danone uniqueness - danone-danonecom …danone-danonecom-prod.s3.amazonaws.com/user_upload/... ·...
TRANSCRIPT
DANONE UNIQUENESSDANONE UNIQUENESS
A STRONG RECORD OF PROFITABLE GROWTHA STRONG RECORD OF PROFITABLE GROWTH
Antoine GISCARD D’ESTAING
Steady high organic growth recordSteady high organic growth record
6.4%6.4%
3.1%3.1%
7.5%7.5%
6.6%6.6%
8.1%8.1%
6.3%6.3%
5.4%5.4%
6.6%6.6%
5.7%5.7%
3.7%3.7%
4.6%4.6%4.1%4.1%
4.2%4.2%
7.8%7.8%8.1%8.1%
7.9%7.9%
5.5%5.5%
8.5%8.5%
7,6%7,6%7.1%7.1%
6.8%6.8%
9.0%9.0%9.5%9.5%
8.9%8.9%
5.3%5.3%
9.8%9.8%
4.7%4.7%
6.6%6.6%
7.8%7.8%8.2%8.2%
9.4%9.4%
0%
2%
4%
6%
8%
10%
12%
T199
T299
T399
T499
T100
T200
T300
T400
T101
T201
T301
T401
T102
T202
T302
T402
T103
T203
T303
T403
T104
T204
T304
T404
T105
T205
T305
T405
T106
T206
T306
5 %
7 %
Since 1999 Groupe Danone has achieved 10 quarters itsLT guidance and 15 quarters above its guidance
The Group’s organic sales growth for the last five yearshas been situated near the high end of our target rangeThe Group’s organic sales growth for the last five yearshas been situated near the high end of our target range
20032001 2002 2004
+5.0%+5.0%
+7.0%+7.0%
+5.1%+6.0%
+7.2% +7.8% +6.7%+6.7%
2005
Average annual growth ’00-’05: +6.6%Average annual growth ’00-’05: +6.6%
Danone has shown constant operating margin improvement in spite of sustained input costs pressureDanone has shown constant operating margin improvement in spite of sustained input costs pressure
20012001
11.1%
20022002
11.7%
20032003
12.2% 12.4%
200520052004IFRS2004IFRS
13.10%
20042004
13.35%
The gap with the « best in class » has narrowed
DANONE has achieved a sustained EPS growth from continuing activitiesDANONE has achieved a sustained EPS growth from continuing activities
20012001 20022002 20032003
Excluding exceptional items
3.22€3.22€
3.06€3.06€
2.76€2.76€
+11.2%+11.2%
+5.6%+5.6%
+10.9%+10.9%
2004IFRS
2004IFRS
20042004
3.58€3.58€
+15.9%+15.9%
4.14€
20052005
3.57€
CAGR 01-05 ≈ +11%CAGR 01-05 ≈ +11%
In 2005 FCF amounted to 10% of net sales, a strong progression from 2001…In 2005 FCF amounted to 10% of net sales, a strong progression from 2001…
20012001 20022002 20032003
818
1,0171,149
2004IFRS2004IFRS
20042004
1,224
+8.2%
1,204
20052005In % of sales
5.7%5.7% 7.5%7.5% 8.7%8.7% 8.9%8.9% 9.8%9.8% 10.0%10.0%
1,303
14.3%14.3%
…and Return on Invested Capital has increased continuously over the last 5 years…and Return on Invested Capital has increased continuously over the last 5 years
9.3%9.3%
11.8%11.8%12.7%12.7%
14.4%14.4%
12.3%
20012001 20022002 20032003 2004IFRS2004IFRS
20042004 20052005
ROIC : (NOPAT + net income of affiliates) / average I nvested Capital over the year).
DANONE has posted a significant growth of its annual dividendDANONE has posted a significant growth of its annual dividend
20012001
1.03€*1.03€*
Dividend per shareDividend per share
20022002 20032003
1.15€*1.15€* 1.225€*1.225€*
20052005
1.70€
20042004
1.35€1.35€
*After adjustment for the two-for-one share split on J une 15, 2004
CAGR 01-05 ≈ +13%
From 2002 to 2005, Danone has outperformedits peer group*From 2002 to 2005, Danone has outperformedits peer group*
PEER GROUP*
Average organic sales growth +6.9% +3.8%
Margin progression (bp) +39 -17
EPS progression (bp) +10.9% +4.8%
DANONE
* Peer group: Cadbury, Kellogg’s, Kraft, Nestlé, Un ilever.* Peer group: Cadbury, Kellogg’s, Kraft, Nestlé, Un ilever.
ROIC 2005 14.5% 14.0%
Source: analyst’s reportsSource: analyst’s reports
ROIC : (NOPAT + net income of affiliates) / average I nvested Capital over the year).
How was this growth achieved?
Focusing on the right categoriesFocusing on the right categories
Focusing on the right geographiesFocusing on the right geographies
Developing innovations which meet consumers’ needsDeveloping innovations which meet consumers’ needs
Leveraging on an efficient organizationLeveraging on an efficient organization
Making the right acquisitionsMaking the right acquisitions
Focusing only on the fastest growing food categoriesFocusing only on the fastest growing food categories
Source: EuromonitorSource: Euromonitor
World Market CAGR 00-05 (volume) World Market CAGR 00-05 (volume)
1.1%
1.7%
2.1%
2.5%
2.6%
2.7%
2.9%
2.9%
2.9%
3.1%
3.6%
5.4%
10.1%
10.4%
2% 4% 6% 8% 10% 12%
RTE cerealsRTE cerealsSoupSoup
CarbonatesCarbonatesFrozenFrozen
ConfectioneryConfectionerySauces,Sauces,CheeseCheese
Sweet biscuitsSweet biscuitsIce creamIce cream
Savoury biscuitsSavoury biscuitsBaby foodBaby food
YogurtYogurtFunctional drinksFunctional drinks
Still bottledStill bottled
0%
Investing strongly to achieve critical size in “New Frontiers”Investing strongly to achieve critical size in “New Frontiers”
RussiaMexico
� over +18% organic growth versus +9.1% at Group level*� over +18% organic growth versus +9.1% at Group level*
� from 11% in 1999 to 29% in 2006*� from 11% in 1999 to 29% in 2006*
Fresh Dairy
Bottled water
#1
#1
#1
#2
#1
#1 ex-aequo
#1 ex-aequo
China USA
Doubling their weight in the total Group salesDoubling their weight in the total Group sales
And catching up with the rest of the group on profitabilityAnd catching up with the rest of the group on profitability
Danone market positionsDanone market positions
* YTD September 2006* YTD September 2006
#1
#1
Indonesia
Biscuits
New Frontiers grow much faster than the Group averageNew Frontiers grow much faster than the Group average
The contribution to sales growth is well balanced across geographiesThe contribution to sales growth is well balanced across geographies
9 months 2006 SALES9 months 2006 SALES
49.5%
10.8%8.9%
10.2%
18.2%2.3%
9 months Growth contribution9 months Growth contribution
11.3% 17.3%
14.8%
9.4%23.3%
23.9%
Western Europe
Eastern Europe
North America
LATAM
Asia
ROW
Innovations drive high value and high margin organic growth with limited cannibalizationInnovations drive high value and high margin organic growth with limited cannibalization
>+15%
>+25%
0%0%
5%5%
10%10%
15%15%
20%20%
25%25%
30%30%
DAIRYDAIRYBLOCKBUSTERSBLOCKBUSTERS
AQUADRINKS +AQUADRINKS +FUNCTIONAL DRINKSFUNCTIONAL DRINKS
BISCUITS' JEWELSBISCUITS' JEWELS
>+10%
≈ 50% of dairy business
≈ 40% of beverages business
≈ 10% of biscuits business
Light, agile organization encouraging decision-making and exchanges at CBU levelLight, agile organization encouraging decision-making and exchanges at CBU level
CBUs are responsible for new products development (eg: SER functional drink)
Launching decisions are taken at country level, corporate acting only as a coordinator
No central marketing organization, but light “acceleration units”
Market-place events: best practices sharing amongst attendees
CBUs are responsible for new products development (eg: SER functional drink)
Launching decisions are taken at country level, corporate acting only as a coordinator
No central marketing organization, but light “acceleration units”
Market-place events: best practices sharing amongst attendees
Roll-out initiatives built on past successesRoll-out initiatives built on past successes
The companies we have acquired in our core business in the last ten years represented 22% of our sales in 2005, while growing at+19%
The companies we have acquired in our core business in the last ten years represented 22% of our sales in 2005, while growing at+19%
DairyDairy BeveragesBeverages BiscuitsBiscuits
Danone ArgentinaDanone Argentina ArgentinaArgentina 19961996 Aguas MineralesAguas Minerales ArgentinaArgentina 19961996 PapadopoulosPapadopoulos GreeceGreece 19961996Danone Clover PLFDanone Clover PLF South AfricaSouth Africa 19981998 WahahaWahaha ChinaChina 19961996 Danone IndonesieDanone Indonesie IndonesiaIndonesia 19971997StonyfieldStonyfield USUS 20032003 BonafontBonafont MexicoMexico 19971997 BolshevikBolshevik RussiaRussia 19991999Al Safi DanoneAl Safi Danone Saudi ArabiaSaudi Arabia 20052005 Health DrinksHealth Drinks ChinaChina 19981998 Lu GyoriLu Gyori HungaryHungary 20002000
Termas de VillavicencioTermas de Villavicencio ArgentinaArgentina 19991999 Danone MashreqDanone Mashreq EgyptEgypt 20032003RobustRobust ChinaChina 20002000 Chock and RollsChock and Rolls RussiaRussia 20042004NayaNaya CanadaCanada 20002000AQUAAQUA IndonesiaIndonesia 20012001Zywiec ZdrojZywiec Zdroj PolandPoland 20012001SMDASMDA FranceFrance 20012001SALUSSALUS UruguayUruguay 20012001Frucor NZFrucor NZ New ZealandNew Zealand 20022002Robust drinking waterRobust drinking water ChinaChina 20042004AquariusAquarius ChinaChina 20042004
2005 GROWTH2005 GROWTH
2005 SALES - Bn €2005 SALES - Bn €
23% 18% 12%
0.7 1.9 0.3
2005 GROWTH 19%2005 SALES - Bn € 2.9
TOTAL
Our acquisition criteria are quite simpleOur acquisition criteria are quite simple
Only specific targets which match our long-term strategy
Small to medium acquisitions rather than big, expensive ones
We trust our capacities to develop our business in a new geography through « brown fields »
Only specific targets which match our long-term strategy
Small to medium acquisitions rather than big, expensive ones
We trust our capacities to develop our business in a new geography through « brown fields »
AND NOW?AND NOW?
WE ARE READY TO STAY AHEAD
OF COMPETITORS!
WE ARE READY TO STAY AHEAD
OF COMPETITORS!
Our markets will remain very attractive on a world wide basisOur markets will remain very attractive on a world wide basis
Source: EuromonitorSource: Euromonitor
World Market CAGR 06-11 (volume) World Market CAGR 06-11 (volume)
0% 1% 2% 3% 4% 6%
0.9%1.9%
2.4%2.8%2.8%
3.0%3.2%
3.7%4.0%
4.4%4.6%
5.3%6.4%
6.6%
SoupSoupCarbonatesCarbonatesRTE cerealsRTE cereals
ConfectioneryConfectioneryCheeseCheese
Frozen processed foodFrozen processed foodSauces, dressings & condtsSauces, dressings & condts
Ice creamIce creamSweet biscuitsSweet biscuits
YogurtYogurtSavoury biscuits & crackersSavoury biscuits & crackers
Baby foodBaby foodFunctional drinksFunctional drinksStill bottled waterStill bottled water
5%
Launching breakthrough innovationsLaunching breakthrough innovations
Bone health, ageing, joints protection, etc.Bone health, ageing, joints protection, etc.
Danone has a distinctive know-how to leverage its R&D capabilities to launch tasteful and attractive products…
…which meet health consumer needs
Danone has a distinctive know-how to leverage its R&D capabilities to launch tasteful and attractive products…
…which meet health consumer needs
Entering new “adjacent” categoriesEntering new “adjacent” categories
Fruits & plants: our focus ison scientific cooperationand specific associations with « experts » in new ingredients.
Fruits & plants: our focus ison scientific cooperationand specific associations with « experts » in new ingredients.
…with the objective to launch functionalproducts with new benefits
…with the objective to launch functionalproducts with new benefits
Ready to stay ahead of competitorsReady to stay ahead of competitors
So many new countries to conquer!So many new countries to conquer!
EgyptEgypt
AlgeriaAlgeria
UkraineUkraine
ScandinaviaScandinavia
BangladeshBangladesh
Recent acquisitionsRecent acquisitions
Beverages24 M inhabitantsBeverages24 M inhabitants
Dairy142 M inhabitantsDairy142 M inhabitants
Dairy47 M inhabitantsDairy47 M inhabitants
Dairy + Beverages + Biscuits35 M inhabitantsDairy + Beverages + Biscuits35 M inhabitants
Dairy74 M inhabitantsDairy74 M inhabitants
DANONE is well positioned to sustain its competitive edgeDANONE is well positioned to sustain its competitive edge
PORTFOLIOPORTFOLIOHealth & wellnessFocus on a limited number of categoriesEmerging market exposure
Health & wellnessFocus on a limited number of categoriesEmerging market exposure
TOP LINETOP LINEConstantly ahead of « the pack »BlockbustersInnovation
Constantly ahead of « the pack »BlockbustersInnovation
FINANCIALSFINANCIALS Capital discipline on CAPEXBalance sheet optimization: buy back + improved dividend
Capital discipline on CAPEXBalance sheet optimization: buy back + improved dividend
PROFITABILITYPROFITABILITY
Market shares & gap with local #2Product mixGeographic mixOperational leverage
Market shares & gap with local #2Product mixGeographic mixOperational leverage
++-+
++-+
DANONE’s 2007 prioritiesDANONE’s 2007 priorities
PORTFOLIOPORTFOLIO Consolidate our US successKeep the right balance between the fast growing countries and the mature ones
Consolidate our US successKeep the right balance between the fast growing countries and the mature ones
PROFITABILITYPROFITABILITY Focus on operating & logistic efficiencies to offset input costs pressureHead office & IS costs under strict control
Focus on operating & logistic efficiencies to offset input costs pressureHead office & IS costs under strict control
FINANCIALSFINANCIALSContinuous acquisition of minority interestsMore emphasis on ROIC for acquisitions and CBU’s
Continuous acquisition of minority interestsMore emphasis on ROIC for acquisitions and CBU’s
TOP LINETOP LINE Build on France recoveryAddress few geographic situationsBuild on France recoveryAddress few geographic situations
DANONE’s ObjectivesDANONE’s Objectives
SALES GROWTHSALES GROWTH +6% to +8% like-for-likeSelective acquisitions to reinforce our geographic expansion
+6% to +8% like-for-likeSelective acquisitions to reinforce our geographic expansion
PROFITABILITYPROFITABILITY EBIT to growth faster than sales, between 7 % and 10 %, like for likeEBIT to growth faster than sales, between 7 % and 10 %, like for like
Like for like operating margin improvement in 2007 >20 bpFull guidance for 2007 (FCF, EPS) to be given next FebruaryLike for like operating margin improvement in 2007 >20 bpFull guidance for 2007 (FCF, EPS) to be given next February