Danone: The fast growing healthy food powerhouse. Antoine Giscard d Estaing Executive VP Finance, Strategy and IS Groupe DANONE September 5, 2007

Transcription

1 Danone: The fast growing healthy food powerhouse Antoine Giscard d Estaing Executive VP Finance, Strategy and IS Groupe DANONE September 5, 2007

2 Disclaimers No reliance should be placed on the accuracy, completeness or correctness of the information or opinions contained in this presentation. Groupe Danone, its subsidiaries, its advisors or its representatives shall not, under any circumstances, bear liability (in negligence or otherwise) for any loss or damage arising as a result of the use of this presentation or the information it contains. This presentation contains forward-looking statements. No responsibility or liability is or will be accepted and no representation or warranty is or is authorized to be given as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. No such future projections, management targets, estimates, prospects or returns have been independently audited, examined or otherwise reviewed or verified. In addition, such future projections, management targets, estimates, prospects or returns reflect various assumptions and estimates concerning anticipated results and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the management of Groupe Danone. Accordingly, there can be no assurance that such future projections, management targets, estimates, prospects or returns will be realized. Forecast and actual results will likely vary, and those variations may be materially higher or lower than those future projections, management targets, estimates, prospects or returns. None of the future projections, management targets, estimates, prospects or returns in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, management targets, estimates, prospects or returns have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in this presentation. Any views contained herein are based on financial, economic, market and other conditions prevailing as of the date of this presentation. In particular, no assurance can be made that the combination of Groupe Danone with Royal Numico N.V. ( Numico ) will be successfully completed.

3 Disclaimers Forward-looking statements speak only as of the date of this presentation. As a result, Groupe Danone expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements in this presentation as a result of any change in our expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. This presentation does not constitute an offer or invitation to purchase any securities of Numico and nothing contained herein shall form the basis of any contract or commitment whatsoever. In addition, this presentation does not constitute an extension of the conditional tender offer for Numico shares into the United States or into any other jurisdiction in which such an offer would be illegal or subject to restrictions. The tender offer is not extended into, nor can it be accepted in, and no document related to the tender offer may be transmitted, directly or indirectly, to the United States or to any of the other jurisdictions described above, or to persons residing in the United States or in any of the other jurisdictions described above, by mail or by any other means of communication or instrumentality of commerce (in particular, without limitation, transmission by facsimile, telex, telephone, or electronic mail) or through any facilities for securities exchange of the United States or of any of the other jurisdictions described above. This presentation is being furnished to you solely for your information, and it may not be reproduced, redistributed or published (whether internally or externally to your company), directly or indirectly, in whole or in part, to any other person. Neither this presentation nor any copy of it may be taken, transmitted into or distributed in the United States. The distribution of this document in other jurisdictions may also be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Non-compliance with these restrictions may result in the violation of legal restrictions of the United States or of other jurisdictions. By participating in this presentation, you acknowledge the foregoing disclaimers and agree to be bound by the foregoing limitations.

4 Summary Reminder of who we are A lot has happened since we last met Update on the Fresh Dairy growth engine Spring Water at the heart of our beverage business Danone: a major player in the Baby Food and Clinical Nutrition markets (subject to anti-trust clearance by EU regulator)

5 Danone is the world leader in health through food A unique expertise in food and nutrition developed through years of consumer understanding, R&D, strong innovation and communication Brands ~ 1300 M ~ 1000 M ~ 800 M ~ 900 M ~ 500 M ~ 500 M Source: 2006 internal data

6 Our health through food offer has been up to now mostly focused on adults and kids High Growth/ Capital building Maintenance/ Early prevention Ageing/ Problem solving Specific nutrition/ heath needs Low Babies/ Toddlers Teenagers Adulthood Elderly / pathology Life stage Source: internal data

7 Recent Key M&A Moves Sale of the Biscuits activity announced in June (5.3blnE), on track for completion in Q Friendly deal reached with Numico board in July for a full cash acquisition of this Company (12.3 blne) Danone owns approx. 29% of Numico shares Regulatory approvals expected by end of October 2007 Offer settlement date expected for early November 2007

8 Danone + Numico combined sales: 100% health through food Danone in 2006 Danone pro-forma Baby Food 3% Clinical Nutrition 5% Biscuits 16% Baby Food 17% Beverages 28% Fresh Dairy 53% Beverages 26% Fresh Dairy 52% ROW 22% ROW 22% Asia-Pacific 17% W. Europe 50% Asia-Pacific 19% W. Europe 48% E. Eur. 11% E. Eur. 11% In 2008, Danone post portfolio swap, will be an est. 17blnE company, with an enhanced growth and margin profile Source: Internal data, Numico public information 8

9 We play in the most attractive food segments Still bottled water Functional drinks Baby food Savoury biscuits & crackers Yogurt Sweet biscuits Ice cream Sauces, dressings & condts Frozen processed food Cheese Confectionery RTE cereals Carbonates Soup World Market CAGR (volume) 0.9% 1.9% 3.2% 3.0% 2.8% 2.8% 2.4% 4.6% 4.4% 4.0% 3.7% 5.3% 0% 1% 2% 3% 4% 5% 6% 6.6% 6.4% Source: Euromonitor 9

10 Fresh Dairy continues to be the driver of growth, with 5 key priorities Push Blockbusters to the limit Innovation Factory Leverage our unique R&D expertise Expansion to new geographies and new partnerships Execution excellence

11 Our Fresh Dairy Blockbusters Growth Protection Transit Digestion Weight Management 800 M 1000 M 1300 M 900 M 11

12 The Activia Example: one health benefit, many extensions 2000 Yogurt Only 2007 Yogurt, fermented milk and other relevant supports 12

13 Fresh Dairy continues to be the driver of growth, with 5 key priorities Push Blockbusters to the limit Innovation Factory Leverage our unique R&D expertise Expansion to new geographies and new partnerships Execution excellence

14 Innovation: based on identified consumer expectations Incidence 18,00 16,00 Energy Defense Overweight 14,00 Transit 12,00 Peau Skin 10,00 8,00 Stress Joints Dentition Cardio 6,00 4,00 2,00 0,00 0,0 10,0 20,0 30,0 40,0 50,0 60,0 Preoccupation 14

15 Preparing tomorrow s Diamonds Cardio Beauty?? Seven countries Five countries 15

16 Fresh Dairy continues to be the driver of growth, with 5 key priorities Push Blockbusters to the limit Innovation Factory Leverage our unique R&D expertise Expansion to new geographies and new partnerships Execution excellence

17 The identification of active ingredients: expertise of R&D and its partners D D Dairy R&D community ~ 450 people Specialized along brand and health benefit lines 17

18 Clinical Studies at center of claims Brand Benefit Partnership with KOL Clinical studies Scientific markers Claim Major Investement in clinical studies: X 10 in 4 years 18

19 Fresh Dairy continues to be the driver of growth, with 5 key priorities Push Blockbusters to the limit Innovation Factory Leverage our unique R&D expertise Expansion to new geographies and new partnerships Execution excellence

20 Since early 2006 : New countries and strengthening of our positions Egypt Dairy 74 M inhabitants Bangladesh Dairy 150 M inhabitants Algeria Dairy+beverages beverages+biscuits 35 M inhabitants Japan Dairy 128 M inhabitants Scandinavia Beverages 24 M inhabitants China Dairy + beverages 1,3 Bln inhabitants Thaïland Dairy 65 M inhabitants Colombia Dairy 44 M inhabitants Ukraine Dairy 47 M inhabitants Chile Dairy 17 M inhabitants 20

21 Fresh Dairy continues to be the driver of growth, with 5 key priorities Push Blockbusters to the limit Innovation Factory Leverage our unique R&D expertise Expansion to new geographies and new partnerships Execution excellence

22 Execution excellence: in-store impact and shopper insight AME: van-selling Modern Trade: Iconized Danone Blocks Mexico: POS coverage and visit frequency Russia: geographic expansion in direct distribution 22

23 Dairy business-line: Superior and sustainable growth engine Like-for-like sales growth 7,7% 10,1% 10,1% 11,1% 7,4% 9,4%

24 Beverages: Spring Water at the heart of our beverages strategy Unique Spring Water heritage Innovation based on a common foundation Sales execution as key driver Sustainable development and water resource management

25 A 4blnE business with a unique Spring Water heritage 25

26 This unique foundation extends off of a common base DNH: Drinkabe Natural Hydrating 26

27 Clear health benefits for each water or beverage brand Elimination Vitality Youth / Body Renewal Body Management 27

28 Beverages business-line: strong contributor to growth Like-for-like sales growth 14,8% 7,6% 4,4% 9,9% 7,0% 10,0%

29 DANONE AS A MAJOR BABY FOOD AND CLINICAL NUTRITION PLAYER (*) (*) subject to anti-trust clearance by EU regulator

30 DANONE has launched a friendly offer on Numico NUMICO Sales 2006: 2,623m EBITA 2006 (1) : 483m Margin (%): 18.4% Employees: 12,888 Rest of the World 5% Asia-Pacific 25% Eastern Europe 14% Western Europe 56% BABY FOOD 72% CLINICAL NUTRITION 28% KEY FINANCIALS Sales 2006: 1,880m EBITA: 340m Margin: 18.1% Sales 2006: 743m EBITA: 192m Margin: 25.8% BREAKDOWN 3,0% Western Europe SALES GROWTH (2) BY REGION (2006) 22,0% Eastern Europe 20,0% 20,0% Dumex Rest of the World 12,2% Total Group 6,0% Northern Europe 12,0% Southern Europe SALES GROWTH (2) BY REGION (2006) SALES BY SEGMENT (2006) 20,0% Eastern Europe 22,0% Rest of the World 10,9% Total Group Disease Targeted Nutrition 35% Medical Nutrition 65% (1) Including central overheads / headquarter costs of (49)M (2) Excluding exceptional items and on a comparable basis 30 30

31 Baby Food portfolio: ~65% milk and ~35% food, with 5 major brands across the world Sales 1,9B Nutricia Cow & Gate Milupa Mellin Dumex Food 35% Main countries Netherlands France UK Ireland Germany Eastern Europe Italy China Thailand Malaysia Products: Milk 65% Milk Food 2006 Baby Food Source: Numico public information, Euromonitor

32 The world-wide Danone health through food offer has been up to now mostly focused on adults and kids High Growth/ Capital building Maintenance/ Early prevention Ageing/ Problem solving Specific nutrition/ heath needs Low Babies/ Toddlers Teenagers Adulthood Elderly / pathology Life stage Source: internal data

33 Baby Food and Clinical Nutrition will strengthen Danone s Active Health position; joint R&D and marketing knowledge leveraged across life stages Strong fit with Danone s mission: To bring health through food to the largest number of people High ILLUSTRATIVE Specific nutrition/ heath needs Low Babies/ Toddlers Baby Food Teenagers Adulthood Elderly / pathology Life stage Clinical Nutrition Source: internal data

34 18B Baby Food and 4B Clinical Nutrition size vs. packaged food Market sizes (retail, B) Bottled water Sauces, dressings, condiments Fresh Dairy Pet food and care products Functional drinks Baby Food Pasta Clinical Nutrition* (excl-parenteral) Note: Clinical Nutrition includes oral, tube and devices. Manufacturers sales value Source: Euromonitor, external sources 34

35 Baby Food market description Milk (Formula) Weaning Food Stage 1 milk (standard milk): 0-6 months Cereals (dried food): >4 months Stage 2 milk (followon milk): 6-12 months Prepared food: >4 months Stage 3 milk (growing up milk): months Recent segment Source: Baby Food players public information Other (biscuits, juices): >4 months 35

36 Baby Food market: attractive growth, particularly in segments and regions where Numico is strongly present High expected growth, mostly in Stage 2 & 3 milks and dried food and in Asia and Eastern Europe Baby Food market 100% B Other food Prep. food Dried food Hypoallergenic milk Stage 3 milk Stage 2 milk CAGR (06-11) 5,7% 4% 2% 6% 3% 11% 9% Baby Food market 100% Australasia 18B Latam AME E. Eur. North America Asia CAGR (06-11) 5,7% 2% 5% 3% 6% 2% 13% 20 Stage 1 milk 4% 20 W. Europe 2% Source: Euromonitor, internal data, Baby Food players public information

37 Opportunity for attractive growth even in developed countries; high profitability for major Baby Food players Growth in developed countries High profitability France and UK cases (05-06) Baby Food growth 10%+ Baby Food player margin (%) ~30% ~20% 6% Numico 2% Baby Food market Blédina 2% Baby Food market France UK Source: Euromonitor, brokers, internal data, Numico public information Milk & Food players Milk players

38 Danone with Bledina has a proven innovation-based growth model Like-for-like sales growth 7,4% 7,9% 6,6% 8,1% 3,5% 3,8% 1,8% H1 07

39 Baby Food market opportunity APac 10 WW average 20kg CAGR % AMEA 11 5% Latin America 28 3% Eastern Europe 78 6% North America 119 2% Western Europe 135 2% France 215 2% Source: Euromonitor, External data Per capita consumption (kg/ baby)

40 Baby Food market drivers Number of newborn babies Increase in disposable income Cultural drivers: Number of working mothers, popularity of breastfeeding, increase demand for functional food Glocal market 40

41 Both Baby Food and Clinical Nutrition have high entry barriers Frozen food Baby Food Brand and marketing: local and baby-specific Relationship with KOLs and medical community Significant R&D investment High product quality standards Pet food Shelf stable food Yogurt Non alcoholic beverages Confectionnery Alcoholic beverages Baby Food Minimal presence of PLs 2% 6% 2% 9% 12% 15% 19% 21% 25% % WW Private Labels market share Clinical Nutrition Significant R&D investment Relationship with KOLs and medical community Unique distribution network (specific channels) High product quality standards Consolidated market: globally and locally Fresenius 8% Other 21% Numico 16% Abbott 30% Nestlé 25% Worldwide Enteral Clinical Nutrition market Source: Nielsen, Brokers

42 Source: Euromonitor Numico and Blédina combination: the creation of the #2 tie Baby Food worldwide player, with leading regional positions Numico + Blédina Baby Food positions W. Europe E. Europe Asia Africa Middle East # 1 # 1 # 2 tie # 2 # 2 tie Baby Food worldwide player

43 Clinical Nutrition market: 2 major segments, Medical Nutrition and Disease Targeted Nutrition Definition Distribution channels Conditions (i.e.) Medical Nutrition Nutrition for the sick or in need of special care Hospitals, special care homes, pharmacies, home care Inability to eat Surgery Swallowing disorders Cancer Diabetes Disease targeted nutrition Nutrition to alleviate disease symptoms or delay its progression Home delivery, pharmacies Cow s milk allergies Pediatrics Metabolic diseases Epilepsy Products Oral Nutrition Tube Nutrition Oral Nutrition 43 Source: Clinical Nutrition players public information

44 Clinical Nutrition market: strong forecasted growth, specially in segments and geographies where Numico is strongly present High expected growth, particularly in oral nutrition Growth in LatAm, Asia and Europe Clinical Nutrition market 100% 4B Devices CAGR (06-11) 4,7% 1% Clinical Nutrition market 4B 100% Latam CAGR (06-11) 4,7% 10% Asia Pacific 8% Tube 2% EMEA 5% Oral 7% 20 North America 2% Source: Internal data, Clinical Nutrition players public information

45 Numico Clinical Nutrition: very attractive #1 positions Sales Growth (05-06) 0,7B 11% 20% ~22% E. Eur. 3% Asia Pacific 6% Americas 7% W. Eur. 84% ~9% Worldwide Numico Clinical Nutrition positions Russia 1 2 China Clinical Nutrition Source: Euromonitor, Brokers, Numico public information 45 2

46 Clinical Nutrition market drivers: ageing population, increase in lifestyle diseases and awareness of Nutrition s role in prevention Ageing global population in developed & developing countries Other key drivers of clinical nutrition market Life expectancy at birth for the world From 67 years today to 75 in 2045 Source: World Health Organization, United Nations Developed regions World Developing regions Increase in lifestyle diseases i.e. obesity, diabetes Growing role of Nutrition in prevention and disease management Significant share of malnourished patients still don t receive proper nutrition Shift from parenteral (intravenous) to enteral (gastric) nutrition Growth in home care market 46

47 Source: Internal data, Numico public information The combination of Danone s and Numico s R&D capabilities will lead to a unique and ownable offer across Functional Foods Danone Numico + Probiotics + + Prébiotics Innovation across Functional Food, with strong scientific dossiers to support health claims

48 Source: Internal data, Numico public information Leverage Numico s health marketing capabilities Apply Numico s Health marketing knowledge into Danone Dairy + Leverage Numico s medical/ KOL network to promote probiotics Strengthen Danone Functional portfolio

49 Source: Internal data, Numico public information Bring health through food to the greatest number of people throughout their lives Danone: the only truly healthy global food company and the fastest growing FMCG

50 THANK YOU

51 BACK-UPS

52 H KEY FIGURES Net Sales 7,553 M +8.6% like-for for-like +4.7% reported 1,055 M Trading operating income +8.6% Trading operating margin Underlying net income from continuing activities Underlying EPS (fully diluted) from continuing activities % 663 M bp like-for for-like + 51 bp reported Vs 614 M H % Vs 1.25 H % Free Cash Flow (1) (1) 631 M Vs 732 M H % For purposes of this presentation, all figures reflect a scope of consolidation which INCLUDES the biscuits activities (1): Free Cash Flow: Cash flow from operations less capital expenditure (net of disposals) and change in working capital 52

53 H1 2007: A Very Strong Performance Despite Headwinds Sales growth (like-for-like) above our guidance (+8.6%), despite Wahaha Strong margin improvement (+47bp) despite negative input cost headwinds Continued growth of EPS (+10%), after a very strong H1 06 (+25%) FCF affected by Wahaha working capital deterioration and higher CAPEX 53

54 Q2 07 top-line growth in our targeted range +8.0% 9% 8.9% 9.5% 11.5% 10.1% 7.3% +6.0% Like-for-like sales growth Q Q Q Q Q Q Without Wahaha +7.8% +7.1% +7.5% +8.8% +10.3% +9.9% 54

55 FRESH DAIRY PRODUCTS 9.5% 8.5% 9.2% 9.6% 12% 11.2% Q Q Q Q Q Q Outstanding growth in all major geographies, built on very strong 06 comparatives Solid growth trend in mature home markets confirmed Top line growth continues to be driven by Eastern Europe (>+20%) and Latin America (+18%) Blockbusters show strong positive trends at mid-double digits Continuous high single-digit at Bledina 55

56 BEVERAGES 21,7% 11.8% 12.4% 14.9% 9.1% 0.9% Without Wahaha Q Q Q Q Q Q % +5.8% +8.2% +10.5% +9.7% +9.0% Quarter heavily impacted by Wahaha performance at -19% Sustained superior growth excluding Wahaha Europe growing mid single-digits with poor weather, offset by strong Poland Sustained momentum in LATAM with growth exceeding +20% 56

57 Strong performance in Europe offsets decline in Asia EUROPE 8% 4.3% 4.7% 5.3% 6.2% 7.7% ASIA Q Q Q Q Q Q % 17.9% 17.7% 20.1% 8.4% -5.6% Without Wahaha Q Q Q Q Q Q % +7.3% +7.3% +7.9% +8.9% +9.2% REST OF WORLD 16.5% 15.6% 14.9% 17.2% 17.2% 16.6% 57 Q Q Q Q Q Q2 2007

58 A healthy like-for-like margin progression in H1: + 47 bp Translation FX rates Scope of consolidation Country mix +47 bp Like-for-like Operational performance +3bp +1bp -3bp 13.97% 13.46% +144 bp - 94bp Input costs H H

59 Definitions: Prebiotics and probiotics Probiotics Prebiotics What Effect Role A good bacteria (live microorganism) When ingested in adequate amounts, it confers a specific health benefit to the body Helps to improve immune and digestive functions Molecule Further develops the good bacteria in the intestinal flora to guarantee its balance Develop targeted good bacteria in the intestine = Food for the good bacteria Benefits Immunity/ Allergy Digestion Others Immunity Balance of intestinal flora (mostly babies) Improve mineral absorption