Building the Future Franck Riboud Groupe DANONE Global Consumer and Food Retail Conference June 11, 2007 Paris
Building the Future 1 2 3 Become the reference in healthy nutrition Construct a global presence Continue to strengthen our dual project by uniting our people s energy and talent
Building the Future 1 2 3 Become the reference in healthy nutrition Construct a global presence Continue to strengthen our dual project by uniting our people s energy and talent
Health according to the WHO State of physical and mental well-being Absence of illness, infirmity or discomfort
Dramatic recent evolution Hunter/ gatherer Monoculture Industrialisation Tomorrow Plants Cereals Fats / Sugar Animals Physical labor + hunting Domesticated animals Physical labor Domestic animals Intellectual labor/ Leisure? Low life expectancy Famine Reduced mortality Deficiency Increased life expectancy Obesity
An acceleration of life expectancy Life expectancy 120 Health = age well 80 40 20 0 Health = survival Health = no illness 1 000 1800 2 000 Year
Health for today s consumer Live longer Live better Quest for longevity Live happily with your family Stay young and attractive longer A body free on constraints Autonomy One day, we ll live to 120 but we ll also want to live well!
A new health Yesterday Wait until you are ill to see a doctor Tomorrow Understand molecular abnormalities 20 years before being ill Healthy people will be treated Each individual as an actor of his/her her own health
Food: the first medicine Prevention Treatment Food Medicine
The power of food Food Bio Availability Taste and culture Role of Intestinal flora Health Frequency Easy health
Danone has legitimacy in addressing new consumer expectations
«Les eaux d Evian et Volvic», have long been recognized as serving the general public s health Danone : a strong health DNA For 200 years,, Danone bottles nature
Danone : a strong health DNA Yogurt sold in pharmacies for Spanish children suffering from diarrhea Collaboration with E. Metchnikov & l Institut Pasteur
Each moment of consumption is a moment of pleasure That s why our logo is a smile Delicious products
Innoladder Deployment Consumer equirements Active Ingredients Scientific proof Diamond marketing Launch
Main 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
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
Scientific evidence: our investment in clinical studies Number of studies 15 18 31 40 58 2003 2004 2005 2006 2007 Key Figures 4000 subjects in 2006 250 000 products distributed for clinical tests 50 people internally / 100 partners externally A global approach
Health is the heart Natural Health Pleasure Health Affordable Health Segmented Health
Dairy: one brand = one health benefit Growth Protection Digestion / Transit Weight Management 800 M 1000 M 1300 M 900 M
Dairy: one brand = one health benefit Cardio Beauty??
Beverages : Capitalize on the strength of our natural water brands Water Beverages The base Our strongest water brands : Easy to drink Natural Strong Hydration Our developments New drinks : Easy to drink Natural Strong Hydration Combined with the benefits of fruit and plants
lear health benefits for each water or beverage bran Elimination Vitality Youth / Body Renewal Weight Management
Boost differentiation and innovation based on health & nutrition Fun Energy HarmoniousGrowth Light Vitality Long Lasting Energy Healthy Savory Snacks Indulge without guilt
New potential territories? Fruit Plants
Building the future 1 2 3 Become the reference in healthy nutrition Construct a global presence Continue to strengthen our dual project by uniting our people s energy and talent
Broad-based country portfolio: not just relying on New Frontiers and «Mature Home Markets» As percentage of Group Sales 2005 2006 New Frontiers Contributors Mature Home Markets Growth (lfl) Contributors Mature Home Markets New Frontiers 2005 + 8% < 0% + 18% 2006 + 10% + 3% + 20%
A new phase of expansion 80 In 10 years Danone present in 80 countries 40 Today Danone present in 40 countries 3 to 5 new countries/year 0 2007 2017
Since early 2006 : New countries and strengthening of our positions Egypt Dairy 74 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 Bangladesh Dairy 150 M inhabitants Thaïland Dairy 65 M inhabitants Colombia Dairy 44 M inhabitants Ukraine Dairy 47 M inhabitants Chile Dairy 17 M inhabitants
A Hub Strategy
A Hub Strategy
Building the future 1 2 3 Become the reference in healthy nutrition Construct a global presence Continue to strengthen our dual project by uniting our people s energy and talent
Building the Future «A company s responsibility does not stop on the doorstep of its factories or offices. Its actions are felt beyond and throughout its environment. The jobs it provides affect the entire lives of the people concerned. Their future and their children s future depend on the possibilities for promotion that the company offers. Through the energy and raw materials it consumes, it alters the appearance of our planet Growth should never be an end in itself, but a tool which, instead of reducing quality of lif should help to improve it. At the same time, to ensure quality of living implies company performance. A company without performance is a company without means; a managing director who does not foc on his objective of economical performance is not a responsible managing director. Antoine Riboud - 1972»
Double projet Economic Performance Sales Operating Results Cash flow R.O.I.C. Net Income EPS Societal Performance People Security Training Dialogue Free shares Environment Reindustrialisation Water protection Packaging Danone.communities
Free Shares Projects An equal number of shares, regardless of level and geographic location Opportunity to share strategy,, challenges and results with 90 000 employees
Danone.communities: societal innovation An investment fund to sustain «social entreprises» profitable but with a main objective of social impact (public health, poverty) A fund open to the largest number to federate energies and wills A win-win initiative A mutual fund with a money market returns Easier access to shareholders and employees A meaningful savings plan with strong social usefulness Sustainable support to local development A source of innovation and motivation for Danone teams
An example : Grameen Danone Foods
Financial Objectives Like-for-like sales growth : +6% to +8% EBIT to grow faster than sales: Between +7% and +10%, operating margin in excess of +20 bp for 2007 (on a like-for-like basis) EPS growth >+10% Enhanced shareholder return: Active share buyback program in 2007
2006: An Outstanding Year Net Sales 14,073 M +9.7% like-for for-like +8.1% reported 1,914 M Trading operating income +10.1% Trading operating margin 13,60 % + 32 bp like-for for-like + 25 bp reported Underlying EPS (fully diluted) From continuing activities 4.88 Vs 4,14 FY 05 + 17.9% Free Cash Flow (1) (1) 1,516 M Vs 1,303 M FY 05 +16.4% ree Cash Flow: Cash flow from operations less capital expenditure (net of disposals) and change in working capital
Q1 2007: broad-based based growth with all business lines and geographies constributing significantly Like-for-like Sales Growth Fresh Dairy Products Beverages +12% +9.1% Biscuits & Cereal Snacks +4.3% TOTAL GROUP +10.1%
Building the Future Franck Riboud Groupe Danone