Strategic Business Overview Bernard HOURS
2000-2007: Continuous growth 8% Volume 10% Sales 14% EBIT 7% 6% 5% 4% 3% 2% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% 12% 10% 8% 6% 4% 2% 0% 0% 0% 2000 2007 2000 2007 2000 2007 On a like-for-like basis
/kg US$/barrel The double crisis 4,00 140 3,50 120 3,00 100 2,50 80 2,00 MILK 60 OIL 1,50 1,00 40 0,50 Raw material increase CRISIS 20 0,00 0
Consumers changed SAVINGS SERVICE / PERSONNALISATION HOLISTIC HEALTH CONNECTED / COMMUNITY PLEASURE NATURE
2009: our objective was to achieve the fastest pitstop
We adapted our levers for growth AFFORDABILITY RANGE / RESET NEW SALES BUSINESS MODEL Baby Brand Pyramid INDONESIA EMOTIONAL COMMUNICATION Online Sales Medical US NEW MEDIA EXPERTISE Actimel UK Website Google Blogs TASTE COMMUNICATION & RANGE CO 2 / OFFSET Activia Drink BELGIUM My strong Tree POLAND
We strongly accelerated in 2009 + 7.1% 3.6% 4.1% Volume Sales 2.2% 1.1% 1.0% Q1 09 Q2 09 Q3 09
In this environment we grew our shares Market Share H109* / ** 27% Market Share YTD09*/** 22% Market Share MAT*/** 28.5% 61% countries with N 1 position 64% countries with N 1 position 56% countries with N 1 position 65% gaining market share*** 42% gaining market share*** 64% gaining market share*** * Value Market Share ** Total Danone Key Markets: 44 countries Dairy, 11 Waters, 33 Baby *** Volume Share Last month 09 vs same month 08 Source: Retail Panel
In this environment we grew our shares Volume last month vs same month 08 China + 15.7 pts Egypt + 10.0 pts Hungary + 8.5 pts Canada + 6.4 pts Chile + 5.5 pts Cz Rep + 4.5 pts Mexico + 2.9 pts Japan + 2.2 pts UK + 1.4 pt France + 1.3 pt USA + 1.2 pt Germany+ 1.1 pt YTD SEPT volume Share evolution Mexico + 4.3 pts Uruguay + 1.9 pt Poland + 1.7 pts Turkey + 0.6 pt Volume last month vs same month 08 Argentina + 7.2 pt Switzerland + 4.4 pt Ukraine + 3.1 pt Indonesia + 3.0 pt Brazil + 1.9 pt New Zealand + 1.9 pt
And reached record sales 12 month rolling sales 15,600 mln 16,000 15,500 15,000 14,500 14,000 Source: Finance Department
6 unique competitive assets 1 Mission 2 Diamonds 3 Organization 4 Geographies 5 Cash flow 6 Productivity
1 A more essential and profound mission 5 rising areas of health concerns : Health is influenced by intestinal flora Baby s health has a lifetime impact It is essential to drink 2L a day to stay healthy. Natural water is different from tap water An adapted and specific nutrition allows better recovery of sick people It is unbearable that a significant part of the population suffers from recurrent nutritional deficiencies. Danone commits itself to work with local authorities to find product solutions
1 A unique mission To the largest number of people Real deep health issues PKU Alzheimer HIV Rising awareness in scientific and medical community
1 A more essential and profound mission Immunity Research Allergy Chronic inflammatory disease Infection Role in metabolic disorders: obesity Role in neurologic disorders: autisme, Alzheimer, Depression, Hyperactivity syndrom, Baby Nutrition Research Time-framed metabolic events in the early phase of life with a disease-related outcome in later life Optimized fat architecture Fermented products Taste education Water Resources and Protection Improved ground water detection Modeling of all springs to improve protection Zero water waste processing and sustainable water use Medical Nutrition Research Nutrition for people who cannot eat or lack specific nutrients Strategies against Faltering growth in small infants Specific disease-targeted nutrition Packaging Research Lightweightings, eco-shape & breakthrough design Optimisation of materials & shape Natural fibers into plastics
2 Unique ability to build resistant diamonds Danacol: exclusive plant sterols 82% of Market Share Fortimel: superior high protein supplement Drive the segment growth Bebelac: unique complete care formula > 1 Bn sales Danone Nutriday: nutrition formula adapted to local needs & local wallet Spectacular reset results Elimination: low mineral water to help eliminate Leader in Mexico With unparalleled taste superiority and dailiness
2 Unique ability to build diamonds Despite the crisis we increased our A&P investments & GRP levels Dairy Activia Waters + 14% A&P + 10-20% GRP + 13% A&P + 7% GRP Baby + 18% A&P + 60% GRP
3 Original synaptic organization Adaptability Multiplicity Reactivity + synapses = + intelligence + synergies + knowledge + success New York Amsterdam Paris Barcelona Moscow Shanghai Singapour Buenos Aires
3 Original synaptic organization Adapting Human Resources to new local reality More than 6,000 recruitments worldwide in 2009 mainly Asia and Latin America 1,000 directors worldwide of which 100 moved this year out of their region Building solid and diverse zone management unique CODE Attitudes Around 25 zones GMs with more than 10 country origins With a unique CODE attitude
4 Unique expertise and opportunities in new geographies More international 1996 2008 France 38% North America 6% Latin America 7% Asia Africa & Pacific Middle 7% East 1% Eastern Europe 2% Western Europe ex. France 39% France 14% Western Europe ex. France 33% North America 9% Latin America 13% Asia Pacific 12% Africa & Middle East 4% Eastern Europe 15%
4 Unique expertise and opportunities in new geographies World TOP Sales Contributors H1 09 China Export Argentina UK Indonesia Distributor Model Brazil Middle East CBU
4 Unique expertise and opportunities in new geographies White space in current big countries: East Russia + West USA + North Brazil + 200 mln new consumers One meaningful area to assess BOP model: Indian subcontinent 1 bn people Dairy Geographical Footprint Per Capita potential in recently opened countries 800 mln consumers with <1 kg per cap
5 Unique financial expertise in cash flow FCF in mln and as a % of sales Numico 1516 1036 1149 1224 1303 1184 1183 Double digit growth 622 624 794 4.7% 4.4% 5.5% 7.6% 8.8% 10.0% 10.0% 12.6% 9.3% 7.8% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
5 Unique productivity expertise Milk Reinvention Productivity Cross division synergies Logistics & operation
6 Unique productivity know-how: reinventing milk By-product valorization Desserts & Drinks DanCream European Cream sales Upstream Differentiation DanFarm potential up to 40-80 mln CO2 Footprint reduction DanMilk means to differentiate Danone milk Milk Transformation milk cracking
6 Unique productivity know-how in Logistics Maximize assets via logistic & sales co-distribution: Ferrero in Central Europe / Unilever in Germany Fixed cost absorption + Logistic & commercial margins Estimated 10-15 mln in 2010 Maximize internal assets via co-distribution Baby through Dairy: Argentina / Brazil / Russia Quick access to 100% distribution Bigger weight in key account negotiations Optimization distribution network design & efficiency Shared process & infrastructure Stock reduction Baby top line acceleration: +40% sales growth in Brazil 8 new countries to be deployed by early 2010
6 Unique productivity know-how: cross divisional synergies Head office convergence: 7 countries initiated move in 2009-2010 6 more in 2011-2012 Global plan for IS/IT convergence Purchasing opportunities cross division 2010 media pitch 17 Countries Cross divisional + 15% GRP ( 80 mln equivalent)
Conclusion H2 2009 momentum 6 competitive assets for growth Wide open opportunities