Danone Sa · EURONEXT:BN
Danone Sa — Investor Day (November 2020)
62 slides from Danone Sa's investor day presentation, Nov 23, 2020
Slide 1: Investor Update Event #1
INVESTOR UPDATE EVENT #1 November 23, 2020 I 1 I
Slide 2: Event agenda
Event agenda Emmanuel FABER, Véronique PENCHIENATI, Henri BRUXELLES, COO, Juergen ESSER, Conclusion Chairman & CEO CEO Danone End-to-end design Chief Financial, International to delivery Tech and Data Officer Reconnecting Reshaping Agile supply chain Financial Question with sustainable the organizat
Slide 3: Disclaimer
Disclaimer • This presentation contains certain forward-looking statements concerning Danone. In some cases, you can identify these forward- looking statements by forward-looking words, such as “estimate”, “expect”, “anticipate”, “project”, “plan”, “intend”, “objective”, “believe”, “forecast”, “guid
Slide 4: Event agenda
Event agenda Emmanuel FABER, Véronique PENCHIENATI, Henri BRUXELLES, COO, Juergen ESSER, Conclusion Chairman & CEO CEO Danone End-to-end design Chief Financial, International to delivery Tech and Data Officer Reconnecting Reshaping Agile supply chain Financial Question with sustainable the organizat
Slide 5: Strong 5-year strategic and financial track record
2014-2019 Strong 5-year strategic and financial track record Like-for-like Step change Record Plant-based and sales growth in margin recurring EPS level organic +3.1% +260bps ~+50% #1 average 15.2% in 5 years Worldwide I 5 I
Slide 6: 2020 performance impacted by covid
2020 performance impacted by covid Calling for a bold reinvention of Danone LFL sales Margin Recurring Out-of-home decline headwinds EPS down closure -1.6% 14.0% -10% Cross-border limitations 9 months YTD -72bps in H1 in H1 Extra-costs and inefficiencies I 6 I
Slide 7: A time of change is also a time of opportunity
A time of change is also a time of opportunity Local first: a bold reinvention to restore shareholder value creation Resolutely local and New eating habits Portfolio efficient organization New growth spaces refocus TODAY H1-21 New “normal” I 7 I
Slide 8: Three big organization shifts announced
Back to last month announcements Three big organization shifts announced Global categories Local BUSINESS LEAD Pyramidal Delayered Corporate Leaner WAYS OF Global WBU Regional WBU Zero overlaps Clear accountabilities WORKING Cluster Country Siloed Integrated & connected Cycles and Procurement End to
Slide 9: Executive Committee team November 2020
Executive Committee team November 2020 Emmanuel FABER Chairman and CEO 2 macro-regional CEOs 2 global functions Internal CFO replacement Véronique Shane Henri Nigyar Bertrand Juergen Cécile PENCHIENATI- GRANT BRUXELLES MAKHMUDOVA AUSTRUY ESSER CABANIS BOSETTA (as of Feb-21) (until Feb-21) CEO CEO Ch
Slide 10: Additions to Executive Committee team
Additions to Executive Committee team Local teams now part of executive governance Floris Charlie Corine Bruno Silvia Jean-Marc WESSELING CAPPETTI TAP CHEVOT DAVILA MAGNAUDET President President President President President President Europe CIS, Turkey Asia, Africa and Greater China Latin America S
Slide 11: Reshaping the organization
Reshaping the organization Unlock significant efficiencies to fuel profitable growth Local Significant efficiencies ahead €1bn Delayered Leaner Zero overlaps Clear accountabilities recurring savings by 2023 Integrated & connected End to end design to delivery function I 11 I
Slide 12: Event agenda
Event agenda Emmanuel FABER, Véronique PENCHIENATI, Henri BRUXELLES, COO, Juergen ESSER, Conclusion Chairman & CEO CEO Danone End-to-end design Chief Financial, International to delivery Tech and Data Officer Reconnecting Reshaping Agile supply chain Financial Question with sustainable the organizat
Slide 13: Véronique Penchienati, 21 years at Danone
Véronique Penchienati 21 years at Danone Since Nov. 2020: CEO Danone International EVP Specialized Nutrition EVP Growth & Innovation (Comex since Feb 2018) Véronique PENCHIENATI, President Evian Volvic World CEO Danone International GM Danone Eaux France Reshaping VP Marketing Dairy Worldwide Busine
Slide 14: The world has changed: 5 trends prompted by Covid-19
The world has changed 5 trends prompted or accelerated by Covid-19 Local Supply chain Trusted brands Consumer- Structural empowerment and competitiveness operating at centric growth channel shifts decision-making and agility scale opportunities I 14 I
Slide 15: We are clear on our strengths and areas of improvement
We are clear on our strengths And on our areas of improvement Strengths Areas of improvement ▪ Health-focused portfolio ▪ Heavy cost structure above countries ▪ Trusted brands operating at scale ▪ Complex decision-making ▪ Protein, Plant-based and Probiotic expertise ▪ Siloed organization by categor
Slide 16: Objective: reconnect with 3-5% profitable growth agenda
Adapting to reconnect with Danone’s profitable growth agenda Shifting to a local-first, cross-category organization BETTER SERVING EMPOWERING OUR FURTHER ENGAGING IMPROVING CONSUMERS COUNTRIES DANONERS OUR COST COMPETITIVENESS Objective: reconnect asap with Danone’s 3-5% profitable growth agenda I 1
Slide 17: A fitter and more agile organization: three key principles
A fitter and more agile organization to enable growth and deliver efficiencies Three key principles Local empowerment ▪ Combining local businesses under a single local management team ▪ Simplified and localized decision making for maximum speed and relevance ▪ Leaner functions serving countries for
Slide 18: A fitter and more agile organization: three key principles
A fitter and more agile organization to enable growth and deliver efficiencies Three key principles Local empowerment ▪ Combining local businesses under a single local management team ▪ Simplified and localized decision making for maximum speed and relevance ▪ Leaner functions serving countries for
Slide 19: From category-led businesses to geography-led units
From category-led independent businesses to geography-led units Pushing down decisions to countries that are empowered for speed and relevance FROM A CATEGORY-LED TO A GEOGRAPHY-LED ORGANIZATION WITH 6 ZONES ORGANIZATION OPERATING CROSS-CATEGORY One cross-category management team by country Country
Slide 20: Resolutely decreasing the number of units and entities
Resolutely decreasing the number of units and entities To localize cross-category decision-making and delayer structures above countries FROM TO ▪ 3 divisions ▪ 6 zone teams ▪ 13 regional teams ▪ 22 country business units ▪ 61 country business units One country, one unit, one portfolio across 3 divi
Slide 21: At country level, the business divisions will be combined
At country level, the business divisions will be combined To strengthen their ability to operate efficiently with zero overlap FROM 3 BUSINESSES TO ONE CROSS-CATEGORY ENTITY OPERATING IN PARALLEL OPERATING IN SYNERGY Brand Brand Brand Brand assets & strengthened category expertise assets assets asse
Slide 22: Leaner structures above countries
Leaner structures above countries to support and simplify decision-making Multi-local brands illustration FROM 4 TEAMS TO 2 TEAMS Corporate team (brand model) Multi-local Activia leader Global Activia team Regional team Country Activia team Country Activia team I 22 I
Slide 23: A fitter and more agile organization: three key principles
A fitter and more agile organization to enable growth and deliver efficiencies Three key principles Local empowerment ▪ Combining local businesses under a single local management team ▪ Simplified and localized decision making for maximum speed and relevance ▪ Leaner functions serving countries for
Slide 24: Protecting and strengthening our expertise on current categories
Protecting and strengthening Our expertise and capabilities on current categories Joining forces to strengthen Preserving Specialized Nutrition-specific category expertise expertise with a dedicated Unit Category-specific expertise Medical affairs and market access, and best practices preserved home
Slide 25: Addressing all growth opportunities with three Acceleration Units
Addressing all growth opportunities within, across and beyond categories With three Acceleration Units PLANT-BASED HEALTHY AGEING E-COMMERCE I 25 I
Slide 26: Plant-based acceleration unit: ~€5bn sales target in 2025
The Plant-based acceleration unit supports the €5bn revenues target by 2025 Leveraging a versatile portfolio of ingredients, brands and categories ~ €5bn sales target in 2025 Plant-based ▪ Stepped-up scope beyond EDP Acceleration ▪ Strengthened and upskilled team unit ▪ Dedicated resources operating
Slide 27: Healthy ageing, the next big opportunity
Beyond our existing business Healthy ageing, the next big opportunity Immunity Mobility Focus on Support to the immuno-nutrients immune system > +20% YTD > +10% YTD > +40% YTD Q3 2020 I 27 I
Slide 28: eCommerce acceleration unit
eCommerce acceleration unit Dedicated teams and strengthened capabilities AT LOCAL LEVEL ACCELERATION UNIT E COMMERCE EQUIP COUNTRIES WITH TOOLBOX E COMMERCE DEDICATED TEAM Tools to win the digital shelf REPORTING TO GM Performance monitoring From current e commerce position in the sales D2D capabil
Slide 29: A fitter and more agile organization: three key principles
A fitter and more agile organization to enable growth and deliver efficiencies Three key principles Local empowerment ▪ Combining local businesses under a single local management team ▪ Simplified and localized decision making for maximum speed and relevance ▪ Leaner functions serving countries for
Slide 30: €700m SG&A costs reduction in 3 years
A leaner and delayered organization with actions taken at all levels of the Company €700m ~20% SG&A costs reduction in 3 years 2023 savings I 30 I
Slide 31: Delivering significant savings by 2023 with selective reinvestments
A fitter and more agile organization to best serve strategy and execution Conclusion Local empowerment Delivering significant savings by 2023 with selective Leaner Commons reinvestments in growth serving countries To reconnect asap with Danone’s 3-5% profitable growth agenda More competitive cost st
Slide 32: Event agenda
Event agenda Emmanuel FABER, Véronique PENCHIENATI, Henri BRUXELLES, COO, Juergen ESSER, Conclusion Chairman & CEO CEO Danone End-to-end design Chief Financial, International to delivery Tech and Data Officer Reconnecting Reshaping Agile supply chain Financial Question with sustainable the organizat
Slide 33: Henri Bruxelles, 33 years at Danone
Henri Bruxelles 33 years at Danone Since Nov. 2020: COO End-to-end Design to Delivery EV P Waters & Africa Regional V ice President Waters Latam, based in Mexico GM Danone Argentina GM Danone Portugal Henri BRUXELLES, COO, End-to-end design to delivery Chief Marketing Officer Danone V P Marketing Da
Slide 34: Danone's end-to-end value chain at a glance
Danone’s End to End value chain at a glance Balancing global scale and local proximity Design Source Manufacture Deliver 7 R&D centers of excellence 53,000 190 factories 400 1.5 billion suppliers distribution consumers 300 copackers (1) centers served each year 400,000 90 million 600 quality farmers
Slide 35: New design-to-delivery global and local function
New design-to-delivery global and local function Deliver superior consumer value for profitable growth Topline growth through better, faster innovation and superior experience High end-to-end efficiency landing in gross margin People and Planet impact as brand differentiator Power of one integrated
Slide 36: Design to Deliver integration in action: Alpro
Value creation through Design to Deliver integration already in action Alpro: a center of excellence supporting plant-based acceleration Farming Processing Base Recipe Filling ▪ 2 R&I hubs in Louisville and Wevelgem ingredients raw materials products formulation packaging ▪ 700 ‘plant-based’ native
Slide 37: Design to Deliver integration in action: Steenvorde factory
Value creation through Design to Deliver integration already in action Steenvorde factory: greater valorization of organic milk + = Accelerated and competitive Expertise in Milk valorization extension in organic IMF organic milk at Steenvorde collection factory Collection of up to Producing 80mL org
Slide 38: New design-to-delivery global and local function
New design-to-delivery global and local function Deliver superior consumer value for profitable growth Topline growth through better, faster innovation and superior experience High end-to-end efficiency landing Today’s in gross margin focus People and Planet impact as brand differentiator Power of o
Slide 39: €300m yearly extra-efficiencies in gross margin by 2023
€300m yearly extra-efficiencies in gross margin by 2023 By working end to end, beyond categories and in a cost competitive way DYNAMIC PORTFOLIO DESIGN TO CONNECTED OPERATIONS THE FUTURE OF MANAGEMENT SUPERIOR VALUE TRANSFORMATION PROCUREMENT SKU / brand Product re-engineering Sweat the assets Desig
Slide 40: Dynamic portfolio management in action: USA
Dynamic portfolio management in action Already tangible results in USA -30% in # SKU on half-gallon formats +10% volume output on performing assets Double-digit LFL sales growth year-to-date +250bps share gains(1), widening gap with competition (1) Value share, YTD v s YTD-1 I 40 I
Slide 41: Dynamic portfolio management in action: Waters and Africa
Dynamic portfolio management in action Already tangible results in Waters and Africa 25% net SKU reduction - 30% gross reduction in SKUs -35% in losses Reduced complexity, direct plant delivery Capacities redeployed to high velocity SKUs +25-30 bps at plant gross margin level 100bps margin optimizat
Slide 42: Dynamic portfolio management levers deployed across portfolio
Dynamic portfolio management 4 levers deployed across the portfolio and geographies Space for the heroes Eliminate to innovate Volvic Touch UK – revenues by flavor ~50% Discontinued SKUs Target 2021: ~30% Redeployed capacities to ~15% heroes ~5% <2% <2% Fl.1 Fl.2 Fl.3 Fl.4 Fl.5 Fl.6 -20% SKUs Track
Slide 43: Design to superior value in action
Design to superior value in action Big impacts visible in Plant-based, Coffee Creamers and Yogurt Market competitive +50bps gross benchmarking margin impact Flavor harmonization Graphic technology Ingredients optimization Light- weighting Plant-based Coffee Greek beverages Creamers Yogurt Sleeves an
Slide 44: Design to superior value: roll-out approach on top SKUs
Design to superior value Roll-out approach on top SKUs by country Mapping of consumer sensory, ingredient, Value packaging and usage Cost Top 5 SKUs performance drivers Product design by country Product and packaging Design to value tear down 5/10% net COGS Remove non- improvement differentiating fa
Slide 45: Connected operations transformation in action
Connected operations transformation in action Unlocking growth and efficiency, enabling sustainability: concrete proof points ‘Sweat our assets’ program: Europe EDP production lines illustration Reverse ‘line- Bring utilization filling’ innovation rates currently below 30% to >60% Asset use massific
Slide 46: Connected operations transformation: Opole factory
Connected operations transformation in action Unlocking growth and efficiency, enabling sustainability: concrete proof points Opole: People powered Data-driven demand planning to and data enabled factory step-change factory efficiency 8,000 Forecast hours of Demand accuracy training planning fueled
Slide 47: Connected operations transformation
Connected operations transformation Sweat the assets and connected transformation programs CONNECTED TRANSFORMATION Sweat Digital Demand-driven & Logistic control the assets manufacturing data-enabled E2E tower (US / Europe) planning 40 sites digitalized by 2023 ‘Sweat our Maximize utilization of Co
Slide 48: The future of procurement
The future of procurement Building data-enabled sourcing capabilities Inflation mitigation Data-enabled sourcing Predictive analytics for Structured supplier Digital spoc for collaborative market risk management collaboration innovation with suppliers Digital and advanced analytics enabled procureme
Slide 49: Equivalent €300m yearly extra-efficiencies by 2023
D2D, creating competitive edge and unlocking value in a covid world DYNAMIC PORTFOLIO DESIGN TO CONNECTED OPERATIONS THE FUTURE OF MANAGEMENT SUPERIOR VALUE TRANSFORMATION PROCUREMENT From 4.5% to 6% structural productivity Net end to end COGS management Equivalent €300m yearly extra-efficiencies in
Slide 50: Event agenda
Event agenda Emmanuel FABER, Véronique PENCHIENATI, Henri BRUXELLES, COO, Juergen ESSER, Conclusion Chairman & CEO CEO Danone End-to-end design Chief Financial, International to delivery Tech and Data Officer Reconnecting Reshaping Agile supply chain Financial Question with sustainable the organizat
Slide 51: Juergen Esser, 20 years at Danone
Juergen Esser 20 years at Danone Since Nov. 2020, fully effective as of Feb 2021: Chief Financial, Technology and Data Officer SVP Finance Waters & Africa VP Finance Evian Volvic World Juergen ESSER, Chief Financial, Tech and Data Officer Key positions in Operational Business and Corporate Finance a
Slide 52: Reconnect with profitable growth ambition
Reconnect with profitable growth ambition In my own words Consistency Discipline Execution I 52 I
Slide 53: Delivering €1bn efficiencies by 2023
Delivering €1bn efficiencies by 2023 Above and below gross margin Recurring savings by 2023 €300m Cost of goods sold and logistic costs ~2/3 Gross margin delivered by end of 2022 €700m SG&A Overheads I 53 I
Slide 54: Targeting ~20% overheads reduction in 3 years
Targeting ~20% overheads reduction in 3 years Primarily from delayering and local synergies €700m ~20% SG&A ▪ Global and country headquarters costs reduction ▪ Shared services optimization in countries in 3 years 2023 savings I 54 I
Slide 55: Accelerating pace of restructuring
Accelerating pace of restructuring To support return to profitable growth Doubling down on 2-year payback restructuring costs ~€1.4bn € 700m € 1.4bn SG&A restructuring savings costs ~€0.6bn BY 2023 2018-20 2021-23 I 55 I
Slide 56: Balancing reinvestment and returns
Balancing reinvestment and returns To reconnect to profitable growth Unlocking Reinvestment in strategic significant efficiencies growth opportunities €1bn recurring savings by 2023 Plant-based Healthy Ageing e-commerce Flexible allocation depending on market conditions and opportunities I 56 I
Slide 57: Updated Financial Targets
Updated Financial Targets Long-term goal Mid-term ambition 2022 target 3% to 5% LFL ( 1) sales growth > 15% operating mid to high teens margin (2) operating margin(2) (1) Like-for-like (2) Recurring operating margin I 57 I
Slide 58: Reconnecting with profitable growth in H2 2021
After 12 months of covid disruption (H1’20 to H1’21) Reconnecting with profitable growth in H2 2021 Confirming full-year guidance 2020 2020 ▪ 14% recurring operating margin ▪ €1.8bn free cash flow A two-phase recovery plan ▪ H1: Lasting consequences of covid, setting up new organization 2021 Margin
Slide 59: Wrap up
y DANONE NVENTING DANONE s \ Investor oe RE| WRAP UP
Slide 60: Updated Financial Targets
Updated Financial Targets Long-term goal Mid-term ambition 2022 target 3% to 5% LFL ( 1) sales growth > 15% operating mid to high teens margin (2) operating margin(2) (1) Like-for-like (2) Recurring operating margin I 60 I
Slide 61: Q&A
y DANONE NVENTING DANONE SS \ Investor oe @ « + Q&A ane November 23, 2020 RE|
Slide 62: Investor Update Event #1
INVESTOR UPDATE EVENT #1 November 23, 2020 I 62 I