Chairman and CEO Emmanuel Faber and senior members of the management team presented the strategy to build on the company’s 2020 objectives and 2030 strategic goals, to ‘drive superior sustainable profitable growth and create sustainable shareholder value.’
Faber said, “We are developing our unique portfolio of health-focused and purpose-led manifesto brands, acting as a catalyst for consumer reach. Our growth strategy focuses on valorized innovations to address some of the fastest-growing trends, notably among the younger generations.
“We continue to make our organizational model more efficient by empowering our people and fostering engagement. Our strategic priorities remain to accelerate growth, maximize efficiencies, and allocate capital with discipline. Our progress to date gives us every confidence in our ability to navigate increasing global volatility and deliver superior sustainable profitable growth, to create and share value.”
The seminar included updates on specialized nutrition in China.
After 12 months of growth in China, sales are contracting in the short term, amid changes in infant milk formula market dynamics. Danone said it is ready to address in the mid-term new profitable growth opportunities, positioning its strategy towards the faster growth areas, including by seizing growth opportunities emerging from evolving lifestyles and needs from an aging population.
Plant-based
Danone said it plans to triple its worldwide plant-based sales from €1.7bn ($1.9bn) to around €5bn ($5.7bn) by 2025 by accelerating its core plant-based beverages and yogurt categories, expanding into adjacencies, and unlocking opportunities by combining its position in dairy with the high plant-based growth potential.
The newly formed Growth and Innovation organization is a key lever for growth acceleration, Danone said, through re-imagining brands, optimizing consumer reach and engagement via precision marketing. Together with its purpose-led manifesto brand strategy, Danone will accelerate its presence in fast-growing channels with a priority on e-business, where the objective is to double sales by 2020 to €2bn ($2.3bn).
Cost savings
Danone said it is making progress towards its protein cost-saving program, targeting €1bn ($1.2bn) savings by 2020, and is embedding efficiencies in its operating model to support sustainable profitable growth.
Danone said it confirms its 2018 guidance of double-digit recurring EPS growth at constant exchange rate, excluding impact from its Yakult Transaction.
Danone reiterated its objectives of accelerating like-for-like sales growth to 4%-5% by 2020, based on the following dynamics:
Strong like-for-like sales growth above 5% in Specialized Nutrition;
In Waters, also achieve strong like-for-like sales growth above 5%;
Solid like-for-like sales growth of 4% to 5% in Essential Dairy & Plant-based.
To reflect its organization under a single business leader, EDP International and EDP Noram reporting will be merged into a single EDP reporting entity from January 1 2019.
Increasing recurring operating margin will be more than 16% by 2020; and Danone expects to reach net debt/EBITDA ratio below 3-times by 2020.
Danone also confirmed its ROIC2 target of around 12% while postponing its achievement to 2022, primarily reflecting the impact of currency devaluations and changes in accounting standards.
Cécile Cabanis, CFO, said, “In an increasingly volatile environment, we are very pleased with the enhanced resilience of our operating model, delivering good results. Given short-term headwinds, including in our Early Life Nutrition business in China, the path to 2020 will not be linear.
“We continue to strengthen our business model to accelerate throughout 2019 and 2020, towards our objectives, in order to deliver consistent EPS growth and create sustainable shareholder value.”