Barclays Global Consumer Staples Conference - September 5, 2018 Cécile Cabanis Francisco Camacho - Danone
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Barclays
Global Consumer Staples
Conference
September 5, 2018
Cécile Cabanis
Francisco Camacho
I 1 I
Delivering Superior
Sustainable Profitable
Growth
Cécile Cabanis
CFO
I 2 I
Our strategic ambition
Leading the way to create and share sustainable value
Healthier Responsible
eating and drinking business stewardship
I 3 I
An unparalleled health-focused portfolio
Fully aligned with the ongoing Food revolution
29% 20% 33% 18%
Specialized Nutrition Essential Dairy and Plant-Based Essential Dairy and Plant-Based Waters
> 88% of volume sold recommended for daily consumption(1)
% of sales in H1 2018. (1) Refers to water, yogurt and other daily dairy products, baby milks & foods, milks and milk powders, beverages with 0% sugar and medical nutrition. Based on official public health
recommendation, these categories are generally suitable for daily consumption.
I 4 I
Consumers continue moving towards healthier food and nutrition
Our categories outperform the industry average
Growth profile by category – 10-year forecast to 2022
+9%
+8% +8%
+7% +7%
+6% +6% Average
+5% +5% Food &
+4% +4% Beverage
+4.5%
+3%
+2%
+1%
Water Flavored Organic Baby Plant-based Coffee Coffee Yogurt Medical Chocolate Sugar Carbonates Cereals Frozen
Confectionary Ready
Water Food Beverages Creamers Meals
#3 #1 #2 #1 # 2 # 1 # 1
Source: Euromonitor in Europe
I 5 I
New consumer preferences are transforming our industry
Transition from mass volumes to lifestyle purchase decisions
Our environment Our transformation
1/3 58%
▪ Local, authentic, natural
Products
▪ From multi-packs to single serve
of new generations of growth driven ▪ Committed and accountable
willing to pay a premium
for healthy food(1)
by local brands(2) Brands ▪ Resonating messaging
▪ Targeted digital marketing model
16% 55%
▪ Convenience and on-the-go
Channels
+ ▪ E-commerce
e-commerce average buying decisions from ▪ Innovating locally in small scale
growth(3) brand advocacy(4)
Organization ▪ Cross-regional collaboration
▪ Partnerships with customers and suppliers
(1) Source: Nielsen (2) Source: Kantar Worldpane (3) CAGR 2012-22; source: Planet Retail 2016; (4) Source: BCG Brand Advocacy Index
I 6 I
Strong financial track record
Balanced growth model, accelerating efficiencies
Delivering strong set of results in first half 2018
Life-for-Like +4.7% +4.4% NET SALES
sales +2.9% +2.5%
growth(1) + 4.0% (1)
2014 2015 2016 2017 € 12.5 bn
14.4% RECURRING OPERATING MARGIN
13.8%
Recurring 12.9%
51bps
12.6%
operating + (1)
margin
14.27%
2014 2015 2016 2017
+14.2% RECURRING EPS GROWTH
Recurring
+10.8%
EPS growth
(at constant
+2.5%
+8.4%
+ 13.4%
exchange rate) € 1.76
2014 2015 2016 2017 excl. Yakult Transaction
Impact, at constant
(1) Like-for-like New Danone exchange rate
I 7 I
Allocating capital with discipline
Delivering long-term shareholder value
Invest for Shareholder
Deleverage growth & returns and
efficiency dividends
Sustained level of
Net debt reduction (€bn) Increasing dividend
capex/net sales
18.2 €1.90
15.4 €1.70
13.7 €1.50 €1.60
4.2% 4.2% 3.9%
H1 2017 2017 H1 2018 2015 2016 2017 2014 2015 2016 2017
I 8 I
Making strategic progress in every business unit
Essential Dairy and Plant-based returning to growth
+1.4% +0.8 % +0.4%
-0.4% -0.2%
-0.8% -0.3%
-2.2% -1.7% -2.3% -2.4%
-2.8% -2.9%
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
Excl. Fresh Foods -0,9% +0.1% +0.5% +2.7% Excl. Morocco
Record market share Gradual stabilization with
in yogurt solid growth in some countries
~75% of former WhiteWave Increased contribution
growing >5% in H1 2018 from innovations
Sales growth figures in Like-for-like New Danone
I 9 I
Making strategic progress in every business unit
Highly profitable growth in Specialized Nutrition, strong growth in Waters
+17.8% +10.3%
+14.5% +7.6%
+8.4% +10.6% +4.2% +4.8%
+5.2% +5.6% +1.8% +0.3%
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
Direct and Premium
Ultra-premium Aquadrinks platform
Transition to
Tailored
Circular Plastics
nutrition
Sales growth figures in Like-for-like New Danone
I 10 IGrowth model driven by value
Premium innovations supporting valorization
Major step-up in innovation – more, faster, better
Weight of innovation in net sales: ~ +40% vs 2017
Driving portfolio valorization
I 11 IStrengthening the operating model across the company
Consistently accelerating efficiencies towards 2020
Ongoing €1bn $300m
productivities Protein WhiteWave
Program(1) Synergies(2)
▪ Organization efficiencies ▪ Manufacturing ▪ HQ consolidation
(OneDanone, procurement) ▪ Logistics ▪ Sales force merge
▪ Cost optimization ▪ Sales & Marketing ▪ G&A / Shared back-office
▪ Professional services ▪ Procurement
Increased discipline in resource allocation
(1) Gross savings objective by 2020 (2) Estimated impact on recurring operating income by 2020
I 12 INavigating increasing volatility
Challenging external context
Input cost Currencies Boycott
increase
CRUDE OIL 74$
52$
H1 2017 H2 2017 H1 2018
Source: US Energy Information Administration
I 13 IAccelerate towards 2020
2018: a year of execution and delivery
2020 2018 2020
Strategic priorities
Like-For-Like
4-5% Sales
1 Accelerate growth growth
2018 objective
Recurring operating
>16%
DOUBLE-DIGIT margin
2 Maximize efficiencies RECURRING EPS EPS
Consistent recurring
GROWTH EPS growth
at constant exchange rate Net debt/Ebitda(1)Driving EDP growth
from the Food Revolution
Francisco Camacho
EVP Essential Dairy and Plant-Based
I 15 IFrancisco Camacho
18 years at Danone
Since Executive Vice President
Oct-2017 Essential Dairy and Plant-Based
Executive Vice President Waters
2011 Member of Executive Committee
Growth and Innovation Officer (Mar-2017)
2009 Regional Vice President Fresh Dairy Latam
2004 General Manager Fresh Dairy Argentina
Prior 2000 Senior positions at Revlon and P&G
I 16 IEssential Dairy and Plant-Based at a glance
A unique product and brand portfolio with €13bn global sales
53% ~1/4 of revenues
of Danone from former
revenues WhiteWave
Top-5 countries
#1
in the world(1)
Strong 56% of sales
portfolio of global and
local brands
fromlocal
brands
(1) Source : Euromonitor. In relevant Danone scope (only in sub-categories and countries we play in)
I 17 IWhat we will discuss today
A consumer-driven Accelerating
transformation plant-based expansion
I 18 IWhat we will discuss today
A consumer-driven Accelerating
transformation plant-based expansion
I 19 INew generation of consumers driving the Food Revolution
Trend setters with new set of values
Eating healthier Seeking immediacy Trend setters
47% 30% 77%
of young willing to pay a Convenience Discounters E-commerce of Food family spending
generation eating
healthier(1)
premium
for healthier food(1) growing 3x faster influenced by Generation Z(3)
than hypermarkets(2)
(1) Source : Nielsen Global health and wellness survey 2015 and Nielsen’s online pool 30,000 in 60 countries
(2) Source: Data relates to retailers within the planet retail 2016 database only: e – estimate / f – forecast. Small stores includes: Neighborhoods stores, Drugstores & Pharmacies, Convenience stores
(3) IBM Institute for business value (January 2017)
I 20 IGrowing healthier consumer preferences in Food industry
Creating new category fundamentals
Probiotics Protein
Probiotic
beverages and High protein
yogurts growing yogurt growing
> 6% > 10%
Plant-based Fat is back
Plant-based Google Search
beverages and Trends for « keto »
yogurts growing diet in U.S. since
> 8% last year
x4
Source: Euromonitor value CAGR 2015-2017 total world. Plant-based excluding China
I 21 ITraditional lines between categories are blurring
Creating new market opportunities for Danone
From linear… … to fluid categories
Essential
Brands fermented Organic
Categories
Essential & segments milks
fermented Probiotics
Channels
milks
White
indulgence Plant-based
probiotic
yogurt
Desserts
Benefits &
storytelling Occasions
Ingredients,
flavors &
texture Desserts Plant-based
Plant-based Indulgence indulgence
Coffee Plant-based
beverages
I 22 ITraditional lines between categories are blurring
and we are well equipped to address this growth
From linear… … to fluid categories
Essential
fermented
milks
Essential
fermented
milks
Desserts
Plant-based
Plant-based
Desserts
I 23 INew playground for EDP
Offering broader and faster growth opportunities
Broader set of
Yogurt & Desserts essential and daily
food categories
PLAYGROUND
+3% > 5%
FROM TO
Sizeable
Sizeable Competitors per
Competitors per market
market
COMPETITIVE LARGE, GLOBAL LARGE, GLOBAL
LANDSCAPE & REGIONAL & REGIONAL
BRANDS BRANDS
2-5 20+
Source: Euromonitor retail value 2017 – Total world without China
I 24 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win millennials Own probiotics, Accelerate Drive Relentless Impulse
protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 25 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win Own probiotics, Accelerate Drive Relentless Impulse
millennials protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 26 IWin with millennials
Rejuvenating brands, expanding into new adjacencies and kids
Rejuvenating and Expand into Kids as
launching new brands new adjacencies an entry point
I 27 IWin with millennials
Multiple touchpoints and resonating stories
Precision marketing Object of desire
and new partners and storytelling
I 28 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win millennials Own probiotics, Accelerate Drive Relentless Impulse
protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 29 IFostering and owning probiotics with Activia
Shots: Billions of live and active probiotics
US net sales total Activia brand evolution vs LY.
+4%
Nov-17 Jun-18
NOV17 DEC17 JAN18 FEB18 MAR18 APR18 MAY18
Q1-18 Q3-18
I 30 IExtending high protein trend across our portfolio
to better capture growth in dairy and plant-based yogurts
Plant-based Dairy yogurt extensions New brands
(Yogurts, beverages & bars) (Drinkable & spoonable)
Q1-18 Q4-18
Q2-18 Q4-18
Q4-18
Q4-18 Q1-18 Q2-18 Q1-18
I 31 ILeveraging new ingredient-based benefits
in both core and new brands
New Actimel New Activia New brand WA –
Soft functional ingredients Touch botanicals
Mate Tea - Baobab - Guarana - Ginger Lime - Green tea & Mint Houjicha (roasted green tea)
Kari (persimmon)
Q4 18 – EU Q1 19 Q3-18 Q4-18
I 32 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win millennials Own probiotics, Accelerate Drive Relentless Impulse
protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 33 I9 ccelerating plant-based business
A
Expand core brands, drive indulgence and new brands
Accelerate core Plant-based Indulgence Exploit Plant-based for
brands other relevant brands
Liv Oat shot Q4 18
I 34 IAccelerating plant-based business
Using the full ingredients spectrum and differentiation
Full plant-based Differentiation through premiumization
ingredient spectrum
Soy Oat
Almond Cashew
Coconut Rice Renewable sugarcane, made from at least 80% plants
I 35 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win millennials Own probiotics, Accelerate Drive Relentless Impulse
protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 36 IDrive indulgence
White indulgence, portfolio sophistication and impulse
White Indulgence Portfolio sophistication
Q3-18
STRENGHTHEN IMPULSIVENESS
Strengthen impulse
Q2-18 Q2-18
I 37 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win millennials Own probiotics, Accelerate Drive Relentless Impulse
protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 38 IRelentless innovation
Own expansion of new trends and foster new spaces
Align with existing trends Own the expansion Foster new growth
of new trends spaces
High protein Organic Probiotics Coffee inspired
Indulgence Simply plain Plant-based Savory
(personalization)
I 39 IRelentless innovation
Ingredients based benefits and on-trend packs
Soft functional Language, storytelling
ingredients and new materials
I 40 IRedefining strategic priorities
Danone is well positioned to embrace consumer trends
Win millennials Own probiotics, Accelerate Drive Relentless Impulse
protein and soft Plant-based Indulgence Innovation On-the-go
functionals
I 41 IWinning in impulse and on-the-go channels
Right portfolio, dedicated route-to-market and native impulse team
DEDICATED Dedicated
TAILORED RTM
Right portfolio and offering route-to-market
50% of total
growth from
Impulse
Channels
Native impulse
Single serve team
CONVENIENCE
& PROXI VP sales
Impulse
channels
NEW ON-THE-GO
FOOD STORES
Pouches Drinkables
I 42 IWhat we will discuss today
A consumer-driven Accelerating
transformation plant-based expansion
I 43 IPlant-based
Strong growth opportunities in every segment
Beverages Performance Yogurt Ice cream Desserts Creamers Cream Cheese
nutrition
Expected
category
growth +7-10% +15% +20-40% +20-40% +20-40% +20-30% +10-20% +70%
2017-2020
Source: Danone estimation based on trends and regional performance in existing markets ( Nielsen, IRI & Euromonitor)
I 44 IStrong market penetration opportunities ahead
From niche vegetarian to mass market flexitarian
Huge market penetration opportunity More and more flexitarians
Milk
1/3
35%
US 40%
Plant-based
beverages Belgium 35%
UK 28% of people
France 20% > 90%
Germany 19%
identify themselves
Mexico* 11%
as Flexitarian
Russia 85%
US 5% Plant-based milk also buy
Mexico*Expand and strengthen Plant-based business
1 Full ingredient spectrum in the core
2 Adjacencies
3 Geographical roll-out
4 New brands
I 46 IPlant-based growth plan
Key pillars
Core acceleration driven by
1 full ingredient spectrum 2 Expansion to adjacencies
Q1 18 Q4 18
Soy Oat Q1 18 Q1 18
Ice Cream
Probiotics
Q4 18 Q3 18
Almond Coconut Shots
Ready-to-drink Coffee
Creamers
Desserts
Cheese
Cooking ingredients
Rice Cashew
I 47 IPlant-based growth plan
Key pillars
3 Geographical roll out 4 New brands
Liv Oat shot
EAST EUROPE
Our Plant-based Q4-18
brands today
I 48 IPlant-based growth plan
Successful expansion of Plant-based yogurts worldwide
Experiencing very strong Danone ahead of big
growth in key markets Dairy competitors
Plant-based yogurts category Plant-based yogurts
value growth in 2017 market share in H1 2018
+58%
+38% 87%
+14%
+11%
+10% 72%
EU9
Source: Nielsen / IRI value growth 2017
I 49 ISo Delicious Indulgence and Ingredients expansion
Innovate in indulgence and dominate Plant-based ingredients
Ice-cream and mousses Organic almond and coconut
So Delicious
brand growth
in H1 2018
STEEP
DOUBLE
DIGIT
Q1-18 Q2-18 Q2-18
I 50 ISilk New Brand proposition
“Progress is perfection”
New Silk positioning returns the brand back to growth
Silk brand
growth
in H1 2018
HIGH
SINGLE
DIGIT
I 51 II 52 I
I 53 I
I 54 | 54I |
Disclaimer
• This presentation 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,” “objective”
“believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” “continue,”
“convinced,” and “confident,” the negative or plural of these words and other comparable terminology. Forward looking
statements in this document include, but are not limited to, statements regarding Danone’s operation of its business, and the future
operation, direction and success of Danone’s business.
• Although 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 “Risk Factor” section of Danone’s
Registration Document (the current version of which is available on www.danone.com).
• Subject to regulatory requirements, Danone does not undertake to publicly update or revise any of these forward-looking
statements. This document does not constitute an offer to sell, or a solicitation of an offer to buy Danone securities.
• All references in this presentation to ”Like-for-like (LFL) New Danone” changes, recurring operating income, recurring operating
margin, recurring net income, recurring income tax rate, Recurring EPS, Yakult Transaction Impact, free cash flow and net financial
debt correspond to financial indicators not defined in IFRS. Their definitions, as well as their reconciliation with financial statements,
are defined in the H1 results press release issued on July 27th, 2018. Q1, Q2 and H1 2017 reported figures have been restated for
IFRS 15.
• Due to rounding, the sum of values presented in this presentation may differ from totals as reported. Such differences are not
material.
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