% 48%
49%
Margin (%) 9.2% 10.5% 6.3%

Source : Company filings and website

Kellogg’s – Company Overview
Business overview Leading brands - Divisions

• Kellogg Company's business is broadly divided into two divisions: Kellogg North America and Kellogg Snacks
Breakfast
International
• Kellogg North America includes retail cereal, retail snacks, and frozen and specialty channels businesses in
both the United States and Canada
• Kellogg International is divided into businesses in Europe, Latin America, and Asia and Australia
• The North American Retail Cereal business includes many of the Company's popular brands such
as Kellogg's Special K, Frosted Flakes, and Kashi, our natural brand
• The North American Retail Snacks business includes Keebler cookies and crackers, such as Chips
Deluxe and Cheez-It, wholesome snacks, such as Fruit Twistables fruit snacks and Nutri-Grain bars, and our
Frozen Others
popular toaster pastry brand, Pop-Tarts
• The Frozen and Specialty Channels business includes brands such as Eggo, Morningstar
Farms, and Worthington, and the food service, convenience store, vending, and drug store businesses
• The Kellogg International business focuses almost exclusively on the cereal and wholesome snack
categories within the respective regions

Categories

Cereal Snacks Kellogg Quarterly Revenue 2020-2023

in US($)m
Cornflakes , Cereals , Granola ,rice krispies treats , Pringles original crisps , sharp cheddar and
Nutri – grain soft baked breakfast bars , parmesan crackers , Cheez crackers , Bacon
Frosted apple cinnamon flavor pop-Tarts and cheddar crackers

Frozen Others

French toaster sticks cinnamon , Waffles unicorn Brownie batter protein , chocolate peanut butter
cotton candy , chocolatey chip banana waffles , protein bar , Blueberry pastry crisps , Instant
chocolatey chip pancakes noodles

Source : Company website

Kellogg’s – Company overview
Geographic segment overview

North America International

• North America : United states Canada , Mexico The International segment is divided into Europe , Latin America , Asia ,
• Central America : Guatemala Australia
Description Europe & Middle East : Netherlands, Greece , France , Denmark , Portugal,
Turkey , Ireland, UK
Latin America : Argentina , Brazil , Chile , Colombia , Peru , Venezuela

Net Sales in U.S($)m Net sales in U.S($)m

Financials

April Q1 2023 April Q1 2022 April Q1 2023 April Q1 2022

Selected brands

Manufacturing facilities San Jose , Omaha , Kansas city , Wyoming , Seelyville , Louisville , Jackson , Memphis , Mexicali , Queretaro , Toluca , Bogota , Guayaquil , Lagos , Springs ,
Rome , Belleville , Lancaster , Blue Anchor , Cary , Pikeville , Rossville , Manchester , Sricity , Rayong , Takasaki , Enstek , Botany , Pskov , Vyazma ,
Kutno , Valls

Latest News :
• Kellogg opened its cereal manufacturing facility in Botany,a suburb of Sydney, Australia, in 1928. In its 90+ years, it’s produced more than four billion kilograms (8.8 billion pounds) of the iconic cereals that Australians love
• Kellogg Mexico team is helping create Better Days for 3 billion people with a new ECOmural at its Queretaro plant that uses Photocatalytic paint, which has an active mineral coating that helps break down air pollutants.
• Kellogg’s Corn Flakes™ are on their way to becoming more sustainable – which is important, considering our company produces 42 million kilograms of cereal in Australia each year

Source : Company website

Kellogg’s – Company overview
Product overview
Snacks Cereal , Breakfast Frozen Others

Offers snacks products under Kellogg’s, Cheez-It, Rice Offers Cereals and cereal bars under the Offers frozen foods under Morningstar Farms The company manufactures noodles, which
Krispies Treats, Pop-Tarts, Pringles, Austin, RXBAR, and Kellogg’s , Bear naked and Kashi brands and Eggo brands account for the third highest revenue out
Description Parati brand names of all other products. The revenue from
noodles The Noodles product category
contributed 8.83% to the revenue,
amounting to $0.32 billion

1,375
Revenue 7,563
5,123 5,280 1,106
6,807 1,097
U.S($)m

1,145

FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022

Products Crackers , Chips , Dips , Granola bars , Chewy bites Cereals , Granola , Cornflakes , Cookies , Pancakes , Waffles , French toaster sticks Brownie batter protein , chocolate peanut
Froot loops cinnamon butter protein bar , Blueberry pastry crisps
, Instant noodles

Brands Cheez-it , club , Pringles , Corn pops , Froot loops , Jumbo Apple jacks , All-Bran , Bear Naked , Crspix Eggo , Kashi Incogmeato , Kashi , Morning star farms ,
snax , Nutri grain , Zesta , Town house , Cracklin Oat Bran , Frosted mini wheats, Special K , Instant Noodles
Froot loops , Honey smacks , Mueslix ,
smart start , Special K

Select Brands

Source : Company website

Kellogg’s – Company overview
Share Price Performance

140 28-Apr-22
11-Dec-19 Kellogg Company Declares Regular 28-Apr-23
Pringles Flavor Stacking' Returns to the Dividend of $0.58 per Share for Second Kellogg Company Declares Regular Dividend
8-Feb-21
big game for the third Year In a row with an Quarter and Announces Plans for Dividend of $0.59 per Share for Second Quarter and
The company celebrates virtual closing bell ceremony with
120 out Increase in third quarter Announces Plans for Dividend Increase in
the New York Stock Exchange (NYSE) as part of its
of this World Twis third Quarter
Gratitude Campaign to honor essential employees
06-Dec-18 working throughout the COVID-19 pandemic.
Kellogg’s launches new snacks
100 from Cheez-It, Pringles and Rice
Krispies Treats
Rebased to Kellogg's

80

60
28-Sep-22
Announced additional appointments to the
future leadership team of North America Cereal
40 Co.
24-Jul-20 5-May-23
announced that its Board of Directors Company reports the first
17-Jan-19 declared a dividend of $0.57 per share quarter results , the Company
Pringles returns to super bowl advertising with 30-Jul-21 sustained strong top-line
20 new 'Flavor Stacking’ spot momentum, with net sales
announced that its Board of Directors
growth across each of its
declared a dividend of $0.58 per share Regions contributing to
on the common stock of the Company another quarter of double-

0
5-Jul-18 5-Oct-18 5-Jan-19 5-Apr-19 5-Jul-19 5-Oct-19 5-Jan-20 5-Apr-20 5-Jul-20 5-Oct-20 5-Jan-21 5-Apr-21 5-Jul-21 5-Oct-21 5-Jan-22 5-Apr-22 5-Jul-22 5-Oct-22 5-Jan-23 5-Apr-23 5-Jul-23

Kellogg's co. S&P

Performance L5Y L4Y Since covid-19 L3Y L2Y Russian-Ukraine war L1Y L6M L3M

Kellog's co. (4.4) 22.6 4.2 3.2 6.8 (6.0) (5.4) (3.2) 0.5

S&P (98.4) (98.5) (98.7) -98.6 -99.0 (98.8) (98.8) (98.8) (98.9)

Source : Company website

 Kellogg’s – Company overview
Ownership structure

Name Ownership Shares Valuation Name Ownership Shares Valuation

W.K. Kellogg Foundation, Endowment 15.94% 54,631,838 $3.7b Van Eck Associates Corporation 0.87% 2,981,036 $201.4m
Fund

BlackRock, Inc 9.25% 31,697,821 $2.1b Renaissance Technologies LLC 0.71% 2,447,206 $165.3m

The Vanguard Group, Inc 9.07% 31,097,431 $2.1b State Farm Insurance Companies, 0.7% 2,416,261 $163.2m
Asset Management Arm

Keybank National Association, Asset 6.02% 20,650,404 $1.4b BNY Mellon Asset Management 0.7% 2,397,604 $162.0m
Management Arm

State Street Global Advisors, Inc 3.84% 13,174,311 $890.1m First Trust Advisors LP 0.68% 2,315,781 $156.5m

Wellington Management Group LLP 3.21% 10,989,339 $742.4m Legal & General Investment 0.67% 2,310,286 $156.1m
Management Limited

Geode Capital Management, LLC 1.65% 5,659,404 $382.3m Columbia Management Investment 0.67% 2,283,136 $154.2m
Advisers, LLC

Charles Schwab Investment 1.49% 5,120,543 $345.9m Amundi Asset Management SAS 0.61% 2,085,458 $140.9m
Management, Inc

Beutel Goodman & Company Ltd 1.22% 4,188,008 $282.9m Acadian Asset Management LLC 0.55% 1,898,791 $128.3m

Northern Trust Global Investments 1.16% 3,972,454 $268.4m Norges Bank Investment 0.54% 1,848,158 $124.9m
Management

Invesco Capital Management LLC 1.01% 3,476,685 $234.9m California Public Employees' 0.49% 1,674,374 $113.1m
Retirement System

UBS Asset Management AG 0.88% 3,009,299 $203.3m Llura Gund 0.48% 1,656,632 $111.9m

Note: Top 25 shareholders own 63.14% of the company

Source: Company website
Kellogg’s – Company overview
Key Management
Name and position Biography Name and position Biography
• Joined Kellogg Company in October 2017 • Joined Kellogg Company in 1997
Steven Cahillane • Previously served as the president of Coca-cola Americas Rodrigo Lance • Previously served as SVP , KNA supply chain
CEO , Chairman • Spent eight years with Ambev, the world’s largest brewing Senior vice • Prior to his supply chain roles he served as Vice President ,
of the board company, in various roles including Chief Commercial Officer, president, Global Snacks Engineering in 2011
global marketing, sponsorships, innovation and research supply chain • Holds a MBA degree from Tecnologico de Monterrey
• Holds a Master of Business Administration degree from Harvard
University
• He has been in this role since July 2018
• Joined Kellogg Company in 2001 as a Marketing Intern for Eggo David Lawlor • Prior to Kellogg, he served as Vice President European Cereal
Nicolas Amaya in the United States SVP and President, • Under Mr. Lawlor’s leadership, Kellogg has continued to play a
SVP and President, • Prior to Kellogg, he held various marketing roles at Unilever Kellogg Europe critical role in tackling hunger by funding school breakfast clubs
Kellogg Latin America Andina in the personal care division and food banks across its European region
• Led the complex and challenging regional integration of Pringles • Holds a degree in politics and history from University College
in 2012 Dublin
• Holds a MBA degree from Thunderbird, Garvin School of
International Management • He has been in this role since 2016
Gary H. Pilnick. • Prior to joining Kellogg, he was affiliated with the Chicago law firm of
• Joined Kellog company in March 2012 Vice Chairman, Chief Jenner and Block from 1989 to 1995, which included corporate legal
Amit Banati • Prior to Kellogg he served in a variety of finance, general Legal and assignments in Chicago and Tokyo, Japan
Vice Chairman and management and board roles at Kraft Foods, Cadbury Compliance Officer • He was named Vice President and Chief Counsel, Sara Lee
Chief Financial Schweppes and Procter & Gamble Branded Apparel, North and South America in February 1999.
Officer. • He serves on the board of Fortune Brands. In addition, he serves • Holds a bachelor’s degree with honors from Lafayette College,
on the boards of the Kellogg-Wilmar Joint Venture in China and Easton, Pennsylvania
the Kellogg-Tolaram Joint Venture in Nigeria
• Holds a MBA degree from the IIM in Lucknow • She has been in this role since February 2019
Lesley Salmon • Prior to Kellogg she had more than two decades of experience in
• She has been in this role since June 2016
SVP , Chief the Consumer Packaged Goods industry
Melissa Howell • Prior to Kellogg, she was Chief Human Resources Officer for
Information Officer • She played a key role in operational, tactical and strategic
SVP , Chief HR Officer Rockford, Michigan-based Wolverine since 2014
execution across all areas of the business, driving growth
• She spent 24 years with General Motors where she led a team
initiatives and delivering multi-million-dollar savings
of 2,800 Human Resources professionals worldwide
• Ms. Salmon then moved across industries for five years, leading
• Holds a Master of Arts degree in Industrial Relations from
a major transformation of the IT function within Galaxy Optical,
Wayne State University
the largest Optical Manufacturer in the U.K

• Joined Kellogg company in July 2020 • Joined Kellogg company in July 2012
Shumit Kapoor • Most recently, he was Regional President, Pet Nutrition, Asia Chris Hood • Prior to Kellogg, he joined Procter & Gamble in 1993, and had
SVP & President, Asia Pacific with additional oversight of the confectionary and food Senior Vice President a distinguished 19-year career in Marketing and General
Pacific, Middle East business in Japan and New Zealand and President, North Management, based in Cincinnati, Ohio
and Africa • Prior to Mars, Mr. Kapoor was with Nokia and he started his America • He serves on the CBA Board of Directors and FMI Foundation
career at Procter & Gamble Board of Trustees
• Holds a MBA degree from the Indian Institute of Management in • Holds a MBA degree from from Columbia Business School
Lucknow

Source : Company website

Kellogg’s – Company overview
Borad of Directors
Name and position Biography Name and position Biography
• He became Chairman of the Board in March 2018 • He has served as a member of Kellogg Company’s Board of Directors
Steven A. • Previously served as the president of Coca-cola Americas Donald R. since November 2007
Cahillane • Spent eight years with Ambev, the world’s largest brewing company, Knauss • He retired as Executive Chairman of the Board of The Clorox Company
CEO , in various roles including Chief Commercial Officer, global marketing, Member of • Previously held a variety of positions in marketing and sales with the
Chairman of sponsorships, innovation and research the Board Frito-Lay and Tropicana divisions of PepsiCo, Inc.
the Board • Holds a MBAdegree from Harvard University • Holds a bachelor's degree in history from Indiana University

• She has been a member of the Company’s Board of Directors

• She has served as a member of Company’s Board of Directors since Mary A. since October 2012
Stephanie Ann February 2014 Laschinger • She is currently on the Newmont Corporation BOD and is a member of
Burns • Prior to this she served as Chairman, President and Chief Executive Member of the Leadership Development and Compensation Committee
Member of Officer of Dow Corning Corporation until her retirement in 2011 the Board • She was formerly a member of the Board of Directors of the
the Board • She has been on the Forbes magazine 100 Most Powerful Women list Federal Reserve Bank of Atlanta
for several years • Holds a MBA degree from the University of Connecticut
• currently serves on the Board of Directors for Corning, Inc.
and Hewlett-Packard Inc
• She has been a member of Company’s Board of Directors since
• Joined the Company’s Board of Directors in June 2017 Erica L. Mann February 2019
Carter A. Cast • He serves on the Manufacturing Committee and the Social Member of • She was the President and General Manager of Pfizer Nutrition.
Member of Responsibility & Public Policy Committee the Board She joined Pfizer upon its acquisition of Wyeth where she served as
the Board • He has significant leadership experience as well at other Fortune 500 the Senior Vice President of Global Nutrition
companies, including PepsiCo, Inc • Fortune named Ms. Mann to the list of the 50 Most Powerful Women
• Holds a MBA degree from Northwestern University’s Kellogg School of International in 2016 and 2017
Management • Holds a degree in Marketing Management diploma from the Institute
of Marketing Management
• He has been a member of Company’s Board of Directors since • He has served as a member of Kellogg Company’s Board of Directors
Roderick D. February 2019 J. Michael since October 2020
Gillum • He is currently a principal at Jackson Lewis P.C. where he co-leads the Schlotman • He was the Executive Vice President and Chief Financial Officer of
Member of Firm’s Automotive Industry team Member of Kroger from September 2015 through December 2019
the Board • He previously served as the board chair and more recently as the co- the Board • He is a member of the Chair of the Board of Connetic Ventures LLC
trustee of the W.K. Kellogg Foundation Trust and Ohio National Financial Services
• Holds a MBA degree from the Massachusetts Institute of Technology • Holds a bachelor’s degree in Accounting from the University of
Kentucky
• He has served as a member of Company’s Board of Directors since • She has served as a member of Company's Board of Directors since
G. Zachary December 2014 Carolyn M. December 2015
Gund • He chairs the Manufacturing Committee and also serves on the Tastad • Prior to this she served as Chief Executive Officer, Health Care
Member of Compensation & Talent Management Committee, the Nominating & Member of at Procter & Gamble
the Board Governance Committee and the Executive Committee. the Board • She has served on the board and executive committee of the
• He is also a director at AccordCare, an in-home care service provider Consumer Brands Association
• Holds a MBA degree from the Kellogg School of Management • Holds a Bachelor's degree in Commerce from the University of
Saskatchewan in Canada

Source : Company website

Kellogg’s - Financial overview

Income statement Q1 Q1 FY FY

(millions except share data ) Mar-22 Mar-23 2021 2022

Net Sales 3,672 4,503 14,181 15,315

Cost of goods sold 2,513 2,843 9,621 10,700

Selling , general and administrative expense 642 770 2,808 2,980

Operating profit 517 440 1,752 1,635

Interest expense 56 80 223 218

Other income(expense), net 74 26 437 (220)

Income before income taxes 535 386 1,966 1,197

Income taxes 112 86 474 244

Earnings (loss) from unconsolidated entities 1 2 3 9

Net income 424 302 1,495 962

Net income (loss) attributable to non controlling interests 2 4 7 2

Net income attributable to Kellogg company 422 298 1,488 960

Per share amounts:

Basic 1.24 0.87 4.36 2.81

Diluted 1.23 0.86 4.33 2.79

Source : Company website

Kellogg’s – Financial overview

Balance sheet Q1 FY
( Millions, except share data) Mar-23 31st December 2022
Current assets
Cash and cash equivalents 347 299
Accounts receivable , net 1,820 1,736
Inventories 1,801 1,768
other current assets 356 383
Total current assets 4,324 4,186
Property , net 3,786 3,789
Operating lease right-of-use assets 611 617
Goodwill 5,690 5,686
Other intangible , net 2,297 2,296
Investment in unconsolidated entities 434 432
Other assets 1,488 1,490
Total assets 18,630 18,496
Current liabilities
Current maturities of long-term debt 567 780
Notes payable 471 467
Accounts payable 2,900 2,973
Current operating lease liabilities 113 121
Accrued advertising and promotion 813 766
Accrued salaries and wages 214 370
Other current liabilities 923 872
Total current liabilities 6,001 6,349
Long-term debt 5,759 5,317
Operating lease liabilities 477 486
Deferred income taxes 728 760
Pension liability 711 709
Other liabilities 475 500
Commitments and contingencies
Equity
Common stock 105 105
Capital in excess of par value 1,033 1,068
Retained earnings 9,293 9,197
Treasury stock , at cost (4,666) (4,721)
Accumulated other comprehensive income(loss) (1,713) (1,708)
Total Kellogg company equity 4,052 3,941
Non controlling interests 427 434
Total equity 4,479 4,375
Total liabilities and equity 18,630 18,496

Source : Company website

Kellogg’s – Financial overview
Cash flow statement YTD FY
Date 31-03-2023 Dec-22
Operating activities
Net income 302 962
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization 116 478
Postretirement benefit plan expense(benefit) -15 240
Deferred income taxes -6 -46
Stock Compensation 22 96
Other -10 -42
Post retirement benefit plan contributions -5 -23
Changes in operating assets and liabilities , net of acquisitions :
Trade receivables -110 -257
Inventories -27 -411
Accounts payable 9 411
All other current assets and liabilities - 243
Net cash provided by (used in) operating activities 276 1,651
Investing activities
Additions to properties -203 -488
Issuance of notes receivable -5 -22
Repayments from notes receivable 10
Purchases of marketable securities -
Sales of marketable securities 17 -
Settlement of net investment hedges 17 37
Investments in unconsolidated entities 1 -
Purchases of available for sale securities -5 -17
Collateral pain on derivatives -15 -
Sales of available for sale securities 5 19
Other 1 13
Net cash provided by (used in) investing activities -205 -488
Financing activities
Net increase (reduction ) of notes payable, with maturities less than or equal to 90 days 337
Issuances of notes payable, with maturities greater than 90 days 28
Reductions of notes payable , with maturities greater than 90 days -35
Issuances of long-term debt 401 39
Reductions of long-term debt -216 -648
Debt redemption costs -
Net issuances (reductions) of notes payable 3
Net issuances of common stock 19 277
common stock repurchases - -300
Cash dividends -202 -797
Other -38 18
Net cash provided by (used in ) financing activities -33 -1,081
Effect of exchange rate changes on cash and cash equivalents 10 -109
Increase (decrease) in cash and cash equivalents 48 13
cash and cash equivalents at beginning of period 299 286
Cash and cash equivalents at end of period 347 299

Source : Company website

Kellogg’s – Valuation overview
Trading multiples

EV/EBITDA(x) P/E(x) EV/Sales EV/EBIT(x)

Ticker Company Name Share price(US$) Market cap(US$)m EV(US$m) 2021 2022 LTM 2021 2022 LTM 2021 2022 LTM 2021 2022 LTM

K Kellogg's 67.46 23,259 30,225 13.6 14.3 14.9 15.6 24.2 27.7 2.1 2.0 1.9 17.3 18.5 19.4

MDLZ Mondelez International 70.89 97,361 118,200 20.1 19.3 18.6 24.2 23.8 23.3 4.1 3.8 3.6 24.8 23.5 22.6

HRL Hormel Foods company 39.21 22,935 124,108 91.0 60.6 22.2 25.3 6.4 6.8 12.5 10.7 10.1 107.5 83.1 36.6

INGR Ingredion inc 108.69 43,599 46,206 51.1 46.1 37.4 96.5 87.4 77.9 6.7 5.8 5.6 67.5 58.7 53.2

KHC Kraft Heinz 35.63 44,202 63,508 10.0 10.6 10.3 12.2 12.8 12.5 2.4 2.4 2.4 17.5 18.4 17.7

Mean 37.1 30.2 20.7 34.7 30.9 29.6 5.6 4.9 4.7 46.9 40.4 29.9

Median 20.1 19.3 18.6 24.2 23.8 23.3 4.1 3.8 3.6 24.8 23.5 22.6

Operational benchmarking

Net income
2020-2022 CAGR (%) EBITDA Margin(%)
Margin (%)

Ticker Company Name Share price(US$m) Market cap(US$m) EV(US$m) Revenue EBITDA 2021 2022 LTM 2021 2022 LTM

K Kellogg's 67.46 23,259 30,225 -2.9% 5.5% 15.6% 13.8% 13.0% 10.5% 6.3% 5.4%

MDLZ Mondelez International 70.89 97,361 118,200 5.5% 8.9% 20.5% 19.5% 19.4% 14.0% 13.0% 12.7%

HRL Hormel Foods company 39.21 22,935 124,108 22.6% 10.2% 13.8% 17.7% 45.5% 9.2% 31.2% 27.5%

INGR Ingredion inc 108.69 43,599 46,206 7.2% 15.2% 13.1% 12.6% 15.1% 6.6% 6.3% 6.8%

KHC Kraft Heinz 35.63 44,202 63,508 (5.1%) 0.6% 24.5% 22.7% 22.8% 14.0% 13.0% 13.1%

Mean 0.1 0.1 0.2 0.2 0.2 0.1 0.1 0.1

Median 0.1 0.1 0.2 0.2 0.2 0.1 0.1 0.1

Source : Company website

Kellogg’s – Valuation overview
Trading multiples and Operational benchmarking

EV/Revenue EV/EBIT
10.7 83.1

58.7

5.8
3.8 23.5
2.4 2.0 18.5 18.4

HRL INGR MDLZ KHC K HRL INGR MDLZ K KHC

EV/EBITDA 22.6% EV/Revenue CAGR

60.6

46.1 7.2%
5.5%

19.3
14.3
10.6
(2.9%)
(5.1%)
HRL INGR MDLZ K KHC
HRL INGR MDLZ K KHC

87.4

P/E EV/EBITDA CAGR

15.2%

10.2% 8.9%
5.5%
24.2 23.8
0.6%
12.8
6.4
INGR HRL MDLZ K KHC

INGR K MDLZ KHC HRL

Source : Company website
Kellogg’s – Valuation overview

Precedent Transactions
LTM
EV/Revenue(
Announcement date Target company Acquirer Stake(%) Deal value(US$m) Enterprise value(US$m) EV/EBITDA(x) P/E(x)
x)
03-Oct-22 Denali Ingredients Orkla Food ingredient 84.0% 200 200 2.0 13.9 N/A

23-Dec-19 Campbell's Arnott biscuit division KKR & Co. 100.0% 2,200 10,129 2.9 14.8 8.4

04-Jan-19 Kellogg's Cookie Brands Ferroro International 100.0% 1,300 9,597 3.7 15.0 0.7

08-Feb-23 JM Smucker Pet food Brands Post Holdings 100.0% 1,200 4,661 1.6 5.9 12.6

20-Dec-22 Savory solutions Group PAI Partners 100.0% 900 11,822 1.7 4.9 -0.7

04-Oct-22 Kraft Heinz 49%-51% 45,000 45,000 N/A N/A N/A

Mean 2.4 10.9 5.2

Median 2.0 13.9 4.6

By Number of Announced Deals (TTM March 31, 2023)

290 food and beverage deals announced in TTM March 2023

Public
Financial 23%
20%
77% were completed by privately owned buyers

Public vs
Strategic vs
Financial buyer private buyer

80% were strategic transactions

Strategic Private
80% 77%
Source : Company website & Kroll website
Kellogg’s – Valuation overview
Case study – Kraft and Heinz Merger

Transaction overview Leverage Structure

• On 25th March 2025 , Heinz and Kraft announced the merger of the two companies and named the
company as Kraft Heinz Berkshire Hathaway 3G Capital Other Total
• The deal has been valued at around $45billion
• Heinz shareholders will own 51% of the combined company with kraft shareholders owning 49% stake June 7 , 2013 for Heinz $4.25bn equity $4.25 bn equity $8.5 bn
• The kraft shareholders will have cash dividend of $16.50 per share
• The cost of this dividend which amounts to $10 billion will be borne by 3G capital and Berkshire Hathaway June 7 , 2013 for Heinz $8.3bn Preferred stock $8.3bn
• The combined company will have an annual sales revenue of $28 billion
• The merger was a cash and stock merger and it was a horizontal merger Borrowed June 7, 2013 for Heinz $12 bn debt $12bn

Total paid for Heinz $28.8bn

The Merger and it’s fallout
March 2016,added money for Kraft $5.26bn equity $4.74bn equity $10bn
• Flatlining Operations: Revenues for 2018 were unchanged from revenues in 2017, but operating income dipped
(before impairment charges) from $6.2 billion in 2017 to $5.8 billion in 2018; the operating margin dropped Total July 2015 $17bn $9bn $27.8bn
from 23.5% in 2017 to 22% in 2018
• Accounting Irregularities: In a surprise, the company also announced that it was under SEC investigation for
accounting irregularities in its procurement area, and took a charge of $25 million to reflect expected adj Repayment of Buffet's preferred shares ($8.3 bn) (8.3 bn)
• Goodwill Impairment: The company took a charge of $15.4 billion for impairment of goodwill, primarily on their
US Refrigerated and Canadian Retail, an admission that they paid too much for acquisitions in prior years. Total 2016 $9.5 bn $9 bn $18.5 bn
• Dividend Cuts: The company, a perennial big-dividend payer, cut its dividend per share from $2.50 to $1.60, to
prepare itself for what it said would be a difficult 2019
Brands of Kraft Heinz

Company’s corporate strategy

• The Kraft Heinz company is focusing on core business practices, including ZBB revenue management and MBO
• Also focuses on cost cutting and interest in scoring a big acquisition have been key to the company’s strategy
under management installed by Brazillian private equity firm 3G capital
• Kraft Heinz’s cost-focused strategy also gave way to a high-pressure, anxious environment , according to
four former
Kraft Heinz employees who worked at the company’s Chicago headquarters and two former employees from
Europe
• Synergies expected : International growth and Economies of scale
• Heinz has a global footprint , it derives 60% of its sales from regions other than North America
• Kraft on the other hand , derives 98% of it’s sales from North America

Source : Company website

 Kellogg’s – Industry overview
Overview Key Trends

• The FMCG industry is a vital component of the global economy , contributing significantly to a country’s
• In North America , the pandemic awoke a sleeping giant. Before COVID-19 , E-commerce revenue for the
Gross Domestic product (GDP)
food and beverage industry was humming along at a moderate 15.6-15.9% YoY growth rate
and job creation
• Having experienced its potential , projections indicate a stunning 40% + growth rate over the next 4 years
• The global FMCG market size was valued at $11,490.9 billion in 2021 and is projected to reach $18,939.4
• Legacy CPG brands moving into DTC food and beverage :
billion by 2031 , registering a CAGR OF 5.1% from 2022 to 2031
Kraft Heinz , Nestle , Pepsico , Campbells , Hershey’s , Kellogg’s , Coca-cola
• FMCHG products can be broadly categorised into three main segments
Food and Beverage , Personal care and toiletries , Household and cleaning items
• The Food and Beverage market consists of freshly prepared or packaged food as well as alcoholic and non- 10% 5% Kraft 4% Smithfield
7% Nestle 2% Mars
alcoholic beverages Pepsico Heinz foods

• The food and beverage segment is a $435.3 billion combined market in 2021 , worldwide revenue 3% General
is expected to increase from $506.3 billion this year to $856.9 billion by 2025 9% Tyson 6% JBS USA 4% Ab in Bev 2% Coca cola
mills

Market size and split • 10 brands legacy (CPG) command 51% of the F&B sale share
• 20 brands control 71% of the F&B industry sale – predominantely via retail

• The global food and beverage market grew from $6,729.54 billion in 2022 to $7,221.73 billion in 2023 at Key Players
a compound annual growth rate (CAGR) of 7.3%
• Like other verticals , 2020 saw a massive shift to online purchasing a 51.6% year-over-year (YOY) increase Grupo Bimbo SAB de
Global Ecommerce Food and Beverage Total Sales
CV
for food and 39.3% for beverages food and beverage’s three year compounded annual growth rate McCormick & Co 3% in US($)bn
(CAGR) will remain steady at 23% and 14% respectively Inc 3%
Kellogg Co
3%
Inner
Mongolia
Yili…
Global revenue and growth in food category in
Global revenue and growth in Beverage Danone SA
U.S($)bn 506
category U.S($)bn 6%

The Kraft Heinz Co Nestle SA

7%
Dairy & Eggs 22 51 3
47%
Sales
Other Beverages 4
Vegetables 24 General Mills Inc
857
53 Non-Alcoholic
7%

drinks
79 160
Meat
26 70 The Hershey Co
7%
Bread & cereal Hot Drinks 33 56
43 81 Mondelez
International Inc
13% YoY change Projected Growth
Confectionery & snacks Alcoholic Drinks 93 123
43 113
0 50 100 150 200 0 100 200 300 Future Outlook
• Expected market size by 2027 is $9,225.37
• Expected growth rate by 2027 is 6.3%
2021 Revenue 2021-2025 Growth 2021 Revenue 2021-2025 Growth

Source : Company website , Free web

Kellogg’s – Industry overview
Total Addresable market

Global Ecommerce- Food : Growth and Revenue Global Ecommerce- Beverage : Growth and Revenue

600.0 60% 400 45%

+51.6% Growth YoY in 2020 +39.3% Growth YoY in 2020 40%
500.0 350
50%
300 35%
400.0 40% 30%
250
25%
300.0 30% 200
20%
200.0 150
20% 15%
100 10%
100.0 10%
50 5%
0.0 0% 0 0%
2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025

Revenue Growth Revenue Growth

Average annual growth of customers spending on eating out Market size by region
% Others
12 South 5% North
America America
10 9% 28%
8
6
4
2
Asia
0 Pacific
America Europe Asia Pacific Middle East and 35%
Africa Europe
23%
2006-2016 2017-2026

Source : Company website , Free web