Results H July 25th, 2008

Transcription

1 Results H July 25 th, 2008

2 Disclaimer 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 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 sections Risks Factors in Groupe DANONE s Annual Report (which is available on Groupe DANONE undertakes no obligation to publicly update or revise any of these forwardlooking statements. This document does not constitute an offer to sell, or a solicitation of an offer to buy, Danone shares 2

3 H KEY FIGURES Net sales Trading operating income Trading operating margin Underlying net income from continuing activities 7,691 M 1,177 M 15.30% 701 M +9.6% like-for-like +18.2% reported* +12.3% like-for-like +32.2% reported* +35 bp like-for-like +163 bp reported* vs 663M H % (vs pro forma) Underlying EPS (fully diluted) from continuing activities 1.47 vs 1.38 H % (vs pro forma) Free cash flow (1) 550 M vs 571 M H1 07* * Excluding the performance of the Biscuits Division (1) Free Cash Flow: Cash flow from operations less capital expenditure (net of disposals) 3

4 Well on track to reach top-line target Like-for-like sales growth 13.1% 11.0% 11.4% +10% +8.0% 7.5% 7.7% 8.0% +8% +6.0% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 4

5 Numico integration is well on track Integration process is proceeding better than expected - Key strategic priorities set and dedicated teams appointed - R&D, Medical and Marketing aligned to accelerate innovation and growth - Key integration objectives incorporated in BU/dept. s objectives - Organization is aligned and focused; less than 10 regrettable departures 20 mln of cost synergies achieved in H Mainly through cost savings at Numico HQ, stock options and purchasing Fully on track to deliver 45 mln cost synergies for FY 08 Revenue synergy initiatives well on track to deliver at least 120 mln by

6 A fast-growing and well-diversified portfolio FASTER GROWING CATEGORIES DIVERSIFIED GEOGRAPHICAL PORTFOLIO SELECTED GROWTH MARKETS Medical nutrition Still bottled water Functional drinks Baby Nutrition avoury biscuits and crackers Yogurt Sweet biscuits 5.3% 4.6% 4.4% 4.0% 6.6% 6.4% 8.8% France North America Latin America Asia Pacific Mexico Russia Indonesia Sales growth +10% +27% +30% Ice cream Sauces, dressing & condts Frozen processed food Confectionery Cheese 3.7% 3.2% 3.0% 2.8% 2.8% Africa & Middle East China U.S +19% +10% RTE cereals Carbonates Soup Source : euromonitor 0.9% 2.4% 1.9% Western Europe ex. France Eastern Europe Argentina Brazil +28% +25% While geographically diversified, Danone is exposed to faster growing categories and regions 6

7 Addressing consumer trends healthy food CONSUMERS AND HEALTHY FOOD OBESITY IS A GROWING CONCERN 85% of consumers consider food has an impact on health Consumers who care about health go to different categories Relative taste of consumer who care about health «The rise of obesity makes improving the diets and physical activity levels a TOP PRIORITY for the EU in the years ahead» EU Health Commissioner Kyprianou Sandw iches Soft drinks Ready to serve Dairy products Water Fish Fresh vegetables Soups Fresh fruits Water consumption France Spain Switzerland Germany Portugal 100 USA Greece 70 Arge ntina Obesity Source : credoc Source : WHO & Estimates 7

8 Addressing consumer trends healthy food A 100% HEALTH PORTFOLIO A HEALTHIER COMPANY «Danone not only has the «healthiest» portfolio, the management is focused on capitalizing on consumer trends and addressing obesity and Danone Kellog Nestlé General Mills Campbell Unilever Conagra Kraft Cadbury Sara Lee Heinz related health issues» RANKED #1 FOOD COMPANY Insight/JP Morgan April 2008 Inherently nutritious Better for you Other Source : Crédit Suisse 8

9 Analysis of H sales growth VALUE + Japan, Chile, others +7.1% +11.8% Numico +1,345mln Wahaha -576 mln 7,279 mln CURRENCY -4.6% +1.4% SCOPE OF CONSOLIDATION VOLUME +2.5% +9.6% Like-for-like 7,691 mln +18.2% 6,508 mln H H PF H

10 Sales and EPS target reconfirmed EBIT margin target raised to +40 bps to +50 bps Target 2008 Target 2008 Sales growth* +8% to +10% EBIT margin* +40 bps to +50 bps Underlying EPS growth** >+15% * On a like-for-like basis ** versus pro forma 10

11 FRESH DAIRY PRODUCTS High single-digit growth in challenging environment 13.9% 12.0% 11.2% 11.9% 10.5% 9.5% 8.5% 9.2% 9.6% 8.7% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08* Q2 08* *excluding Blédina High single-digit sales growth in challenging environment Volume growth negatively impacted by price increases and difficult market conditions - France in particular Sales in developing markets continue to grow well Blockbusters continue to significantly outperform sales and volume growth of the division 11

12 Health benefits strategy is confirmed Q2 08 We have strong brands Value growth Benefit Activia +26% Transit These brands are supported by specific health benefits Actimel Danonino +8% +6% Immunity Bones Combination of strong brands & health benefits leads to lower price elasticity Vitalinea -4% Danacol +33% Weight Cardio 12

13 Activia continues to be the major engine behind growth Activia sales growth in Q2 2008: Activia growth in France in Q2 08: Volume +13% +0.3% Sales +26% +10% Volume growth in selected countries in Q2 08: Europe: Country A: +10% Country B: +26% Country C: +16% Country D: +14% Country E: +60% Rest of the World: Country F: +30% Country G: +45% Country H: +8% Country I: +56% 50% of Activia sales 13

14 Aug 05 Oct 05 Dec 05 Feb 06 Apr 06 June 06 Aug 06 Oct 06 Dec 06 Feb 07 Apr 07 June 07 Aug 07 Oct 07 Dec 07 Feb 08 Apr 08 June France has witnessed an accelerated drop in consumer confidence, driven by a combination of specific factors Consumer confidence indicator France January 2005 June 2008 Down 4 points in both May & June 14 June 05 Apr 05 Feb 05

15 France has been impacted by a combination of various factors REGULATION - Regulations have weighted on retail consumption over last years - New law addresses the MT issues, but requires adjustment ST RETAIL - Smaller retail formats are gaining market shares to Hyper - We are rapidly gaining market share in smaller formats but are still predominantly in Hyper - Promos pushed to H2 Core range and Big Packs make up a relatively large part of the portfolio and are more vulnerable to price increases This has led to a decline in sales and volume growth in France of -6.4% and -15.1% respectively in Q

16 A large part of the Dairy markets shows resilience and success When isolating the specific situation in France, the volume growth of the rest of the division improves to +0.7% in Q2 08 Eastern Europe, Latin America and Asia continue to have single-digit volume growth, despite a softening in selected markets Certain countries are witnessing a rebound in volumes - Brazil, Stonyfield, Saudi Arabia, Italy Market shares have remained relatively stable or improved in the majority of our Dairy markets - 16 countries improved their market shares - 4 markets in W-Eur lost more than 1%pt ms - 3 markets in RoW lost more than 1%pt ms 16

17 We continue to successfully enter into new geographies Egypt Launch: Market entry 2005, Activia launched in May 2008 Sales growth : +71% in H1 08 MS improvement: +7.8 pts to 25.9% YTD Chile Launch : Market entry June 07, Activia Sept 2007 Sales growth : +24% in H1 08 MS improvement: 9.0 pts to 19.1% in LTM 17

18 We reinforce affordability and value Launch of COPACK Psychological price points Blockbusters Acceleration of sales force effectiveness Productivity Perceived Value Perceived Price Speed of innovation Added value New media Credibility/Endorsement KOLs 18

19 Launch of «COPACK» Roll-out the success of Gratka in Poland in other countries The quality of Danone at a low price 6 x 115 gr /pack Nature, sucré, vanilla & s berries 19

20 Psychological price points Blockbusters Before: 90 T/day After: 140 T/day Ecopack 100g Big pot 500g Psychological Price On pack 20

21 New sources of growth identified for 2009 and beyond Modern trade - New consumer targets - Non-dairy based products - New formats Away from home - Probiotics, high value Deep Affordvaluity: - Powders - Non-dairy proteins 21

22 Usage of new media to support effectiveness Online newspaper MSN Google TV Web Impact on Danacol sales +18% +21% + Comprehension/ Credibility of the benefit 22

23 More focus on credibility and endorsement Lab en Belgique 2ème semestre 2008 Endorsement Institut Pasteur Comm Danone Research 23

24 WATERS* Healthy volumes offset by negative mix 6.8% 5.8% 8.2% 10.5% 9.7% 9.0% 10.8% 7.0% % Q1 08 Q % *excluding Wahaha Good volume performance of +5.1% offset by negative mix effect of 5.9% as volumes are driven by developing markets Performance impacted by poor weather conditions in Europe as well as difficult market conditions in France, Spain and the UK Continued excellent broad-based mid and high-teens growth in Asia and Latin America, respectively, driven by outstanding performance in Indonesia, Argentina and Mexico 24

25 Water markets outside Western Europe continue to do well Western Europe % of total sales 41% Market volume growth 0% Danone volume growth -5% Danone value growth -1% Eastern Europe % of total sales 8% Market volume growth +10% Danone volume growth +14% Danone value growth +17% Latin America % of total sales 18% Market volume growth +5% Danone volume growth +13% Danone value growth +23% Asia % of total sales 29% Market volume growth +11% Danone volume growth +7% Danone value growth +4% Note: % of total sales is based on sales H1 08 All growth data are based on 2007 and growth data related to Danone include Wahaha sales 25

26 We have strong, well-known, high-quality brands We have a portfolio of strong brands.based on high-quality sources Bonafont Badoit 16% 5% Fontvella 7% Volvic 16% Evian 25% Mineral Water 73% Aqua 9% Zywiec 4% Lanjaron 3% Others 15% as a % of water sales as a % of water sales Single Source 1% Multi Source 22% Purified Treated Water 4% 26

27 Our Waters strategy is centered around quality, sustainability and durability Evian water : 22 years of filtration in the French Alps Evian source is protected within a perimeter of 35 sq km and Volvic 38sq km Over 300 analyses per day for both brands Evian and Volvic can be consumed by everyone, including babies, at all times Evian and Volvic were the first brands to introduce RPET in France in May 2008 (25% of RPET in 1,5L and 1L formats) PET weight reduction of 20% over the past 10 years Transportation : 70% of Evian transported by train Diesel train carbon emission is 1/20th of a truck 27

28 We focus on Health, Naturality and the Environment Reason for bottle: naturality (42%) health (28%) Levers to drink more: lower price (71%) more specific on health (63%) environment (36%) It is imperative to continue to explain and build upon our strengths : Health & naturality And bring answers to a growing concern : Environmental responsibility 28

29 This model has reinforced Evian s market share in France Evian wins value and volume market share Value SOM Volume SOM pt pt YTD P6/07 YTD P6/ YTD P6/07 YTD P6/08 29

30 Countries outside Western Europe continue to deliver double-digit volume growth 16% 17% 17% 17% 13% 14% 13% 10% 10% 11% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q

31 BABY NUTRITION Continuation of strong growth track-record 15.0% 18.8% 16.2% 12.2% 8.0% 4.0% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08* Q2 08* Very strong performance on the back of difficult comparable Broad-based growth across all categories and geographies Continued strong value effect (+10.6%) reflecting price increases taken as of Q3 07 Resilient volume performance at +5.6% shows the strength of our brands and the loyalty of our consumers *including Blédina 31

32 BABY NUTRITION We continue to gain market share Volume market share development* Danone Biggest competitor France +1.5% pt -0.9% pt Italy Portugal Finland U.K Germany Poland Turkey +1.6% pt +0.7% pt +4.0% pt % pt +1.3% pt +2.8% pt -2.1% pt -0.2% pt -4.8% pt -3.6% pt -0.5% pt -1.1% pt -0.1% pt Russia -1.3% pt +0.4% pt Indonesia Thailand +2.3% pt +1.5% pt -1.3% pt -3.5% pt *MAT progression vs MAT -1 China -0.7% pt +1.8% pt 32

33 BABY NUTRITION Selected product innovations H1 NETHERLANDS Toddler Cereals Good Night Cereals BALTICS Milk Cereals 8 European Countries Powdered GUM BELGIUM & NL 100% Spring water Juice POLAND B fast Milk Cereals UK & Turkey Good Night Milks 33

34 BABY NUTRITION China: a new segment between Super Premium and Standard MAT 0803 Volume Contribution & Growth Super Premium index % +37.2% Premium % +23.1% Standard % -5.1% Economy 67 14% -28.4% 34

35 MEDICAL NUTRITION Continued strong performance across the board 14.1% 15.5% 14.0% 10.2% 14.6% 12.4% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Continuation of the solid double-digit growth track-record despite difficult comparable Growth is completely volume-driven Strong growth supported by all geographies and Southern Europe in particular All categories contributed to the growth with above average growth coming from GI Allergy and Pediatrics 35

36 MEDICAL NUTRITION Update on Alzheimer project Danone has developed Souvenaid TM, a multi-nutrient drink for Alzheimer patients designed to improve cognitive function Danone Research has successfully completed the first clinical trial The trial results demonstrate clear proof of concept and will be presented at the International Congress on Alzheimer s Disease (ICAD) in Chicago on 30 July 2008 The results will subsequently be submitted to a peer reviewed journal A second study will be initiated in the course of H2, to confirm initial findings 36

37 Broad-based geographic growth EUROPE 9.3% 8.4% 2.9% 9.4% 8.5% 4.5% Q % 18.0% 18.5% 14.9% ASIA* 8.6% 8.5% Q % 16.2% 16.6% 19.8% 15.8% 14.1% REST OF THE WORLD Numbers prior to 2008 excl. the acquired Numico business *Excluding Wahaha Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q

38 Developments in raw materials Milk price developments Milk and milk derivatives costs represented around 2 bn in FY 07 Milk prices are decreasing somewhat faster than we expected. However, current milk prices are still 20% higher compared to Q2 07 USD/KG SMP price From January 01 to July 08 jan 01 june 01 nov 01 apr 02 sept 02 feb 03 july 03 dec 03 may 04 oct 04 mar 05 aug 05 jan 06 june 06 nov 06 apr 07 sept 07 feb 08 july 08 38

39 Developments in raw materials Rising oil prices Rising oil prices impact transportation, energy and PET costs PET costs in FY 07 amounted to approx. 300 mln in FY 07 PET cost is not only impacted by oil prices but also by USD/EUR and the supply & demand levels for PET in the market 1 EUR / USD & Crude oil prices January 2006 to July /1/06 10/2/06 22/3/06 1/5/06 10/6/06 20/7/06 29/8/06 8/10/06 17/11/06 27/12/06 EUR / USD 5/2/07 17/3/07 26/4/07 5/6/07 15/7/07 24/8/07 3/10/07 Brent Oil 12/11/07 22/12/07 31/1/08 11/3/08 20/4/08 30/5/08 9/7/

40 Trading operating income and margin mln H H Trading operating income Other operating items Operating income ,177 (57) 1,120 Trading operating margin 13.67% 15.30% 40

41 A healthy like-for-like margin progression in H1: +35 bp Scope of consolidation +119bp Translation FX rates +9bp Country mix -9bp +35 bp Like-for-like Operational performance 15.30% 13.67% Input costs H H

42 Trading operating margin by business line & geographical area Reported mln H H Like-for-like change Fresh Dairy Products 13.37% 13.86% Waters 13.52% 14.53% +57 bps -111bps Baby Nutrition 19.76% 18.14% +84 bps Medical Nutrition % +113 bps Europe 15.31% 16.58% +100 bps Asia 10.80% 17.29% -4 bps Rest of World 11.81% 11.00% -94 bps GROUP 13.67% 15.30% +35bps 42

43 From operating income to net income mln H PRO FORMA H Reported Non current items H Underlying Trading operating income 1,093 1,177 1,177 Other operating items Income tax Operating income 1,093 1, ,177 Total financial expenses Net income of affiliates Net income of discon.activities Net income Attributable to minority interests Attributable to the parent

44 Tax rate evolution mln H H Total income tax (reported) Reported tax rate 30.2% 26.2% Non current income tax Current income tax Underlying tax rate 27.9% 24.2% 44

45 Underlying EPS from continuing activities H Reported H Pro forma H Underlying net income from continuing activities million Fully diluted number of shares millions Fully diluted underlying EPS from continuing activities %* *vs Pro Forma 45

46 Free cash flow from operations mln H H Cash flow from operations Change in working capital Capital expenditure Assets sales Free cash flow from operations Free cash flow as a % of sales 8.8% 7.2% 46

47 Cash flow statement H H mln Free cash flow from operations Investments in sub. & affiliates Disposals & repayment of vendors loans Dividends paid Share buyback Increase in capital Net debt variation of discontinued activities Others Scope and forex Change in net debt

48 Financing mln June Dec June Net debt 3,365 11,261 11,021 Of which put options granted to minority interests 2,418 2,700 2,716 Equity Incl. minorities 5,937 9,100 9,279 48

49 Debt maturity profile CP* Bonds Synd loan Put options Other mln ,1 0, CP Put options Next significant debt repayment obligation is in December ,1 The vast majority of our interest rates are hedged against short term interest rate increases * Backed up by medium term committed available credit facilities 49

50 Sales and EPS target reconfirmed EBIT margin target raised to +40 bps to +50 bps Target 2008 Target 2008 Sales growth* +8% to +10% EBIT margin* +40 bps to +50 bps Underlying EPS growth** >+15% * On a like-for-like basis ** versus pro forma 50

51 APPENDIX 51

52 Analysis of Q sales growth VALUE + Japan, Chile, others +6.0% +13.4% Numico +700 mln Wahaha -252 mln 3,791 mln CURRENCY -4.6% +0.8% SCOPE OF CONSOLIDATION VOLUME +2.0% +8.0% Like-for-like 3,931mln +17.6% 3,341 mln Q Q PF Q

53 Impact of currency and scope Q Q H Reported sales growth +18.7% +17.6% +18.2% Currency -4.6% -4.6% -4.6% Scope of consolidation +11.9% +14.2% +13.2% Like-for-like sales growth +11.4% +8.0% +9.6% 53

54 Q net sales by business & geographical area mln Q Q Like-for-like sales growth Fresh Dairy Products 2,089 2,179 Waters 1, % -0.8% Baby Nutrition % Medical Nutrition % Europe 1,960 2, % Asia % Rest of World % GROUP 3,341 3, % 54

55 Q like-for-like sales growth Breakdown volume/value Like-for-like volume value Like-for-like sales growth Fresh Dairy Products -1.5% +10.2% +8.7% Waters +5.1% -5.9% -0.8% Baby Nutrition +5.6% +10.6% +16.2% Medical Nutrition +13.1% -0.7% +12.4% Europe -2.7% +7.2% +4.5% Asia +15.2% -0.3% +14.9% Rest of World +3.3% +10.8% +14.1% GROUP +2.0% +6.0% +8.0% 55

56 H net sales by business & geographical area mln H H Like-for-like sales growth Fresh Dairy Products 4,124 4,358 Waters 2,139 1, % +2.6% Baby Nutrition 245 1, % Medical Nutrition % Europe 3,757 4, % Asia 1, % Rest of World 1,702 1, % GROUP 6,508 7, % 56

57 H like-for-like sales growth Breakdown volume/value Like-for-like volume value Like-for-like sales growth Fresh Dairy Products -0.8% +10.4% +9.6% Waters +5.8% -3.2% +2.6% Baby Nutrition +6.0% +11.4% +17.4% Medical Nutrition +13.4% +0.1% +13.5% Europe -0.9% +7.3% +6.4% Asia +13.3% +3.3% +16.6% Rest of World +2.7% +12.3% +15.0% GROUP +2.5% +7.1% +9.6% 57

58 Q1, Q2 & H1 08 top line growth Like-for-like Q Q H Fresh Dairy Products +10.5% +8.7% +9.6% Waters +7.0% -0.8% +2.6% Baby Nutrition +18.8% +16.2% +17.4% Medical Nutrition +14.6% +12.4% +13.5% Europe +8.5% +4.5% +6.4% Asia +18.5% +14.9% +16.6% Rest of World +15.8% +14.1% +15.0% GROUP +11.4% +8.0% +9.6% 58

59 Major changes in exchange rates 45% of sales is denominated in % total Q2 08 sales Q2 08 vs Q2 07 (avg) Q1 08 vs Q1 07 (avg) US Dollar 7% - 13% - 14% Mexican Peso 6% - 10% - 11% Russian Rouble 5% -5% -6% Polish Zloty 5% +11% +10% Indonesian Rupee 4% - 16% - 15% Chinese Yuan 3% -4% -6% Argentinian Peso 3% - 14% - 16% Brazilian Real 3% +4% +5% Canadian Dollar 2% -7% 0% Turkish Lira 2% -6% -1% South African Rand 1% - 20% - 19% 59