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Danone CAGNY 2010
 

Danone CAGNY 2010

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Danone Presentation at 2010 Consumer Goods Analyst Conference

Danone Presentation at 2010 Consumer Goods Analyst Conference

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    Danone CAGNY 2010 Danone CAGNY 2010 Presentation Transcript

    • Pierre-André Terisse February 18th, 2010
    • Disclaimer This document contains certain forward-looking statements concerning DANONE. Although DANONE believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those anticipated in these forward-looking statements. For a detailed description of these risks and uncertainties, please refer to the section “Risk Factors” in DANONE’s Annual Report (which is available on www.danone.com). DANONE undertakes no obligation to publicly update or revise any of these forward-looking statements. This document does not constitute an offer to sell, or a solicitation of an offer to buy, Danone shares. 2
    • Agenda 1 2009: Adjusting the model 2 Danone: 6 levers for profitable growth 3 2010: our key priorities 3
    • 2009: adjusting the model 4
    • KEY FIGURES - FY 09 Sales +3.2% like-for-like (1) Sales € 14,982 mln (1.6)% reported +61 bps like-for-like (1) Trading operating margin 15.31% +40 bps reported Underlying net income +11.5% like-for-like (1,2) from continuing activities € 1,412 mln +7.5% reported Underlying EPS (fully diluted) +10.2% like-for-like € 2.57 (1,2) from continuing activities (3.1)% reported Free cash flow (3) € 1,427mln + 20.6% reported (1) At constant scope of consolidation and constant exchange rates (2) Excluding exceptionals and excluding the effects of the capital increase (3) Free Cash Flow: Cash flow from operations less capital expenditure (net of disposals) 5
    • We strongly accelerated Like-for-like sales growth 1st quarter 4th quarter 13.6% 10.5% 10.8% 7.0% + 5.5% 4.6% 3.8% + 1.0% (1.2)% (3.9)% Baby Medical Baby Medical Nutrition Dairy Waters GROUP GROUP Dairy Waters Nutrition Nutrition Nutrition 6
    • FRESH DAIRY - Market shares continue to strengthen Volume market share vs year ago1 France +0.8 pt Poland +1.4 pt US +1.2 pt Czech +2.8 pt Mexico +1.0 pt Argentina -0.5 pt Republic Russia +0.1 pt(2) UK +1.8 pt Germany +0.8 pt (1) Full year 2009 vs full year 2008 (2) Year to date November 09 vs year to date November 08 7
    • Margins have strongly and consistently progressed in the past two years with a peak in H1 09 Reported margins and like-for-like growth 16.03% +61 bps 15.31% +53 bps 14.91% 14.58% 13.27% FY 07 FY 08 FY 09 H1 09 H2 09 8
    • Danone: 6 levers for profitable growth 9
    • Danone: 6 levers for profitable growth Fast growing categories Diversified geographies A unique mission Focus on productivity Unique cash conversion cycle Decentralized organization 10
    • Well positioned in faster growing categories Faster growing categories Growth focused portfolio 5 - year volume CAGR 2009 performance As of 2008 As of 2009 Sales growth Margin Medical nutrition 8.8% 8.8% 6% Medical Nutrition +11.4% 20.57% Baby nutrition 5.3% 5.3% Still bottled water 6.6% 4.9% 20% Baby Nutrition +7.9% 18.32% Yogurt 4.4% 3.9% Savoury biscuits 4.6% 3.6% and crackers Ice cream 3.7% 3.2% Frozen processed 3.0% 17% Waters +1.0% 12.56% food 2.8% Sauces, dressings 3.2% 2.7% & condiments Cheese 2.8% 2.6% Confectionery 2.8% 2.0% Functional drinks 6.4% 2.0% 57% Fresh Dairy Products +1.6% 14.54% RTE cereals 2.4% 1.7% Soup 0.9% 1.3% Carbonates 1.9% 1.3% Source: Euromonitor 11
    • Unique ability to build differentiation Danacol: exclusive plant sterols Fortimel: superior high protein supplement 82% of Drive the Market segment Share growth Bebelac: unique complete care formula Elimination: low mineral water to help eliminate > 1 Bn€ sales Leader in Mexico 12
    • Unique ability to build differentiation With unparalleled taste superiority and dailiness  Excellent  Daily  Superior 50% 40% 10% superior parity inferior 13
    • Our key brands drive the growth Volume evolution Activia Volume evolution Bonafont Volume evolution Aqua 14
    • Our key brands drive the growth Volume evolution Immunity Volume evolution Neocate Volume evolution Fortimel 15
    • Well diversified geographical footprint exposed to fast growing geographies Diversified geographic portfolio Faster growing markets (sales split 2009) GDP growth differential v. OECD1 Country 07/08 08/09 China 8.2 % 10.6 % Indonesia 5.3 % 6.5 % Brazil 4.3 % 2.6 % Argentina 6.2 % 0.6 % Mexico 0.6 % (0.3)% Russia 4.8 % (0.9)% Source: Economist Intelligence Unit (EIU) as of May 28 2009 (national sources, EIU) 1OECD aggregate real GDP growth rate used as benchmark for 07/08 and 08/09 is 0.8% and (4.1)%, respectively 41% of sales generated in Emerging Markets 16
    • Our mission and market positions provide a strong platform for continued above-sector growth North America Western Europe Eastern Europe No. 1 fresh dairy No. 1 fresh dairy No. 1 fresh dairy No. 2 bottled water No. 1 baby nutrition No. 1 baby nutrition No. 1 medical nutrition No. 1 medical nutrition Latin America Africa/Middle East Asia No. 1 fresh dairy No. 1 fresh dairy No. 1 baby nutrition No. 1 bottled water No. 1 bottled water To bring health through food to the largest number of people 17
    • Substantial potential to increase our worldwide footprint Danone’s geographical presence in 2000 Danone’s geographical expansion since 2000 Danone’s geographical opportunities going forward
    • Unique expertise and opportunities in new geographies White space in current big countries: East Russia + West USA + North Brazil + 200 mln new consumers One meaningful area to Per Capita potential in assess BOP model: recently opened countries Indian subcontinent - 1 bn people Dairy 800 mln consumers with <1 kg per cap 19
    • Danone: a unique mission Treating critical Measuring nutritional stomach Bring health through needs distention food to the largest number of people Hydration and elimination Treating immunity, infection & allergies 20
    • Our Mission: To bring health through food to the largest number of people > USD 25k USD 9-25k < USD 9k n 21
    • Our Mission: To bring health through food to the largest number of people Dairy Romania Baby Nutrition Indonesia 22
    • Our Mission: To bring health through food to the largest number of people Waters Mexico 23
    • Focus on productivity By-product valorization Upstream Differentiation Desserts & Drinks DanFarm – potential up to €40-80 mln CO2 Footprint reduction DanCream DanMilk means to differentiate European Cream sales Danone milk Milk Transformation optimization of milk usage 24
    • Focus on productivity Head office convergence: - 7 countries initiated move in 2009-2010 - 6 more in 2011-2012 Global plan for IS/IT convergence Purchasing opportunities cross division 2010 media pitch - 17 Countries - Cross divisional - + 15% GRP (€ 80 mln equivalent) 25
    • Unique cash conversion cycle FCF in € mln and as a % of sales Numico 1516 1427 1303 1224 1184 1183 1149 1036 794 622 624 4.7% 4.4% 5.5% 7.6% 8.8% 10.0% 10.0% 12.6% 9.3% 7.8% 9.5% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 26
    • Unique cash conversion cycle 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Days inventory 38.7 37.8 38.4 35.5 34.3 33.7 37.2 42.6 42.1 42.2 Days payable -92.0 -87.1 -91.5 -94.6 -94.4 -94.7 -108.8 -119.2 -114.4 -112.8 Days Receivables net of rebates 39 36 34 30 29 25 32 28 18 19 Cash conversion cycle including rebates -15 -13 -19 -29 -31 -36 -40 -48 -54 -54 Successful initiatives Headwind New Initiatives Cash committee Negative mix (new geo) FR€€ Suppliers negotiation LME G€M Sales & operations planning process Capex monitoring (decrease of stocks) Wall to Wall Animation of KPIs 27
    • Decentralized organisation + synapses Adaptability = + intelligence Multiplicity + synergies + knowledge Reactivity + success Amsterdam Moscow Paris New York Barcelona Shanghai Singapour Buenos Aires 28
    • Medium-term objectives Medium-term objectives Sales growth1 At least +5% At least +5% Annual free cash flow € 2 bn by 2012 € 2 bn by 2012 from operations 1 Based on constant scope of consolidation and constant exchange rates 29
    • 2010: our key priorities 30
    • Dynamics of our operating environment Consumption in Western economies Solid growth in emerging countries 12% 10% 8% 6% 4% 2% W.Europe W.Europe 0% S O N D J F M A M J J A S O N (2)% 2009 2010 2011 (4)% W.Europe 2008 2009 Source: Eurostat Industrial Production Source: Nomura Economic Monitor Raw materials rebound Currencies stabilizing SMP price 2005 - 2009 31
    • Key priorities 2010 CONTINUE TO STRENGTHEN TOP-LINE GROWTH 1 Keep reinforcing our competitive positions Negative value growth gradually fading away Strengthen new geographies & seize new opportunities 2 SUSTAIN OPERATING MARGINS Productivity will be key priority to counter cost inflation Competitive management of pricing Balancing H1/H2 3 MAINTAIN FREE CASH FLOW FOCUS Continue to improve the cash conversion cycle Intention to start using share buy-back authorization in 2010 32
    • Outlook 2010 Objectives 2010 Sales growth1 At least +5% At least +5% Free cash flow At least +10% At least +10% EBIT margin 1 Stable margin Stable margin 1 Based on constant scope of consolidation and constant exchange rates 33
    • Notes 34 34
    • Notes 35 35
    • Notes 36 36