Danone Sa · EURONEXT:BN
Danone Sa — Morgan Stanley Global Consumer & Retail Conference 2017
29 slides from Danone Sa's conference presentation, Nov 14, 2017
Slide 1: Morgan Stanley Global Consumer & Retail Conference
MORGAN STANLEY GLOBAL CONSUMER & RETAIL CONFERENCE November 14, 2017 Cécile Cabanis, CFO I 1 I
Slide 2: Forward-looking statements
• This document 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,” “believe,” “forecast,” “foresee,” “likely,” “may,” “shoul
Slide 3: Danone at a glance
Danone at a glance A global leader in health and nutrition ~100 ~€ 25bn 2016 Net sales ~€ 45bn Market capitalization ~100,000 Employees Years in business in 2019 Incl. 2016 WhiteWave sales As of November 7th, 2017 As of December 31, 2016; before WW acquisition 100% ~20 120 #1 Healthy categories Bran
Slide 4: Our mission and ambition
Our mission and ambition Value creation in a sustainable manner A company that is aligned with consumer values, creates value… …at the core of Danone’s growth model Healthier eating and drinking… … in a responsible way Bringing health US ENTITY through food CREATED THE to as many people LARGEST PUBL
Slide 5: Our transformation journey
Our transformation journey A story of constant reinvention 1996 2016 European food conglomerate Global health-focused portfolio 3% Baby Food 7% Glass Packaging 49% Fresh Dairy 7% Advanced 26% Fresh Dairy Products Products Medical Nutrition 10% Waters 8% Beers 39% 100% 3% Pasta Healthy Healthy 5% Sau
Slide 6: Accelerating the transformation in last three years
Accelerating the transformation in last three years Step changes to adapt to market and consumer environment Our environment MACRO CHANGING DIGITAL SMALL, LOCAL IS VOLATILITY CONSUMER TRENDS DISRUPTION THE NEW BIG Our Journey: 2014-2016 PORTFOLIO FOCUS: WhiteWave acquisition • Creating a global lead
Slide 7: 2014-2016: Rebalancing the model of growth
2014-2016: Rebalancing the model of growth Strong track record Sustained improvement in Consistent recurring Like-for-like sales growth recurring operating margin EPS growth 2014-16 2014-16 2014-16 Cumulative CAGR CAGR +4.0% +120bps +8.8% +4.7% +4.4% 13.8% €2.93 €3.10 +2.9% 12.9% €2.62 12.6% 2014 20
Slide 8: Commitments and strategic priorities for 2020
Commitments and strategic priorities for 2020 Accelerate growth and maximize efficiencies ACCELERATE GROWTH 2020 OBJECTIVES* 1 • Execute competitive plans SALES GROWTH: • Engage with consumers in new way 4% to 5% • Accelerate small & local brands MARGIN: MAXIMIZE EFFICIENCIES >16% 2 • Achieve synerg
Slide 9: Commitments and strategic priorities for 2020
Commitments and strategic priorities for 2020 Accelerate growth and maximize efficiencies ACCELERATE GROWTH 2020 OBJECTIVES* 1 • Execute competitive plans SALES GROWTH: • Engage with consumers in new way 4% to 5% • Accelerate small & local brands MARGIN: MAXIMIZE EFFICIENCIES >16% 2 • Achieve synerg
Slide 10: Accelerate growth: Unique portfolio, solid execution
Accelerate growth Unique portfolio, solid execution 2020 LFL sales growth objectives Key drivers Unique Solid Portfolio Execution Net Sales 4 to 5% SUPERIOR GROWTH PRODUCT BRAND CATEGORIES… INNOVATIONS ACTIVATION 2020 2017 Brand MODERATE Activation …ALIGNED PORTFOLIO WITH CONSUMER CHANNELS PREFERENC
Slide 11: Accelerate growth: A unique portfolio
Accelerate growth A unique portfolio… * In Europe Early life nutrition Advanced medical nutrition Waters Number 2 Fresh dairy products in volume Plant-based food & beverages Coffee creamers & beverages I 11 I
Slide 12: Aligned with fast changing consumer trends
Accelerate growth …aligned with fast changing consumer trends 89% of prosumers think that 58% of the FMCG growth 62% of consumers think that “food is as effective as medicine is driven by local brands “it’s essential for a company to in maintaining overall health” be completely transparent” 100% hea
Slide 13: Strong innovation pipeline, matching consumer demand
Accelerate growth Strong innovation pipeline, matching consumer demand Innovate in products to build trust and transparency I 13 I
Slide 14: Strong innovation pipeline, matching consumer demand
Accelerate growth Strong innovation pipeline, matching consumer demand Adjacent categories Snacking and on-the-go Innovate to be part of consumers’ lives at every moments & occasions Coffee Up: (v.) To quickly engage the imagination (k-way 10,000) and all five senses by rapidly administering very go
Slide 15: Driving portfolio premiumization towards iconic brands
Accelerate growth Driving portfolio premiumization towards iconic brands I 15 I
Slide 16: Multi-platforms activation to engage with consumer
Accelerate growth Multi-platforms activation to engage with consumer I 16 I
Slide 17: Shift towards new channels
Accelerate growth Shift towards new channels I 17 I
Slide 18: Q3: +4.7% LFL sales growth
Accelerate growth Q3: +4.7% LFL sales growth Q3 2017 Sales growth (1) H1 2017 Sales growth (1) + 0.4% + 4.7% First 9 months 2017: +2.1% (1) Like-for-like new Danone sales growth I 18 I
Slide 19: Commitments and strategic priorities for 2020
Commitments and strategic priorities for 2020 Accelerate growth and maximize efficiencies ACCELERATE GROWTH 2020 OBJECTIVES* 1 • Execute competitive plans SALES GROWTH: • Engage with consumers in new way 4% to 5% • Accelerate small & local brands MARGIN: MAXIMIZE EFFICIENCIES >16% 2 • Achieve synerg
Slide 20: $300m WhiteWave synergies: significant & highly executable
Maximize efficiencies $300m WhiteWave synergies: significant & highly executable Ambition Accomplishments: on track with value creation • WhiteWave integration on track: • One national sales team in action • Closing of WhiteWave’s corporate HQ • First corporate costs elimination • Faster than expect
Slide 21: Protein efficiency program: €1bn savings by 2020
Maximize efficiencies Protein efficiency program : €1bn savings by 2020 Ambition Accomplishments: roll-out in progress Indirect cost base: ≈ €7 bn 3 pilot countries completed SALES PROFESSIONAL 3RD PARTY LOGISTICS MANUFACTURING AND MARKETING SERVICES MANUFACTURING 30%* 25%* 20%* 15%* 10%* 15 spend c
Slide 22: Commitments and strategic priorities for 2020
Commitments and strategic priorities for 2020 Accelerate growth and maximize efficiencies ACCELERATE GROWTH 2020 OBJECTIVES* 1 • Execute competitive plans SALES GROWTH: • Engage with consumers in new way 4% to 5% • Accelerate small & local brands MARGIN: MAXIMIZE EFFICIENCIES >16% 2 • Achieve synerg
Slide 23: Allocate capital with discipline
Allocate capital with discipline Commitment to delivering long-term shareholder value Invest for growth & Shareholder Deleverage efficiency across returns and time horizons dividends FCF improvement Sustained level of capex : Sustained dividend Portfolio management around 4-5% of sales policy Discip
Slide 24: New organization to ensure success of delivery and transformation agenda
New organization to ensure success of delivery and transformation agenda Increase agility and efficiency EXCOM STREAMLINED Finance, Focus Water & Specialized IS/IT, EDP HR / GS Africa Nutrition Procurement & Cycles Speed REGIONAL LEADERSHIP REINFORCED Closer to market 15 regional leaders empowered o
Slide 25: Securing the short term delivery agenda, preparing for tomorrow
Securing the short term delivery agenda Preparing for tomorrow 2015 2014 2016 2016 2017 2017 2020 2017 objectives: 2020 objectives Recurring EPS growth at LFL sales growth > 4% to 5% constant exchange rate > 12% Recurring operating margin > 16% Reduced leverage ratio(1) to < 3.0x ROIC(1) improved to
Slide 26: Appendix
MORGAN STANLEY GLOBAL CONSUMER & RETAIL CONFERENCE APPENDIX I 26 I
Slide 27: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS Additional indicator of like-for-like changes: “like-for-like New Danone” changes Since completion of WhiteWave acquisition, WhiteWave and Danone’s activities have been combined and are generating synergies. Separate reporting of WhiteWave and Danone in their
Slide 28: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS Since inflation in Argentina—already structurally high—accelerated further in 2014, in particular following the sharp, steep devaluation of the peso in January, using an identical exchange rate to compare 2014 figures with those for the prior year did not acc
Slide 29: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS Recurring operating income is defined as Danone’s operating income excluding Other operating income and expenses. Other operating income and expenses is defined under Recommendation 2013-03 of the French ANC (format of consolidated financial statements for co
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