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Focus on Fundamentals Helping Kellogg Maintain Momentum, Mackay Tells Crowd during Shareowners Meeting
More than 1,500 Kellogg investors gathered Friday, April 25, in Battle Creek for what was a relaxed, consistently positive 2008 Annual Meeting of Shareowners. In fact, the remarks by President and Chief Executive Officer David Mackay - who co-hosted the event with Chairman of the Board Jim Jenness - reflected the "Sustainable, Dependable Performance" theme of our company's 2007 Annual Report. "Thanks to the hard work and passion of Kellogg Company employees around the world, 2007 was another year of continued sales growth, strong financial results and increased shareowner return," David told the crowd. "We remain committed to our goal of delivering sustainable growth in the future." Acknowledging that steep commodities and energy prices made last year "a very challenging environment for most packaged-food companies," David stressed that it's our unwavering focus on the fundamentals of our business that has allowed Kellogg to maintain its momentum. These include driving cereal growth, expanding snacks and continued growth of our Frozen Foods and Kashi businesses. "Our Eggo business is over $500 million now, growing the last three years at double-digits," he reported. "Morningstar Farms meat alternatives, as well as the recently acquired Gardenburger, are well-positioned for continued growth. And Kashi is a great business for us. Since we acquired Kashi back in 2000, we've generated a 40 percent compound annual growth rate." All about opportunity In addition to Gardenburger and Bear Naked, the other U.S. acquisition we made in 2007, David pointed to our acquisition in January of the United Bakers Group in Russia as transactions that will enhance our ability to generate long-term growth. Russia, in particular, is one of the emerging markets that now represent a very important part of our long-term growth strategy. "Markets like Russia, Central and Eastern Europe, Turkey, Latin America and Asia represent significant growth potential," David said. "We've already made good progress. For example, in Latin America our five-year compound annual growth rate is over 10 percent. And in Turkey we announced a joint venture a few years ago with Ülker. We've grown our cereal category share from virtually nothing - a 1 to 2 share - to over 20 share in 2007." David also touched on three areas of corporate focus: environmental sustainability, marketing to children and obesity. Positively and proactively addressing these issues, he said, will help drive Kellogg's sustainable, dependable performance. "Environmental stewardship is a great opportunity for us as a company. Not only can we create potential savings, but we have the opportunity to leave a better environmental footprint going forward," David said, noting that our company will soon be producing its first-ever corporate sustainability report. Speaking to our marketing-to-children practices, David briefly discussed the company's announcement in June that going forward all Kellogg products marketed to children ages 6-11 must meet our science-based Global Nutrition Criteria. He also mentioned that Guideline Daily Amounts (GDAs) are now appearing on the front of cereal packages in the U.S., Canada, Mexico, Australia and Korea to help consumers make more informed food choices. "On the area of obesity," he said, "we believe that we have a role to play along with the rest of the industry. As a company, we have some basic principles: All that we do must be science- and fact-based, and the focus must be on balancing calories in/calories out." The obesity issue presents Kellogg and the rest of the food industry with a real opportunity to encourage nutrition education, develop more choices for healthier diets and support fitness programs wherever possible, he added, noting that our company invested $10 million in support of physical activity last year. In other business... Shareowners re-elected David Mackay, Sterling Speirn and Dr. John Zabriskie to Kellogg's board of directors. Each will serve a three-year term that will expire at our 2011 Annual Meeting. Shareowners also ratified PricewaterhouseCoopers as our company's independent auditors as well as defeated a shareowner-initiated proposal that would have changed the way company directors are elected, from the current plurality-vote standard to a majority-vote standard. The board had opposed the proposal. This was our company's 86th Annual Meeting of Shareowners. It was held once again at the W.K. Kellogg Auditorium in Battle Creek. |
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