Embed Size (px)
Citation preview
1
CAGNY ConferenceFebruary 2006
Groupe DANONE
2
FORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements that reflect Danone's current views and estimates. These statements are based on many factors and
assumptions. Changes in such factors or assumptions could produce significantly different results.
3
Western Europe = 80% of salesWestern Europe = 80% of sales
Like-for-like sales growth: +2.6%
Operating margin: 8.9%
Free Cash Flow to sales: 4.1%
9 categories9 categories
From a slow growing, Western European, multi-category company…
Glass container7%
Water10%
Beer8%
Biscuits20%
Prepared Food9%
Sauces5%
Pasta3%
Fresh DairyProducts29%
Italian Cheese9%
Asia5%
1996Latin America Other1%5%
North America6%
Eastern Europe1%
Rest ofWestern Europe 40%
France42%
4
Like-for-like sales growth: +6.7% in 2005
Operating margin: 13.35% in 2005
Free Cash Flow to sales: 10% in 2005
… to an international, focused company with a high growth profile
2005Other1%
Asia17%
Eastern Europe11%
Rest Western Europe 30%
France22%
North America9%
Latin America10%
Beverages27%
Biscuits18%
55%
Total sales = € 13 Bn
Total sales = € 13 Bn
Western Europe = 50% of salesWestern Europe = 50% of sales 3 categories3 categories
Fresh DairyProducts
5
9-Year Total Shareholder Return: + 16 %
versus peers’ average : + 7%
Market capitalization
€ Bn 23.7X 3€ Bn 8
A transformation which has resulted in value creation to shareholders
0
10
20
30
40
50
60
70
80
90
100
29/12/96 29/12/97 29/12/98 29/12/99 29/12/00 29/12/01 29/12/02 29/12/03 29/12/04 29/12/05
28 €
88 €
Source Bloomberg – peers : Nestlé, Unilever, Cadbury, Coca Cola, Kellogg, General Mills, Pepsico
How have we achieved that performance ?
7
12%18% 7%Share of world market*
Source: Zenith -
Relative size versus direct competitor 1x4x 0.5x
volume
…based on the sum of local #1 positions
80% of Group sales with #1 positions
Worldwide ranking #1 #1 #2
We have built leading market positions in our 3 categories
Fresh Dairy Packaged Water Biscuits Mainly yogurt &
assimilated products
8
Our Health positioning has been a key success factor for superior top line growth
* Average ranking JP Morgan/ UBS/ Morgan Stanley
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
1357911
Like-for-like growthCAGR 03-04
Cadbury
Danone
Nestlé
Unilever
CampbellKellogg
Heinz
Kraft
PepsiCo
Coca-Cola General Mills
Health ranking Food analyst*
9
RussiaMexico
* CAGR ’00-’05
over +15% average organic growth versus +6.6% at Group level*
from 11% in 1999 to 25% in 2005
Fresh Dairy
Bottled water
Biscuits
#1
#1 #1
#1 #1
#2
#1#1
ex-aequo
#1 ex-aequo
Our New Frontiers countries: a powerful growth engine
Indonesia China USA
New Frontiers have grown much faster than the Group average
Doubling their weight in the total Group sales
And catching up with the rest of the group on profitability
Danone market positionsDanone market positions
Fresh DairyProducts
11
Danacol
Vitalinea
A unique brand portfolio dominated by global brands with a differentiated positioning
Actimel Activia
Stonyfield
Danonino
Danissimo
DanioCore range
Danette
12
3.9 € bn3.9 € bn
6.5 € bn6.5 € bn
30%30%
0
1000
2000
3000
4000
5000
6000
7000
8000
2000 200526,00%
26,50%
27,00%
27,50%
28,00%
28,50%
29,00%
29,50%
30,00%
30,50%
31,00%
31,50%
SalesSales
Market share *Market share *
27,8%27,8%
* weighted average market shares on consolidated cies (c. 30 countries)Yoghurt & assimilated yogurts
An outstanding track record in terms of sales growth and market share…
Like-for-likesales
CAGR 00-05: +9.3%
Like-for-likesales
CAGR 00-05: +9.3%
13
… resulting in substantial profitability enhancement
Yoghurt & assimilated productsYoghurt & assimilated products
Average margin progression: c. + 35 bp/ year since ’00
20052005
+ 21 bp+ 21 bp
20002000 20012001 20022002 20032003
+ 40 bp+ 40 bp+ 60 bp+ 60 bp
+ 40 bp+ 40 bp
20042004
+ 8 bp+ 8 bp
Margin progression before 2004 is measured in French GAAPMargin progression before 2004 is measured in French GAAP
13.9%13.9%
14
Countries outside Western Europe have been key contributors to growth
France
Southern Europe
ECE
North America
Latam
Ame
Northern Europe
00
10001000
20002000
30003000
40004000
50005000
60006000
70007000
80008000
20002000 20052005
15%
14%
15%
14%
23%
16%
3%
% total sales ‘05
15
‘00‘00
Among best performers…
6%6%SOMSOM
RussiaRussia
CAGR Sales Op. income
CAGR Sales Op. income
‘00‘00
25%25%
‘05‘05
6%6%SOMSOM
CAGR SalesOp. income
CAGR SalesOp. income
12%12%
‘05‘05
9%9%SOMSOM
CAGR SalesOp. income
CAGR SalesOp. income
13%13%
31,2%31,2%SOMSOM 36,2%36,2%
CAGR Sales Op. income
CAGR Sales Op. income
+13%+20%
+55%+117%
+50%+114%
‘00‘00
+6%+12%
UK UK
USUS
GermanyGermany‘00‘00 ‘05‘05
‘05‘05
SOM: Share of Market (Value)SOM: Share of Market (Value)
16
A business model based on € billion global brands
0
200
400
600
800
1 000
2000 2001 2002 2003 2004 2005
Revenues M€
17
ACTIV: Active benefits / VIA: Path in the digestive tract
Activia is a fermented dairy probiotic producthelping to regulate your transit
Activia is a fermented dairy probiotic producthelping to regulate your transit
Activia: our fastest growing global brand
Contains unique Danone Bifidus Essensis strain selected for its probiotic properties
18
Worldwide Activia sales +30% (CAGR 2000-2005)
Net sales€ million
845 M€
Activia: sales growth has accelerated since 2000…
01999
100
200
300
400
500
600
700
800
900
2001 2002 2003 2004 20052000
19
… as a result of extension to new markets…
A global brand with a presence in 30 countries (20 countries added since ’00)
A global brand with a presence in 30 countries (20 countries added since ’00)
20
2005200520002000Yogurt OnlyYogurt Only Yogurt, fermented milk and other
relevant supportsYogurt, fermented milk and other
relevant supports
…and momentum from innovation
21
Beverages
22
A positive growth momentum
Rising oil pricehas put profitabilityunder pressure over the last 2 years
20052005
-170 bp-170 bp
20002000 20012001 20022002 20032003 20042004
+ 120 bp+ 120 bp
+ 250 bp+ 250 bp - 70 bp- 70 bp
- 100 bp- 100 bp
Margin progression before 2004 is measured in French GAAP
CAGR ‘00-’05 +7.8%CAGR ‘00-’05 +7.8%
2005200520012001 20022002 20032003 20042004
10%10%7%7%
9.9%9.9%
4.4%4.4%7.6%7.6%
13.7%13.7%
23
2005 revenues: € 3.5 Billion2005 revenues: € 3.5 Billion
Asia48%
Rest ofEurope
23%
France17%
A geographical platform geared to Asia & Europe
LATAM8%
Like-for-like sales growth ’05Like-for-like sales growth ’05
-3%
10%15%
-5%
0%5%
10%15%
20%25%
30%35%
40%
France Europe(ex France)
34%
LATAM-2%
NorthAmerica
AsiaTotal volumes 2005:18 Bn liters
of which 70% in developing markets
Total volumes 2005:18 Bn liters
of which 70% in developing marketsdepletions
North America4%
24
France No 2
UK No. 1
Germany No. 1 (Still)
Spain No. 1
Poland No. 1
Turkey No. 1
Mexico No. 1
Argentina No. 1
Japan No. 1
China No. 1
Indonesia No. 1
Leading positions in bottled water with strong brands
25* Source: Zenith - top 42 countries = 90% of total market
CSD
€ 361 Bn386 Bn L € 24 b
Other still
Juices
Flav +Tea +Fruit drinks
HOD
Bottled water
Functional
Diet cola
Worldwide Non Alcoholic Beverage market *
The worldwide NAB will dramatically shift towards health
20042004 Delta 04-09Delta 04-09
38%40%
5%3%
9%8%
16%10%
23%9%
6%
14%1%
12%
Volume Value -7%
6%
37%
7%
25%
23%
6%
2% Our 3 priority segments
account for 85% of forecast NAB
growth
26
Drive water thru sharpened and more functional positionings as well as new format and consumption habits
Exploit the strength of our brands to deliver new and healthier beverages
Leverage our know how to create relevant and differentiated functional beverages
…by delivering differentiated Better-for-You products
…by delivering differentiated Better-for-You products
Being the world fastest growing beverage company….
27
The biggest water brand in the world
The most valuable water brand in the world
The fastest growing water brand in the world
The biggest Aquadrink brand in the world
Water brand strength is the basis for success
28
In 2002, we first deployed advertising focused on the functional water benefit of “body cleansing”
10%
15%
20%
25%
30%
35%
40%
2002 2003 2004 2005
Bonafont KO Pepsi
Market share
Results have been spectacular:
Idea has been expanded to the UK on Evian with success
Water success thru functional positioning: The Bonafont example
2006 will see Argentina and Spain applying this platform
29
Danone Water UK has strengthened its leadership on the bottled water market
Danone Water UK has strengthened its leadership on the bottled water market
Share of market
Aquadrinks: already a success
35%
0%2003 2004 2005
36% 39%
Volvic Touch of Fruit: a major contributor to growth
Volvic Touch of Fruit: a major contributor to growth
16%
2002 2004 2005
24% 25%
20%
2003
CAGR Sales>+30%
CAGR Sales>+30%
value added water in % total sales
UKUK
30
0
30
51 48 50
50
60 58 63
-
10
20
30
40
50
60
70
W20/05
W22/05
W24/05
W26/05
W28/05
W30/05
W32/05
W34/05
W36/05
ZYWIEC ZDROJSMAKOLYK
Aquadrinks: already a success
PolandPolandShare of total market % flavoured water market
In a more competitive market Zywiec has improved its market share thanks to innovation
into flavoured water
In a more competitive market Zywiec has improved its market share thanks to innovation
into flavoured water
22.1
20040
5
10
15
20
25 23.9
2005
31
Ser in Argentina has been a leading dairy brand for more than 10 years, based on a healthy body management promise
In 2002, we launched a sparkling flavored beverage under this brand with 0% Sugar and enriched with calcium and magnesium
Today, SER is the clear diet market leader with 36.7% SOM, ahead of Coca Light 27.8%
Taillefine Fiz, introduced in France in April 05, confirms the universal appeal: Fiz has gained the #2 position on the diet soft drink market, ahead of Orangina
Functionals: Vitalinea is a big beverage opportunity
source Nielsen
32
and achieve our objective to be the leading player in the still beverage market in Asia-Pacific with focus
Close to 11 billion liters – 1.6 billion € sales
A dominant leader in bottled water: 3 times next competitor
on China and Indonesia on Water and Functional drinks
We are well positioned to exploit this opportunity
Already a multicategory player
Asia/Pacific is a very strategic region for Beverages
Indonesia14%
China66%
Japan7%
Australasia11%
Others2%
33
The process from water to beverages
Is well under way
Results in limited cannibalization on existing waterbusiness
Is highly accretive to margin
71%41%
29%59%
% ’05 sales % ’05 sales growth
BEVERAGESPLAIN WATERS
Biscuits
35
FranceFrance
n° 1n° 1
BeneluxBenelux
Czech RepublicCzech Republic
PolandPolandRussiaRussia
HungaryHungary
FinlandFinland n° 1n° 1
ItalyItalySpainSpain
GreeceGreece n° 1n° 1
ScandinaviaScandinavia
SOM >50%SOM >50%
n° 1n° 1n° 1n° 1n° 1n° 1
SOM >35%SOM >35%
SOM >20%SOM >20%n° 1n° 1n° 1n° 1
n° 2n° 2n° 2n° 2n° 1n° 1Europe Europe
AsiaAsia n° 1n° 1
n° 2n° 2
IndiaIndia n° 1n° 1 > 40%> 40%
IndonesiaIndonesia n° 1n° 1 14%14%
MalaysiaMalaysia n° 1n° 1 30%30%China – East & NorthChina – East & North n° 1n° 1 c.20%c.20%
Strong market positions: 85 % of sales with #1 position
75% of total Biscuits sales75% of total Biscuits sales
25% of total Biscuits sales25% of total Biscuits sales
PositionPosition RMSRMS
36
Despite high dependanceon France
Biscuits has closed its profitability gap with the rest of the Group
A significant margin progression in ‘05
Biscuits revenues
France 35%
65%Bisc. exclFrance
-1.3%
+3.1%
1.5%
13,1%13,35%
10,9%
14,5%
FY 04 FY 05
GroupeBiscuits
Like-for-like sales growth ‘05
Like-for-like sales growth ‘05
37
Our nutritional reality is much better than perception
We need to strongly anchor the biscuit among cereals
Change the nutrition perception of biscuits…
38
Launching “better for you”variants
Increase the cereal content, reduce sugar and fat
Moving our main brands into whole grain in 2006: Breakfast, Grany, Prince, Heudebert
CEREALES COMPLETES
…and continue to improve the nutritional profile of products
39
Healthy SavourySnack
Healthy SavourySnack
Light vitalityLight vitality
Harmonious growthHarmonious growth
Boost Differenciation and Innovation
Fun energyFun energy
Long lasting energyLong lasting energy
Indulge without guiltIndulge without guilt
40
Marketing affordable nutrition: the Indonesian example
Affordability was a pre-requisite to reaching the majority of consumers in Indonesia
AffordAffordAffordC
89 millionC
89 million
> € 3.8 a day
€ 1.8 to €3.8a day
< € 1.2 a day
D63 million
D63 million
E54 million
E54 million
€ 1.2 to €1.8 a day
AB34 million
41
Marketing affordable nutrition: the Indonesian example
Powerful concept“strong biscuits”
with tiger icon
Affordabilityin price per unit
and per kg
Strong nutritionalcredentials
Danone Biskuat: the first affordable nutrition biscuit brand in Indonesia
42
Biscuits Indonesia a highly successfulbusiness model
Danone Indonesia Volume Development
05000
1000015000200002500030000350004000045000
2000 2001 2002 2003 2004To
ns2005
50000 ’00-’05 volume CAGR: >+30%
Volume market share
14.413.1
10.07.2
02468
101214161820
2002 2003 2004 2005
We have doubled market share.Leadership within reach
Affordability drives rapid and profitable growth
What levers for growth going forward ?
44
Daniel Carasso Research Center
€125 million invested in research in 2005
NutritionActive health
Consumer preferenceAffordability
Strengthen our Health and Nutrition positioning
Research and development to achieve excellence
Research and development to achieve excellence
45
ProtectionProtection
Digestive ComfortDigestive Comfort
Weight management
Weight management
Physical and Mental Development
Physical and Mental Development
EnergyVitalityEnergyVitality
Strengthen our Health and Nutrition positioning
Protect and Improve Established Health Benefits
Protect and Improve Established Health Benefits
46
Healthy Aging
Disease Prevention
Optimal Health
Good Nutrition in Emerging Economies
Strengthen our Health and Nutrition positioning
Develop New Health Platforms Develop New Health Platforms
47
Worldwide, 3 billionpeople live on
less than 2 eurosa day
Worldwide, 3 billionpeople live on
less than 2 eurosa day
Marketing Affordable Nutrition
Near…Near… …and far…and far
48
Per Capita Consumption is linked to Effort level
Affordable price point opens new consumer opportunity
The Affordability model to leverage our New Frontiers platform
In order to grow steadily in our New Frontiers and ensure marketdominance, we need to break price barrier
In order to grow steadily in our New Frontiers and ensure marketdominance, we need to break price barrier
196 m
168 m
245 m
A/B
C
D/E
* On a sample of 7 countries: Turkey, Russia, Romania, Brazil, Mexico, Argentina, Sth Africa
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
0,0 2,0 4,0 6,0 8,0 10,0Effort Level (% of income)
Per
Capi
ta
SouthAfricaSouthAfrica
RussiaRussiaTurkeyTurkey
RomaniaRomaniaBrazilBrazil
MexicoMexico
ArgentinaArgentina
SpainSpain
FranceFrance
Fresh Dairy Products ExampleFresh Dairy Products Example
49
Preference
AffordableCheetahEnergy/Speed
Simple &meaningful
Relevant/ Enrichment
We have started rolling out this model in South Africa
50
Supply millions of points of sale
Display products prominently
Develop targeted lines and selections
Proximity – meeting the challenge
Products available to consumers wherever they live…Products available to consumers wherever they live…
51
A total universe of 4.4 millions outlets
Of which only c. 25% are controlled by Danone
Visit the outletFridge+50%
8 months pay-backIconize the outlet
+15%+50%
Meeting the Proximity challenge in Fresh Dairy Products
Additional growth potential from better controlling the outlets is huge
52
Proximity contributed up to 60% of Fresh Dairy Productssales growth in 2005, representing c. 25% of total sales
Proximity brings good returns
Revenues Operating profit DSO*
65%
35%
75%
25%
39 days
18 daysProximity
Moderntrade
* Days of Sales Outstanding
Proximity: a very positive impact to our financial equation
Example: Latin AmericaExample: Latin America
Conclusion
54
2005: key take-aways
2005 demonstrates the resilience and superiority of our businessmodel
– Our overall performance is in line with our objectives…
– despite a challenging retail environment in France and rising oil-driven input costs
Organic growth at the high end of our targeted range despite France
– Top line growth excluding France to reach +10,5%…
– … driven by New Frontiers countries: +18%
Margin progression at the low end of our targeted range
– affected by country mix and higher plastics costs
– excl. those factors operational performance remained healthy.
Strong increase in underlying EPS, exceeding our target
55
Top line growth should remain solid: +5% to +7%
Operating Margin should continue its progression: +20 bp to +40 bp on a like-for-like basis
EPS expected to grow low double digit
• Share buyback ’06: € 600 to 800 million• ‘06 Dividend: +26 % vs previous year
We will continue to enhance shareholder return
We intend to further develop our geographical coverage
Financial objectives for 2006
56
To bring Healththrough our food and beverageto as large a number of people
as possible
Our ambition
