Danone Sa · EURONEXT:BN
Danone Sa — Non-Deal Roadshow (April 2008)
38 slides from Danone Sa's roadshow presentation, April 2008
Slide 1: Presentation to investors – April 2008
Presentation to investors – April 2008 1
Slide 2: Forward looking statements
Forward looking statements This document contains certain forward-looking statements concerning Groupe DANONE. Although Groupe DANONE believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause act
Slide 3: Danone's business and strategy overview
I. Danone’s business and strategy overview II. Numico acquisition III. Recent trading update and outlook IV. A conservative financial structure 3
Slide 4: To bring health through food to the largest number of people
The unique capacity to be inspired by a powerful mission To bring health through food to the largest number of people 4
Slide 5: We play in the most attractive food segments
We play in the most attractive food segments World Market CAGR 06-11 (volume) Clinical nutrition 8.8% Still bottled water 6.6% Functionnal drinks 6.4% Baby Nutrition 5.3% Savoury biscuits and crackers 4.6% Yogurt 4.4% Sweet biscuits 4.0% Ice cream 3.7% Sauces, dressing & condts 3.2% Frozen processed
Slide 6: Key features of our business model
Key features of our business model All divisions command leadership positions Through well-known brands and value-adding products Our brands have superior pricing power Growth is fuelled through Innovation Roll-out Geographic expansion Strong productivity gains are generated on fixed and overhead co
Slide 7: We command leadership positions
We command leadership positions Western Europe Eastern Europe North America # 1 Fresh Dairy # 1 Fresh Dairy # 1 Fresh Dairy # 2 Bottled Water # 1 Baby Nutrition # 1 Baby Nutrition # 1 Medical Nutrition # 1 Medical Nutrition Asia # 2 Baby Nutrition Latin America # 1Fresh Dairy # 1 Bottled Water Afric
Slide 8: A success built on well known brands
A success built on well known brands €1900 mln €1100 mln €500 mln €500 mln 2007 Sales 8
Slide 9: Dairy: one brand = one health benefit
Dairy : one brand = one health benefit Transit Weight Digestion Protection Management Growth €1,900mln €1,100mln €900mln €800mln 9
Slide 10: The identification of active ingredients: Expertise of R&D and its partners
The identification of active ingredients: Expertise of R&D and its partners D Dairy R&D community ~ 450 people specialised along brand and health D benefit lines 10
Slide 11: Growth fuel: Roll-out
Growth fuel: Roll-out 2000 2007 Yogurt Only Yogurt, fermented milk and other relevant supports 1.9 Activia sales (€bn) 1.3 0.9 0.7 0.4 0.5 0.3 2001 2002 2003 2004 2005 2006 2007 11
Slide 12: Growth fuel: geographic expansion
Growth fuel: geographic expansion New countries since 2006: Thailand, Colombia, Chile, Egypt, Algeria In 10 years Danone present in 80 countries 80 Today Danone present in 40 countries 40 3 to 5 new countries/year 0 2007 2017 12
Slide 13: Numico acquisition
I. Danone’s business and strategy overview II. Numico acquisition III. Recent trading update and outlook IV. A conservative financial structure 13
Slide 14: 2007: Significant portfolio refocusing
2007: Significant portfolio refocusing Disposal of Biscuits Friendly offer to Kraft for Numico Outstanding price at €5.3bn €12.1bn acquisition or 13.7x 2006A EBITDA Creation of a unique 100% “Health- Fast execution through food” company Strong 2007 performance Potential to leverage exceptional unaff
Slide 15: Danone + Numico: 100% health story
Danone + Numico: 100% health story 2007 2007at 2008 Scope Pro-Forma 2006 Baby Medical Nutrition Nutrition 3% € 0.8 bn Baby Biscuits 5% Nutrition 16% € 2.4 bn 17% Fresh Dairy Fresh Dairy 53% € 8.3 bn Waters 57% 28% Waters € 3 bn 21% Healthy Food 84% 100% 15
Slide 16: The creation of the #2 tie worldwide Baby Nutrition player
The creation of the #2 tie worldwide Baby Nutrition player Numico + Blédina: Baby Nutrition positions Africa W. Europe E. Europe Asia Middle East #1 #1 # 2 tie #2 Source: Euromonitor 16
Slide 17: Numico's Baby Nutrition portfolio is highly complimentary to Danone's product lines
Numico’s Baby Nutrition portfolio is highly complimentary to Danone’s product lines Main Netherlands UK Germany Italy China countries France Ireland Eastern Thailand Europe Malaysia Products: Milk (75% of sale) Food (25% of sale) Source: Numico public information, Euromonitor 17
Slide 18: The barriers to entry are high
The barriers to entry are high…. Frozen food 25% Pet food 21% Shelf stable food 19% Yogurt 15% Non alcoholic beverages 12% Confectionnery 9% Alcoholic beverages 6% Baby Nutrition 2% 0 5 10 15 20 25 30% Worlwide Private Labels market share Source: Baby Food public information, brokers, Nielsen 18
Slide 19: …and the category offers significant growth potential
…and the category offers significant growth potential WW average 20kg APac AMEA Latin America Eastern Europe North America Western Europe France 0 50 100 150 200 250 Per capita consumption (kg/ baby) Source: Euromonitor, External data – APac: Asia Pacific 19
Slide 20: Medical Nutrition consists of two distinct businesses
Medical Nutrition consists of two distinct businesses… Medical Nutrition Disease Targeted Nutrition 20
Slide 21: …with a number of long term growth drivers
…with a number of long term growth drivers Ageing population Lifestyle diseases exploding Growing role of Nutrition in disease management and prevention Industry in its infancy and growing at a fast rate 21
Slide 22: Recent trading update and outlook
I. Danone’s business and strategy overview II. Numico acquisition III. Recent trading update and outlook IV. A conservative financial structure 22
Slide 23: FY 2007 Key Figures
FY 2007 Key Figures +9,7% like-for-like Net Sales €12,776M +5.9% reported Trading operating income €1,696M +6.2% + 45 bp like-for-like Trading operating margin 13.27 % + 3 bp reported Underlying net income €1,185M Vs €1,194M FY ‘06 Net debt Incl. Incl. put put options options €11,261M Vs €2,902M FY
Slide 24: FY 2007 performance at opening scope: key take-aways
FY 2007 performance at opening scope: key take-aways ⌦Top line and margin performance in the upper part of the guidance… ⌦…despite loss of Wahaha co-packed sales, poor summer in Europe, and significant input cost headwinds ⌦ Core business growth is very healthy record growth rate in Fresh Dairy with
Slide 25: Raw materials and pricing update
Raw materials and pricing update Milk is the main input affected by recent cost increases Impact of approx. €390m in 2008 Entire amount offset by pricing, productivities and operating leverage Price increases taken throughout the year in all major geographies 25
Slide 26: Analysis of FY 2007 published Sales
Analysis of FY 2007 published Sales +9.7% Like-for-like +3.7% +3.7% VOLUME VALUE +5.9% NUMICO CURRENCY +4.2% WAHAHA -2.9% H2 07 €12,776M +5.5% OTHER -4.7% +0.1% €12,068M -4.6% SCOPE OF CONSOLIDATION FY 2006 FY 2007 IFRS, excl. biscuits 26
Slide 27: New Danone targets
New Danone targets reflect Targets the New Danone Medium Term Target 2008 Target 2008 Target Sales growth* +8% to +10% +8% to +10% Trading Op.Profit* Faster than Faster than (EBIT) growth sales growth sales growth EBIT margin Improving >+30bp 1 On a like-for-like basis 27
Slide 28: A conservative financial structure
I. Danone’s business and strategy overview II. Numico acquisition III. Recent trading update and outlook IV. A conservative financial structure 28
Slide 29: Key numbers
Key numbers (€mln) 2004 2005 2006 2007 (1) 2007PF (2) Net Sales 12,273 13,024 14,073 12,776 15,044 EBITDA 2,040 2,184 2,365 2,116 2,656 %margin 16.6% 16.8% 16.8% 16.6% 17.7% EBIT 1,559 1,706 1,874 1,696 2,162 %margin 12.7% 13.1% 13.3% 13.3% 14.4% (5) Net Income 638 1,671 1,560 4,338 1,317 (3) Free C
Slide 30: In the last years free cash flow has nearly doubled
In the last 7 years free cash flow has nearly doubled (€mln) 1,516 1,303 1,224 1,204 1,184 1,149 1,017 1,142 1,099 818 624 2000 2001 2002 2003 2004 2004 2005 2006 2007 IFRS % of sales 4.4% 5.7% 7.5% 8.7% 8.9% 9.8% 10.0% 10.8% 8.5% (1) (1) Excluding biscuits and Numico’s financing cost 30
Slide 31: Free cash flow from operations
Free cash flow from operations FY 2006 FY 2007 VAR (€mln) Free Cash Flow from Operations 1,516 1,184 (332) of which Wahaha 126 (57) (183) of which Exceptional financial proceeds 100 (100) (200) (2006) and costs (Numico, 2007) of which Biscuits 191 199 8 Free Cash Flow from Operations 1,099 1,142 43
Slide 32: Net debt evolution
Net debt evolution 0.6 (1.2) 12.1 0.5 (4.7) Put options Financial debt 0.9 0.2 11.3 4.5 3.6 2.9 €bn 2004 2005 2006 Numico Share buy- Dividends Free-cash Biscuits Scope and Various (2) 2007 back flow disposal FX ND /EBITDA 2.2x 1.6x 1.2x 4.2x(1) (1) Audited pro-forma disposal of biscuits and full yea
Slide 33: Debt maturity profile
Debt maturity profile €bn 3,000 2.6 2.7 2,500 2.3 2,000 1.9 1.7 1.6 1,500 1.0 1,000 500 0.2 0 1 Cash & MS CP 2008 2009 2010 2011 2012+ Put options 33
Slide 34: Numico's acquisition financing
Numico’s acquisition financing Total purchase price paid at 12/31/07 €12.1bn The acquisition of Numico was financed via use of cash at hand for €2bn and an 18-month €11bn bridge facility (January 2009) Danone has already refinanced a large portion of the acquisition: The Biscuit disposal for €5.1bn
Slide 35: Key credit ratios
Key credit ratios 2005 2006 2007PF1 Net Debt / EBITDA 1.6x 1.2x 4.2x (incl. put options) Net Debt / EBITDA 0.4x 0.2x 3.2x (excl. put options) Gearing 79% 52% 124% (incl. put options) 1 Audited pro-forma Put options are mainly related to minority interests in Spain, can be exercised at any time with
Slide 36: Danone's Financial policy
Danone’s Financial policy Maintain an appropriate amount of liquidity At end of 2007: €3.9bn of undrawn facility with no covenants to support its CP program and any potential exercise of the put options described before €1bn of cash and marketable securities Danone has access to various funding sour
Slide 37: Conclusion
Conclusion Clear strategy: health through food Pricing power and branding Strong growth (geography, roll-out, innovation…) Integration of Numico delivering as per plan Strong cash flow generation Conservative financial structure with A3/A- ratings 37
Slide 38: Contacts
Contacts Website: www.danone.com Francois-Xavier Roger, Vice President Corporate Finance Phone: +33 1 44 35 21 52 Mail: Francois.roger@danone.com Robin Jansen, Head Investor Relations Phone : +33 1 44 35 20 73 Mail: Robin.jansen@danone.com 38