Danone Sa · EURONEXT:BN
Danone Sa — Barclays Back to School Conference 2011
33 slides from Danone Sa's conference presentation, Sep 7, 2011
Slide 1: Danone Model in Motion
Danone Model in Motion Franck Riboud Sept 7th, 2011
Slide 2: Disclaimer
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 material
Slide 3: Danone Model in Motion: A unique model
Danone Model in Motion A unique model Growing our categories and brands Productivities and cash efficiency 3 3
Slide 4: A unique mission, a unique portfolio
A unique mission, a unique portfolio Fresh dairy Waters Products Hydration Developing a well being and elimination category worldwide Danone worldwide position Bring health #1 Fresh Dairy Products through food #2 Packaged water to the largest number of #2 Baby Nutrition Baby people Medical #3 Medica
Slide 5: Best positioned in fastest growing categories & geographies
Best positioned in fastest growing categories & geographies Fastest growing categories ~50% sales in emerging markets 2010 volume growth by category H1 2011 sales breakdown Baby Nutrition 8.7% Medical Nutrition 6.5% Dairy 5.7% Emerging Waters 5.0% Western markets Europe Savoury Biscuits and Crackers
Slide 6: MICRUB: strongholds in emerging markets
MICRUB: strongholds in emerging markets Sales 2006 2010 proforma Unimilk Growth % group sales €mln % group sales MEXICO 5% 1.0 5% INDONESIA 2% 0.9 5% >60% CHINA 11% 0.8 4% RUSSIA 3% 2.0 11% People USA 7% 1.4 8% BRAZIL 2% 0.7 4% 60% Total 30% 37% MICRUB 6
Slide 7: A strong H1
A strong H1 Objectives Results Sales growth (1) 6-8% 8.7% Trading operating margin around -30 bps (1) -23 bps (1) FCF (2) +8% (1) Like-for-like : Based on constant scope of consolidation (including 12 months Unimilk) and constant exchange rates (2) Free Cash Flow: Cash flow from operations less capi
Slide 8: Danone Model in Motion: Growing our categories and brands
Danone Model in Motion A unique model Growing our categories and brands Productivities and cash efficiency 8 8
Slide 9: Broad based growth across ALL our businesses and geographies
Broad based growth across ALL our businesses and geographies Like-for-like sales growth – H1 2011 Dairy 5.5% w/o Unimilk Europe 3.2% w/o Unimilk Dairy 6.0% Europe 4.0% Waters 16.2% Asia 19.5% Baby 10.4% ROW 13.6% Medical 9.0% 9
Slide 10: Growing our categories and brands - WATERS
Growing our categories and brands - WATERS Aquadrinks - Growth vs year ago Segment weight (2010, value) Plain sparkling 8% HOD 12% Aquadrinks 21% 59% Plain still PET Volvic Bonafont Mizone Badoit 2011 Muscat hibiscus « Mango kweni » « Fruit bubble » launches : (Japan) (Mexico) (Indonesia) (France) –
Slide 11: Growing our categories and brands – BABY NUTRITION
Growing our categories and brands – BABY NUTRITION -9 m 0m 12 m 36 m Supporting pregnant Addressing the special Building superiority & lactating women needs of babies over non specific food 2011 launches : 11
Slide 12: Growing our categories and brands – MEDICAL NUTRITION
Growing our categories and brands – MEDICAL NUTRITION 2011 launches : 12
Slide 13: Growing our categories and brands – FRESH DAIRY PRODUCTS
Growing our categories and brands – FRESH DAIRY PRODUCTS Danone Per Capita Consumption (kg/yr) & 2005-2010 increases 10.0 8.0 All Danone countries: + 33% pcc growth 2005-2010 6.0 4.0 2.0 - 13 13
Slide 14: Growing our categories and brands – FRESH DAIRY PRODUCTS
Growing our categories and brands – FRESH DAIRY PRODUCTS Packaging New channels + 19 pts preference New benefits New segments 14
Slide 15: Fresh Dairy Products in Russia: major growth area
Fresh Dairy Products in Russia : major growth area in volume & value Average consumption of Fresh Dairy Products Netherlands 35 France 1 cup a day Germany 30 Spain 25 Austria Finland Iran Portugal Belgium 20 Czech R. Bulgaria 1 cup every 2 Norway Sweden days Argentina Slovakia 15 UK Poland Hungary T
Slide 16: Danone-Unimilk integration creating a national leader
Danone-Unimilk integration creating a national leader Industrial & supply Portfolio Regions Distribution chain Focus on Modern retail Premium Focused Best-in-class and and on “the West” practices Direct RTM Health + Focus on Presence in Large Focused traditional with traditional network on “the East
Slide 17: Danone-Unimilk integration creating a national leader
Danone-Unimilk integration creating a national leader Phase 1. Collaboration Phase 2. Integration 7 selected collaboration project Building organization with focus on: in key business areas - Growth - Profitability Identification of most potential areas - Sustainability of Danone and Unimilk best pr
Slide 18: Unimilk: focusing on mix & profitability improvement
Unimilk : focusing on mix & profitability improvement S1 like-for-like sales growth Clear short term FOCUS ON THE Tëma priorities RIGHT KPIs brand Prostokvashino brand 21% 14% Segmenting the PRODUCT MIX portfolio S1 2011 S1 2011 Trading operating margin Drive efficiency to GROSS MARGIN 4.05% invest
Slide 19: Unimilk: focusing on mix & profitability improvement
Unimilk : focusing on mix & profitability improvement Brand portfolio dynamics Portfolio simplification Example of sku rationalization : Portfolio optimization Focus on Golden SKUs example of Golden SKU : 19
Slide 20: Fresh Dairy Products in US: Danone catching the opportunity
Fresh Dairy Products in US : Danone catching the opportunity 2010 PCC in LB Potential : Doubling consumption 90.0 80.0 70.0 60.0 50.0 40.0 30.0 22.0 20.0 14.0 10.0 - Almost 2/3’s of all Yogurt Buyers only Buy the Category Once a Month or Less. 20
Slide 21: Danone performance in US
Danone performance in US Sales – Danone Fresh Dairy Products* Danone* contribution to PCC evolution 14.0 Total CAGR 11.7 11.7 12.1 Market 11.1 +10 % Groupe 5.1 Danone 3.7 4.1 4.1 4.4 2006 2007 2008 –2009 21 – 2010 Danone* market share (value) 36.0 35.7 35.7 35.8 36.7 34.3 35.4 35.0 35.3 Groupe Danon
Slide 22: The Greek Phenomenon
The Greek Phenomenon US Fresh Dairy Products - Market Share by Segment 45 40 35 Core 30 25 21.9 Light 20 Proactive Health 15 12.6 Kids 10 5.5 Greek 5 0 2009 2010 2011 YTD Source: IRI 22
Slide 23: Danone's Greek relaunch – July 2011
Danone’s Greek relaunch – July 2011 23
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Slide 25: Activia innovations
Activia innovations New Tastes & Formats Entering new distribution channel GREEK STYLE PARFAIT 1oz Crunchy Granola 5oz Creamy Vanilla Yogurt Thick and Creamy Crunchy and Creamy 2oz Real Strawberries FRENCH STYLE Silky and Fruity Fruit Bites on the Bottom 25
Slide 26: Danone Model in Motion: Productivities and cash efficiency
Danone Model in Motion A unique model Growing our categories and brands Productivities and cash efficiency 26 26
Slide 27: Input cost at high level and volatile
Input cost at high level and volatile S&P GSCI Commodity Index 1000 900 800 700 600 500 400 300 200 100 0 Source : Bloomberg 27
Slide 28: Strong productivities the first lever to manage input costs
Strong productivities the first lever to manage input costs Productivity (1) 2007-2011 (€ mln) Change Stretch 516 ≈500 the Model 470 the Model Do more 324 with less Innovate and change H1 246 Buy Better 2008 2009 2010 2011 (1) Perimeter = COGS including logistic costs 28
Slide 29: Strong productivities the first lever to manage input costs
Strong productivities the first lever to manage input costs 2011 Recipe - Danette 360° renovation Saudi Arabia Better product Cheaper recipe •Product recipe score •Business beat current (9.5) vs. opportunities (9.0) in consumer to fuel brand growth test Better nutrition Less CO2 •Meet Nutritional re
Slide 30: Strong productivities the first lever to manage input costs
Strong productivities the first lever to manage input costs Danone stand-alone before Unimilk Trading operating margin growth Like-for-like -8bps +91bps -174bps +36 bps -53bps +92bps Net of +269 pts productivity 15.30% Margin H1 2010 Leverage & Others Pricing & Mix Input costs Other COGS A&P Margin
Slide 31: FCF: virtuous model and strong performance
FCF: virtuous model and strong performance Free-Cash-Flow (1) 2,000 1,713 1,427 1,183 H1 +7.8% 986 vs H1 10 925 2007 2008 2009 2010 2011 2012 (1) Free cash flow: Cash flow from operations less capital expenditure (net of disposals) and excluding business combinations fees 31
Slide 32: Looking forward with confidence
Looking forward with confidence 32
Slide 33: 2011 target confirmed
2011 target confirmed H1 2011 Objectives FY 2011 Sales growth (1) 8.7% 6-8% Trading operating margin -23 bps (1) around +20 bps (1) on track for FCF (2) +8% € 2 bn in 2012 (1) Like-for-like : Based on constant scope of consolidation (including 12 months Unimilk) and constant exchange rates (2) Free