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Kellogg Company August 3, 2017

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Kellogg CompanySECOND QUARTER 2017FINANCIAL RESULTSAugust 3, 2017

Q2 Kellogg Company Earnings August 3, 2017

Forward-Looking Statements

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This presentation contains, or incorporates by reference, “forward-looking statements” with projections concerning, among other things, the Company’s global growth and efficiency program (Project K), the integration of acquired businesses, the Company’s strategy, zero-based budgeting, and the Company’s sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, charges, rates of return, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, workforce reductions, savings, and competitive pressures. Forward-looking statements include predictions of future results or activities and may contain the words “expects,” “believes,” “should,” “will,” “anticipates,” “projects,” “estimates,” “implies,” “can,” or words or phrases of similar meaning.

The Company’s actual results or activities may differ materially from these predictions. The Company’s future results could also be affected by a variety of factors, including the ability to implement Project K (including the exit from its Direct Story Delivery system) as planned, whether the expected amount of costs associated with Project K will differ from forecasts, whether the Company will be able to realize the anticipated benefits from Project K in the amounts and times expected, the ability to realize the anticipated benefits from Revenue Growth Management, the ability to realize the anticipated benefits and synergies from the acquisitions in the amounts and at the times expected, the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices; labor costs; disruptions or inefficiencies in supply chain; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items.

Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to update them publicly.

This presentation includes non‐GAAP financial measures. Please refer to the Appendices for a reconciliation of these non‐GAAP financial measures to the most directly comparable GAAP financial measures. Management believes that the use of such non-GAAP measures assists investors in understanding the underlying operating performance of the company and its segments.


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Q2 Overview

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Note: All referenced metrics are on a currency-neutral comparable basis; Cash Flow is defined as cash from operations less capital expenditure.

Financials: On Track• Sequential improvement in Net Sales• Continued Profit Margin improvement• Cash Flow on track

• Nearing completion of transition to warehouse from DSD• Parati (Brazil) integration progressing well• Improved cereal performance in core international markets

BusinessTransformation: On Track


Priority – Restore Top-Line Growth

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* All referenced metrics are on a currency-neutral comparable basis.

Return to low single-digit

growth *

On-TrendFood &

Packaging

Winning Where the

Shopper Shops

Brand-Building

Effectiveness

Emerging Markets

Progress Toward Returning to Growth:

Special K and Kashi Co. stabilizing share in U.S. Cereal

Expanding distribution of new Special K and Kashisnack bars

Removed-artificialsEggo gaining share

Progress on DSD transition

Growth in e-Commerce

Continued share gains for kid-segment cereal brands

Momentum for Cheez-It and Rice Krispies Treats

Sequential improvement in U.K., Canada, and Australia cereal

Strong growth in Asia, led by Pringles

Integration and growth of Parati(Brazil), momentum in Bisco Misr (Egypt)

Double-digit growth in Africa and China Joint Ventures **

U.S. Snacks now 100% warehouse distributed

Entering final, wind-down phase

Pivoting to demand-pull model

** Joint Ventures are not included in consolidated results.


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Reported +0.7% (8.4)%

Currency-Neutral Comparable * +6.9% +4.6%

Financial Results – Summary

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* Please refer to appendices for reconciliation of non-GAAP measures to the most directly comparable GAAP measure.

Change Versus Prior Year

Net Sales

OperatingProfit

EarningsPerShare

Reported +1.3% +19.4%

Currency-Neutral Comparable * +7.7% +11.3%

Reported (2.5)% (3.3)%

Currency-Neutral Comparable * (3.1)% (3.8)%

Q2 1st Half


Net Sales – Sequential Improvement

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Net Sales Growth ComponentsYear-over-year, % change

* The acquisition/divestiture figure includes the negative impact of deconsolidating our Venezuela results, beginning January 1, 2017.

-5.7%

1.3% 1.3%

-1.0%

-4.1%

-4.9%

1.8%1.3%

-0.7%

-2.5%

Volume Price/Mix Acq. & Div. * Currency Net Sales

Q1 2017

Q2 2017

Currency-Neutral Comparable Net Sales:

Q1: (4.4)% Q2: (3.1)%

(Reported-Basis)


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Profit Margins – Continued Expansion

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Second Quarter and First Half 2017% of Net Sales, Currency-Neutral Comparable Basis

Gross Profit Margin Operating Profit Margin


39.7%

38.9%

40.0%

39.1%

Q2 1H

2016 2017

+30basis points

+20basis points

15.6% 15.4%

17.2% 16.7%

Q2 1H

2016 2017

+160basis points

+130basis points


Cash Flow – On Track

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$0

$100

$200

$300

$400

$500

1H 2016 1H 2017

Cash Flow *

First Half 2017 vs. First Half 2016

* Cash Flow defined as cash from operating activities, less capital expenditure. Please refer to appendices for reconciliation of non-GAAP measures to the most directly comparable GAAP measure.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1H 2016 1H 2017

Core Working Capital **

** Expressed as % of net sales, “Core Working Capital” is an internal Kellogg metric defined as last 12 months’ average trade receivables and inventory, less 12 months’ average trade payables, divided by last 12 months’ net sales.


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Full Year 2017 – Reaffirming Guidance

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Net SalesCurrency-Neutral Comparable Basis

Current Previous

~ (3)% ~ (3)%- Overlay of DSD price adjustment / disruption

+ Sequential improvement in rest of business,led by Pringles

Operating ProfitCurrency-Neutral Comparable Basis

+7-9% +7-9% + Productivity savings offset Net Sales decline

- Higher y-o-y investment and tax rate in Q3

+ DSD overhead savings weighted to Q4

Earnings Per ShareCurrency-Neutral Comparable Basis

+8-10% +8-10%

Cash FlowCash From Ops., Less Capital Expenditure

$1.1-$1.2 bn $1.1-$1.2 bn

In the Second Half:



Kellogg North America – Overview

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• Sequential NSV improvement, across several businesses

• RTEC category remained soft, but share performance improving

• DSD transition on track and nearing completion

• Strong margin expansion continues

Q2 YTD

Net Sales * (2)% (3)%

Op. Profit * +7% +2%

OP Margin * +170 bp +110 bp


Currency-Neutral Comparable Basis


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Transition From DSD – On Track

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Customer Alignment: Agreed on Kellogg list-price adjustment to customers, transition timing, joint business planning

Core Assortment: Aligned on-shelf assortment, culled tail SKUs

Conversion to Warehouse: Shipping only to customers’ warehouses, halted DSD deliveries

• Now 100% warehouse distributed

• Entering final, wind-down phase

• Pivoting to demand-pull

Completion of Transition: Close distribution centers, execute operational “hypercare”, pivot to “pull-model” commercial activities, increasing brand investment


U.S. Snacks – Performance & Priorities

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• DSD transition well executed and on track

• Pipeline-fill offset by reduced promo activity

• Increased Brand-Building investment



Going Forward:• Transition from DSD• Increase brand support• Strong operating profit

margin expansion

Q2 Highlights:

Q2 YTD

Net Sales * 0% (3)%

Op. Profit * (1)% (14)%

OP Margin * (10) bp (140) bp


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U.S. Morning Foods – Performance & Priorities

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• Category-wide consumption remained soft

• Share gains in kids brands

• Special K innovation and media campaign

• OP margin expansion led by ZBB and Project K


Going Forward:• Gradual improvement in

net sales performance• Strong operating profit

margin expansion


Q2 Highlights:

Q2 YTD

Net Sales * (7)% (6)%

Op. Profit * +5% +5%



U.S. Specialty Channels – Performance & Priorities

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• Continued growth

• Expansion in emerging channels

• Continued operating profit margin expansion


Going Forward:• Steady sales and

operating profit growth• Expand reach, improve

core mix

Q2 Highlights:

Q2 YTD

Net Sales * +2% +4%

Op. Profit * +15% +12%



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North America Other – Performance & Priorities

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• Eggo: Growth from removed artificials and new licensed-equity food

• Kashi Company: Share gain in cereal and significant improvement in snacks trends

• Canada: Broad-based share gains

• Strong operating profit margin improvement



Going Forward:• Improvement in sales

performance• Growth in operating profit

and operating profit margin

Q2 Highlights:

Q2 YTD

Net Sales * (3)% (4)%

Op. Profit * +18% +13%


Canada


Europe – Performance & Priorities

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• Promotion delays following Q1 Pringles pricing negotiations

• Sequential improvement again in U.K. cereal

• Continued operating margin improvement



Going Forward:• Stabilize the U.K.• Increase operating profit

margin

Q2 Highlights:

Q2 YTD

Net Sales * (7)% (8)%

Op. Profit * (1)% (3)%


P1 P2 P3 P4 P5 P6

Share pt chg -2.6 -1.9 -1.0 -0.7 -0.7 0.2

Sales % Chg -14% -5% -4% -4% -1% 0%

-15%

-10%

-5%

0%

Source: Nielsen

Kellogg U.K. Cereal Consumption

Jan Feb Mar Apr May Jun


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Latin America – Performance & Priorities

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• Decline driven by Caribbean/Central America

• Continued growth in Mexico and Mercosur

• Integration and momentum of Parati



Going Forward:• Grow sales• Integrate Parati• Increase operating profit

marginQ2 Highlights:

Q2 YTD

Net Sales * (4)% (3)%

Op. Profit * (15)% +1%

OP Margin * (160) bp +60 bp


Asia Pacific – Performance & Priorities

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• Australia: Continued sequential improvement in net sales

• Broad-based growth in Asia

• Pringles momentum and expansion

• Joint ventures performing well

• Strong operating profit margin expansion


Currency-Neutral Comparable Basis; does not include joint ventures

Going Forward:• Accelerate net sales

growth• Improve operating profit

margins

Q2 Highlights:

Q2 YTD

Net Sales * 2% 3%

Op. Profit * +35% +31%



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In Summary…

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• On track for 2017 sales, profit, earnings, and cash flow

• DSD transition nearing completion

• Committed to returning to top-line growth

* All referenced metrics are on a currency-neutral comparable basis; Cash Flow is defined as cash from operations less capital expenditure.

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