Emmanuel Faber. Deutsche Bank Consumer Conference Paris - June 15th, 2011

Emmanuel Faber Deutsche Bank Consumer Conference Paris - June 15th, 2011 Disclaimer This document contains certain forward-looking statements conce...
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Emmanuel Faber Deutsche Bank Consumer Conference Paris - June 15th, 2011

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.

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Danone: a superior growth engine

3

Sustained volume-driven topline growth Like-for-like sales growth – Total Group

Short term trend

4

Profitable growth, superior cash generation

Trading operating margin Like-for-like growth (1)

2007

2008

2009

2010

+32 bp

+53 bp

+61 bp

+3 bp

+20% +21% (2)

Free cash flow (€ mln and % growth)

+20%

(1) Based on constant scope of consolidation and constant exchange rates (2) Free cash flow: Cash flow from operations less capital expenditure (net of disposals) and excluding business combinations fees

5

A unique mission, a unique portfolio

Fresh dairy Products

Waters Hydration and elimination

Developing a well being category worldwide

Baby nutrition

Bring health through food to the largest number of people

Supporting growing children every step of the way

Medical nutrition

Nutritional support for persons in fragile health

6 6

Best positioned in fastest growing categories & geographies Fastest growing categories

~50% sales in emerging markets

2010 volume growth by category

2010 sales (proforma Unimilk)

Emerging markets

Western Europe

39%

North America

49%

10% 2% Others

Source : Euromonitor & Internal estimate

7

MICRUB: strongholds in emerging markets

Sales

2006

2010 proforma Unimilk

% group sales

€mln

% group sales

MEXICO

5%

1.0

5%

INDONESIA

2%

0.9

5%

CHINA

11%

0.8

4%

RUSSIA

3%

2.0

11%

USA

7%

1.4

8%

BRAZIL

2%

0.7

4%

Total MICRUB

30%

Growth

>60%

People

60% 37% 8

Strong brand platforms

Main brand platforms - Sales 2010 (€ mln)

€ 1 bn sales

9

Strong brand platforms: Example of Aptamil & Immunity

Aptamil & Immunity platform

UK

- Unique blend of GOS/FOS prebiotic - Icons (shield, halo, bear)

Netherlands

Indonesia

1010

Strong brand platforms: Example of Bonafont & Elimination

Bonafont & Elimination platform:

Mexico

•Clear and unique benefit of Elimination and Lightness

Increased market share from 17% to 31% in 4 years

•Harnessing Battle For Water messages

Brazil

•Salmon + icons

Launched in 2009

•Bottle + HOD + Aquadrinks

=> 41% market share in Sao Paulo

Poland Launched in 2011

1111

Innovation pipeline : product and beyond New segments

New moments

New targets

New channels

New benefits

New packaging

12

Our equation: Leverage & Invest

Leverage

Invest

our existing platforms :

in sustainable growth & competitiveness

- brands platforms - geographies - operational systems

13

2010-2011: Profitable & sustainable growth in a challenging environment

14

2011 Environment expected to remain challenging Unemployment in Western economies

Persistent Volatility of currencies & commodities

11 10 9 8 %

US Unemployment rate

7 6

Eurozone Unemployment rate

5 4 2005

2006

2008

2009

2010

GDP growth in Western Europe

2005

2006

Source : Euromonitor

2007

2008

2009

2010

Danone average farmgate price

15

2010 & 2011 : High inflation & record productivities

2010

2011 guidance

Input cost inflation

10%

6-9%

Productivities *

€ 516 mln

~ € 500 mln

*Perimeter = COGS including logistic costs

Liquid milk price evolution

PET price evolution PET West Europe in Euro/Metric Ton

Jan-06

Jan-07

Jan-08

Source : Internal estimate

Jan-09

Jan-10

Jan-11

Jan-2006

Jan-2007

Source : Internal estimate

Jan-2008

PET Asia in USD/Metric Ton

Jan-2009

Jan-2010

Jan-2011

Productivity : embedded in our model

Best practices collection and roll out

WWBU

PURCHASING

Target setting

INDUSTRIAL

CBUs LOGISTICS RECIPES Productivity* – € mln and % COGS

PACKAGING NATURE COMMERCIAL HQ & SERVICES *Perimeter = COGS including logistic costs

Productivity & sustainability Example: « Foam » packaging

Two “standard” layers Density 1.05

Foam Volumes Evolution Europe

Less CO2 19% less CO2 emission for the Packaging

Foam (T)

54%

% lines

38%

Same consumer preference

28% 23,560

16% 4,830 2008

9,000 2009

13,400 2010

2011

Cost saving

Productivity & innovation Example: Danette 360°renovation Saudi Arabia

Better product • Product recipe score beat current (9.5) vs. (9.0) in consumer test

Better nutrition

Cheaper recipe • Business opportunities to fuel brand growth

Less CO2

• Meet Nutritional requirements

• -17% CO2

• Fat and Energy reduction achieved

• 56 M litres of milk saved

• No new ingredient excepted milk solids

• 21% water saving

2011: Ensuring sustained competitiveness

Reset Price index in Fresh Dairy Products from 126 to 120

2011 & beyond Selected competitive price increases Balanced portfolio across the pyramid => more resilient

 Objective = develop the categories – 20 –

2011: Another year of investment in growth Building categories

Building distribution

Building new business models

Reach >7 mln babies

 A&P + sales force + R&D expenses to increase in line with top line guidance

Unimilk integration: a clear priority

22

CIS remains a major growth area for Danone dairy Average consumption of Fresh Dairy Products Netherlands France

35

1 cup a day Germany

30 Spain

25

Austria Portugal

Finland Belgium

Iran Czech R.

20 Norway

1 cup every 2 days

Bulgaria

Sweden Argentina Slovakia Poland

15 UK Japan Canada

10

Hungary Turkey Algeria

Russia Chile

Ukraine

Mexico Italy

South Africa Brazil Romania

USA

5

1 cup a week

Belarus

Colombia

Kazakhstan China

India

0 2%

3%

* GDP growth PPP 2010-2015 (source EIU)

4%

5%

6%

7%

8%

9%

10%

Purchasing Power growth23*

Danone-Unimilk: complimentarity drives synergies Portfolio

Regions

Distribution

Industrial & supply chain Best-in-class practices

Focus on Premium and Health

Focused on “the West”

Modern retail and Direct RTM

Focus on traditional with reach to all SELs

Focused on “the East”

Presence in traditional channels

+ Large network

=

DANONE DANONE UNIMILK UNIMILK

Revenue Revenue synergies: synergies: +10% +10% additional additional sales sales over over 33 years years Cost Cost synergies: synergies: ++ ~~ 200 200 bp bp margin margin over over 44 years years – 24 –

Creating value through the Merger

Danone enables Unimilk to: Accelerate Modern Dairy Category Growth

Share best practices and experience on profitable growth model

– 25 –

Top Line

Unimilk enables Danone to: Obtain National Coverage andIndustrial Base Reach wider consumer base

Bottom Line

Firm as key supplier and customer, leverage size and scale

2011 Unimilk integration key priorities : improve the mix, improve profitability

Clear short term priorities = FOCUS ON THE RIGHT KPIs

Segmenting the portfolio = PRODUCT MIX Drive efficiency to invest behind brands = GROSS MARGIN Integration = SYNERGIES

2011 OUTLOOK

27

2011 targets confirmed

Objectives 2011

Sales growth (1)

6-8% 6-8%

Free cash flow (2)

On On track track for for €€ 22 bn bn in in 2012 2012

Trading operating margin

around around +20 +20 bps bps (1)(1)

(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 capital expenditure (net of disposals) and excluding business combinations fees

28

Notes

29

Notes

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