Brand Portfolio and Positioning

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Emily Hamilton
5 years ago
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3 This presentation contains forward-looking statements, such as projected operating results, earnings and cash flows, that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by those forward-looking statements. You should understand that the risks, uncertainties, factors and assumptions listed and discussed in this presentation, including the following important factors and assumptions, could affect the future results of Smucker and could cause actual results to differ materially from those expressed in the forward-looking statements: (i) volatility of commodity markets from which raw materials are procured and the related impact on costs; (ii) the successful integration of the coffee business with Smucker s business, operations and culture and the ability to realize synergies and other potential benefits of the merger within the time frames currently contemplated; (iii) crude oil price trends and their impact on transportation, energy, and packaging costs; (iv) the ability to successfully implement price changes; (v) the success and cost of introducing new products and the competitive response; (vi) the success and cost of marketing and sales programs and strategies intended to promote growth; (vii) general competitive activity in the market, including competitors pricing practices and promotional spending levels; (viii) the concentration of certain of Smucker s businesses with key customers and the ability to manage and maintain key customer relationships; (ix) the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy of any such customer; (x) changes in consumer coffee preferences, and other factors affecting the coffee business, which represents a substantial portion of Smucker s business; (xi) the ability of Smucker to obtain any required financing; (xii) the timing and amount of Smucker s capital expenditures, restructuring, and merger and integration costs; (xiii) the outcome of current and future tax examinations and other tax matters; (xiv) foreign currency and interest rate fluctuations; (xv) political or economic disruption due to the global credit crisis; (xvi) other factors affecting share prices and capital markets generally; and (xvii) the other factors described under Risk Factors in reports and statements filed by Smucker with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and the proxy materials prepared in connection with the Folgers transaction. You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this presentation. Smucker does not assume any obligation to update or revise these forward-looking statements to reflect new events or circumstances.

4 February 25, 2009

5 Our Purpose Long-Term Strategic Goals Brand Portfolio and Positioning Folgers Integration Industry Trends

6 Ability to implement strategy Strong and growing portfolio of #1 brands Increased scale and opportunities with Folgers Enhanced margins, strong balance sheet, and increased cash flow Management consistency

10 ($ & shares in millions) FY 2009 Pro Forma* FY 2002 Net sales $4,700 $650 Shares outstanding Market capitalization $5,000 + $860 Number of employees 4,500 2,300 *Assumed Folgers transaction had closed on May 1, 2008.

12 Bringing Families Together to Share Memorable Meals and Moments

19 Trust Relevance Consistency Quality Variety Convenience Price

26 Core Competencies Basic Beliefs

27 We will own and market food brands which hold the market position in their respective category, with an emphasis on North America

28 Fix the bullets, colors.also should we grey the words a little? Our Vision Core Competencies Basic Beliefs

29 Net Sales Growth 6%

30 New Products 1% Market Share 2-3% Total 6% Acquisitions 2-3%

31 FY 2003 FY 2004 FY 2005 FY 2007 FY 2008 FY 2009

32 Leverage Infrastructure Net Sales EPS 8%+ Growth 6% Growth

33 Leverage Infrastructure EPS Growth 8%+ Net Sales Growth 6% Dividend Payment Target 40% Payout

34 Net Sales ($ in Billions) 5-Year CAGR = 15% Earnings Per Share (non-gaap)* 5-Year CAGR = 8% $3.0 $3.50 $2.5 $3.00 $2.50 $2.0 $2.00 $1.5 $1.50 $1.0 $1.00 $0.5 $0.50 $0.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 $0.00 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 * Excludes merger, integration and restructuring charges.

35 Sales / Employee ($ in thousands) Net Income / Employee ($ in thousands) $900 $777 $60 $52 $600 $552 $40 $35 $300 $283 $20 $13 $0 FY2002 FY2005 FY2008 $0 FY2002 FY2005 FY2008

36 $300 $250 $ Year CAGR Smucker: 9.1% S&P 500: -2.6% DJIA: 0.6% Peer Group: 3.5% $150 $100 $50 $ SJM S&P 500 DJIA Peer Group *Based on $100 investment and dividends reinvested. Information through January 31, 2009.

38 75%

39 Coffee 40% Spreads 20% All Other 15% Baking 25%

40 Center-of-the-store is an important profit center for retailers ABC Store Baking Aisle Spreads/ Condiments Aisle Frozen Aisle Coffee Aisle Specialty Aisle Natural Beverage Aisle

41 53% Cooking More At Home

42 33% Taking Lunch To Work or School Less Impulse Buying

43 Combined category size of $2 billion Trended Sales 5 Year CAGR > 7% FY2004 FY2006 FY2008 Share of Market: 46%

46 Share of Market 46%

51 Focus on Convenience

52 Combined category size of $6 billion Trended Sales 5 Year CAGR > 25% FY2004 FY2006 FY2008 Share of Market: 20%

62 Folgers is #1 retail packaged coffee brand Strong brand equity Leader in product innovation FY 2008 sales $1.8 billion

63 Four plants Approximately 1,200 employees Cincinnati facility

64 Nov Dec Feb May 2009 Fall 2009 Closing Integrated Sales Team Organizational Structure Customer Visits

66 Coffee category is important to retailer Shopper insights and category management Innovation in category Emphasized relationship core competency

67 Nov Dec Feb May 2009 Fall 2009 Closing Integrated Sales Team Organizational Structure Customer Visits Customer Facing

69 Nov Dec Feb May 2009 Fall 2009 Closing Integrated Sales Team Organizational Structure Customer Visits Customer Facing Plant Go-Live Green Coffee

70 Grow core red can business

76 Increase distribution First year sales in excess of $150 million Advertising recognition in Advertising Age

79 10% Other Markets 90% U.S. Retail Markets

82 Capital structure and debt Private label Commodity cost and pricing trends FX exposure Pensions

83 (in millions) 4/30/08 Current Shares Outstanding Market Capitalization $2,700 $5,100

84 ($ in millions) FY 2009 Pro Forma Total Debt $1,540 Total Capitalization $6,500 Debt / Total Cap 24% Debt / EBITDA ~2x Average Borrowing Rate 5.5% (a) (a) As of January 31, 2009

85 ($ in millions) June 2009 $ 75 November November Total Due $625

86 ($ in millions) FY 2008 FY 2009 Pro Forma (1) Cash Flow From Operations $192 $505 Capital Expenditures (76) (115) Free Cash Flow $116 $390 (1) Assumes Folgers transaction had closed on May 1, 2008 and approximately $80MM in run-rate synergies

87 $ Share - 52 weeks ending 01/25/09 50% 40% Oils 30% 20% 10% 0% 40% 30% Canned Milk 20% 10% 0%

88 $ Share - 52 weeks ending 01/25/09 50% Fruit Spreads 40% Coffee 40% 30% 30% 20% 20% 10% 10% 0% 0% 50% 40% 30% 20% 10% 0% Peanut Butter 20% 15% 10% 5% 0% Baking Mixes

90 Oils and Baking January price decrease of 13% Costs have stabilized Minimize pricing actions

92 Spreads Various costs are up Longer covered positions Price increases taken in early 2009 Maintain current pricing into 2010

94 Coffee Green coffee costs are down Two recent price declines Pricing transparency

95 Coffee Soybean Oil Flour Peanuts Glass / Plastic Fruits Sweeteners Milk Total account for approximately 60% of COGS

96 Percentage of Net Sales Canada Limited international Canada FX exposure $35 million 2H09

97 No FY 2009 impact Based on year-end balances Pension expense increases

99 Ability to implement strategy Strong and growing portfolio of #1 brands Increased scale and opportunities with Folgers Enhanced margins, strong balance sheet, and increased cash flow Management consistency

100 Additional Information Pillsbury, the Pillsbury Logo, and Poppin Fresh the Pillsbury Doughboy are the registered trademarks of The Pillsbury Company, LLC. Carnation is the registered trademark of Societe des Produits Nestle S.A. Dunkin Donuts, and the Dunkin Donuts Logo are the registered trademarks of DD IP Holder LLC. The following trademarks and their corresponding logos are the trademarks of their respective owners: NBC, Wal-Mart, Sam s Club, Kroger, Target, Food Lion, SuperValu, Ahold, Harris Teeter, Publix and Costco. All other trademarks and logos are the trademarks of The J. M. Smucker Company.

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The J. M. Smucker Company. Investor Presentation October 2008

The J. M. Smucker Company. Investor Presentation October 2008 The J. M. Smucker Company Investor Presentation October 2008 Forward Looking Statement This presentation contains forward-looking statements, such as projected operating results, earnings and cash flows,