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  • KelloggCompany May4,2017

    Page1 of11

    KelloggCompany2017FIRSTQUARTERFINANCIALRESULTSMay4,2017

    Q1KelloggCompanyEarnings May4,2017

    ForwardLookingStatements

    2

    Thispresentationcontains,orincorporatesbyreference,forwardlookingstatementswithprojectionsconcerning,amongotherthings,theCompanysglobalgrowthandefficiencyprogram(ProjectK),theintegrationofacquiredbusinesses,theCompanysstrategy,zerobasedbudgeting,andtheCompanyssales,earnings,margin,operatingprofit,costsandexpenditures,interestexpense,taxrate,capitalexpenditure, dividends,cashflow,debtreduction,sharerepurchases,costs,charges,ratesofreturn,brandbuilding,ROIC,workingcapital,growth,newproducts,innovation,costreductionprojects,workforcereductions,savings,andcompetitivepressures.Forwardlookingstatementsincludepredictionsoffutureresultsoractivitiesandmaycontainthewordsexpects,believes,should,will,anticipates,projects,estimates,implies,can,orwordsorphrasesofsimilarmeaning.

    TheCompanysactualresultsoractivitiesmaydiffermateriallyfromthesepredictions.TheCompanysfutureresultscouldalsobeaffectedbyavarietyoffactors,includingtheabilitytoimplementProjectK(includingtheexitfromitsDirectStoryDeliverysystem)asplanned,whethertheexpectedamountofcostsassociatedwithProjectKwilldifferfromforecasts,whethertheCompanywillbeabletorealizetheanticipatedbenefitsfromProjectKintheamountsandtimesexpected,theabilitytorealizetheanticipatedbenefitsfromRevenueGrowthManagement,theabilitytorealizetheanticipatedbenefitsandsynergiesfromtheacquisitionsintheamountsandatthetimesexpected,theimpactofcompetitiveconditions;theeffectivenessofpricing,advertising,andpromotionalprograms;thesuccessofinnovation,renovationandnewproductintroductions;therecoverabilityofthecarryingvalueofgoodwillandotherintangibles;thesuccessofproductivityimprovementsandbusinesstransitions;commodityandenergyprices;laborcosts;disruptionsorinefficienciesinsupplychain;theavailabilityofandinterestratesonshorttermandlongtermfinancing;actualmarketperformanceofbenefitplantrustinvestments;thelevelsofspendingonsystemsinitiatives,properties,businessopportunities,integrationofacquired businesses,andothergeneralandadministrativecosts;changesinconsumerbehaviorandpreferences;theeffectofU.S.andforeigneconomicconditionson itemssuchasinterestrates,statutorytaxrates,currencyconversionandavailability;legalandregulatoryfactorsincludingchangesinfoodsafety, advertisingandlabelinglawsandregulations;theultimateimpactofproductrecalls;businessdisruptionorotherlossesfromwar,terroristactsorpoliticalunrest;andotheritems.

    Forwardlookingstatementsspeakonlyasofthedatetheyweremade,andtheCompanyundertakesnoobligationtoupdatethempublicly.

    ThispresentationincludesnonGAAPfinancialmeasures. PleaserefertotheAppendicesforareconciliationofthesenonGAAPfinancialmeasurestothemostdirectlycomparableGAAPfinancialmeasures.ManagementbelievesthattheuseofsuchnonGAAPmeasuresassistsinvestorsinunderstandingtheunderlyingoperatingperformanceofthecompanyanditssegments.

  • KelloggCompany May4,2017

    Page2 of11

    Q1KelloggCompanyEarnings May4,2017

    Q1Overview

    3

    Consumption IndustrywidesofteninginJanuaryandFebruaryinU.S.

    Shipments AlsoaffectedbytradeinventoryfromQ4,pricepackchangesonPringles

    Margins ContinuedexpansionthroughProjectK,ZeroBasedBudgeting,sequentialimprovementinprice/mix

    Earnings ContinuedOperatingProfitgrowth,taxratetiming,ontrackforyear

    CashFlow Increasedyearonyear,workingcapitalimprovement,ontrackforyear

    *Allreferencedmetricsareonacurrencyneutralcomparablebasis;CashFlowisdefinedascashfromoperationslesscapitalexpenditure.

    Q1KelloggCompanyEarnings May4,2017

    2020GrowthPlan AddressingTheseTrends

    4

    OnTrendFood&Packaging

    ProgressmadeinQ1toward:

    OmniChannelApproach&Capabilities

    EmergingMarketsScale&Expansion

    MarginExpansionforFuelandEarnings

  • KelloggCompany May4,2017

    Page3 of11

    Q1KelloggCompanyEarnings May4,2017

    Reported (17.6)%

    CurrencyNeutralComparable* 2.2%

    FinancialResults Summary

    5* PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    ChangeVersusPriorYear

    NetSales

    OperatingProfit

    EarningsPerShare

    Reported 51.0%

    CurrencyNeutralComparable* 13.5%

    Reported (4.1)%

    CurrencyNeutralComparable* (4.4)%

    Q1

    Q1KelloggCompanyEarnings May4,2017

    NetSales ImpactedbyVolume

    6

    FirstQuarter2017

    $3,395M +1.3%

    $3,254M(5.7)%

    (1.0)%

    CurrencyNeutralComparableGrowth

    +1.3%

    Yearoveryear,%change

    *

    *Theacquisition/divestiturefigureincludesthenegativeimpactofdeconsolidatingourVenezuelaresults,beginningJanuary1,2017.

  • KelloggCompany May4,2017

    Page4 of11

    Q1KelloggCompanyEarnings May4,2017

    ProductivityInitiatives OnTrack

    7

    NetworkRestructuring

    ZeroBasedBudgeting

    GotoMarketModel

    GlobalBusinessServices

    OrganizationalDesign

    Q1KelloggCompanyEarnings May4,2017

    ProfitMargins ContinuedExpansion

    8

    32.0%

    34.0%

    36.0%

    38.0%

    Q12016 Q12017

    FirstQuarter2017%ofNetSales,CurrencyNeutralComparableBasis,ExcludingVenezuela

    GrossProfitMargin

    9.0%

    11.0%

    13.0%

    15.0%

    17.0%

    Q12016 Q12017

    OperatingProfitMargin

    * PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    +20basispoints

    +110basispoints

  • KelloggCompany May4,2017

    Page5 of11

    Q1KelloggCompanyEarnings May4,2017

    CashFlow OnTrack

    9

    ($160)

    ($120)

    ($80)

    ($40)

    $0

    $40

    $80

    $120

    Q12016 Q12017

    CashFlow*

    FirstQuarter2017

    *CashFlowdefinedascashfromoperatingactivities,lesscapitalexpenditure.PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    ExcludingBondTenderof$(144)

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    Q12016 Q12017

    CoreWorkingCapital**

    **CoreWorkingCapitalisaninternalKelloggmetricdefinedaslast12monthsaveragetradereceivablesandinventory,less 12monthsaveragetradepayables,dividedbylast12monthsnetsales.

    Q1KelloggCompanyEarnings May4,2017

    2017 UpdatedGuidance

    10

    NetSalesCurrencyNeutralComparableBasis

    Updated Previous

    ~(3)% ~(2)% Q1decline BroaderU.S.consumptionsoftness+Sequentialimprovementincomingquarters

    OperatingProfitCurrencyNeutralComparableBasis

    +79% +79% +Nochange+ProductivitysavingsoffsetlowerNetSales

    EarningsPerShareCurrencyNeutralComparableBasis

    +810% +810% +Nochange

    CashFlowCashFromOps.,LessCapitalExpenditure

    $1.1$1.2bn +Nochange$1.1$1.2bn

  • KelloggCompany May4,2017

    Page6 of11

    Q1KelloggCompanyEarnings May4,2017

    2017 PhasingFactorstoConsider

    11

    Sequentialimprovementintopline

    DSDtransitiontiming OverlapofWarehouseandDSDcostsduringQ2Q3transition OverheadsavingslargelystartinQ4

    Q1KelloggCompanyEarnings May4,2017

    KelloggNorthAmerica Overview

    12

    Strongmarginexpansioncontinues

    Slowstartonsales

    DSDtransitionprogressingwell

    Strongcommercialplansahead

  • KelloggCompany May4,2017

    Page7 of11

    Q1KelloggCompanyEarnings May4,2017

    U.S.SpecialtyChannels Performance&Priorities

    13

    Q1

    NetSales* +5%

    Op.Profit* +9%

    OPMargin* +90bp

    * PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    Stronggrowth

    Expansioninemergingchannels

    Continuedoperatingprofitmarginexpansion

    CurrencyNeutralComparableBasis

    2017: Steadysalesand

    operatingprofitgrowth Expandreach,improve

    coremix

    Q1Highlights:

    Q1KelloggCompanyEarnings May4,2017

    NorthAmericaOther Performance&Priorities

    14

    CategoryslowdownsinJanuary/February

    Eggo removalofartificialingredients

    Kashisegmentgainedshareincereal

    Strongoperatingprofitmarginimprovement

    Q1

    NetSales* (6)%

    Op.Profit* +8%

    OPMargin* +200bp

    * PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    CurrencyNeutralComparableBasis

    2017: Improvementinsales

    performance Growthinoperatingprofit

    andoperatingprofitmargin

    Canada

    Q1Highlights:

  • KelloggCompany May4,2017

    Page8 of11

    Q1KelloggCompanyEarnings May4,2017

    U.S.MorningFoods Performance&Priorities

    15

    CategoryslowdownsinJanuary/February TradeinventoryreducedfromQ4 Growthinkidsbrands;timingofSpecialK

    andMiniWheats innovation

    OPmarginexpansionledbyZBBandProjectK

    Q1

    NetSales* (6)%

    Op.Profit* +5%

    OPMargin* +250bp

    * PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    2017: Gradualimprovementin

    netsalesperformance Strongoperatingprofit

    marginexpansion

    CurrencyNeutralComparableBasis

    Q1Highlights:

    Q1KelloggCompanyEarnings May4,2017

    U.S.Snacks Performance&Priorities

    16

    CategoryslowdownsinJanuary/February

    TradeinventoryreducedfromQ4 Announcedandcommencedexit

    fromDSD

    ContinuedsharegainsinCrackers,ledbyBig3collectiveincrease

    Q1

    NetSales* (6)%

    Op.Profit* (27)%

    OPMargin* (270)bp

    * PleaserefertoappendicesforreconciliationofnonGAAPmeasurestothemostdirectlycomparableGAAPmeasure.

    CurrencyNeutralComparableBasis

    2017: TransitionfromDSD Increasebrandsupport Strongoperatingprofit

    marginexpansionQ1Highlights:

  • KelloggCompany May4,2017

    Page9 of11

    Q1KelloggCompan