F. KEGELS - Danone Unimilk in CIS
Danone Unimilk in CIS Filip Kegels, CEO Danone Unimilk CIS
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Russia: steady growth region Russian economy stands at the 6th place of GDP calculated on the basis of the purchasing power parity (€ bio, 2011) US A Chin a Japa n Indi a German y Russia Brazi l U K Franc e Ital y
11 650 8 732
Starting from the early 2000s Russian GDP grew at a steady rate of approximately 5-6% per year
52%
Real GDP (€ bio)
275%
3 434 36%
277
6.40% 646
854
4.30% 1 978 1 436
3 416 181% 2 406
45%
1 841
113%
1 773
86%
1 769
54%
1 711
45%
1 427
32%
200 0
2005
2009
2011
201 5
Growth rate 2011/2000 GDP based on PPP per capita (€ per capita) 5.20% 5.20% 10 041 8 152 200 0 (2)
2005
4.44% 10 419
12 932
16 369
2009
2011
201 5
(1) Calculated in current prices Estimate based on the data from IMF
Other CIS Countries: also optimistic UKRAINE 2.70% 73
33 200 0
2005
Real GDP (€ bio)
5.2% 82
128
2009
2011
KAZAKHSTAN
174
201 5
7.50%
9.70% 20
48
81
200 0
2005
2009
144
2011
214
201 5
BELARUS 5.30%
5.80%
–4–
11
26
34
43
200 0
2005
2009
2011
(2)
(1) Calculated in current prices Estimate based on the data from IMF
52
201 5
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Danone before Unimilk: creating a large profitable platform in Russia 1992 Danone mono-brand store opened in the Moscow center 1995 Opening of the first Danone plant in Russia (Togliatti, Samara region) 2000 Opening of the state-of-the-art plant in Chekhov, Moscow region 2001-2008 Steady double-digit growth, both in volume and sales
kRUB
kT
350
2009 Keeping volumes in crisis, but loosing Sales
300 250 200 150 100 50
2010 Back to double-digit growth
Sales, kRUB
Danone before Unimilk: developing business in CIS 1998
2005
Registration of Danone branch in Ukraine kRU B 600 500 400 300 200 100 -
Ukraine Vol and Sales growth development
Acquisition of a local plant in Ukraine - Danone Dnipro created
kT 50 40 30 20 10
2004 2005 2006 2007 2008 2009 2010
2007
Registration of Danone branch in Kazakhstan
2008
Registration of Danone branch in Belarus
Sales, kRUB
Volume, kT
kRU B
k T 25 20
2010
Opening of Danone plant near Almaty – the first modern dairy plant in Kazakhstan
15 10 2008
2009
2010 Sales, kRUB
Volume, kT
5
Merging Danone and Unimilk in 2010
• •
Danone controls 57.5%, ex-Unimilk shareholders 42.5% Danone has majority at the board of Directors
Danone + Unimilk Snapshot
•
Danone entered Russian market in 1992
•
Unimilk established in 2002
•
4 plants in CIS
•
25 plants in CIS
•
Annual sales* 2010: 700 mln €
•
Annual sales* 2010: 1.3 bn €
•
Focus on “blockbuster” brands; developing mainstream modern category
•
Numerous brands allowing the company to address the vast majority of the market
•
Russian Fresh dairy market**
•
Russian Fresh dairy market**
• •
•
25.6% market share #1 player
• •
Russian Total dairy market*** • •
11.2% market share #3 player
•
13.9% market share #3 player
Russian Total dairy market*** • •
15.4% market share #2 player
(1) * Based on 2010 exchange rate : 40.31 RUR/€ (2) ** Source: Nielsen Retail Audit, National Urban, FM 2011 (3) *** Source: Nielsen Retail Audit, National Urban, FM 2011;
Danone Unimilk: Complementarities of Businesses Portfolio
Regions
Focus on Premium and Health
More focused on “the West”
Industrial Distribution & supply chain Modern retail and Direct RTM
Best-in-class practices
+
=
DANONE UNIMILK
Focus on traditional with reach to all population
More focused on “the East”
Presence in traditional channels
Large network
Leader of the dairy market in Russia and CIS Russia becomes #1 Market for Danone Fresh Dairy Division
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Governance of the Company BOARD OF DIRECTORS 4 Danone - 3 ex-Unimilk
CEO – Filip Kegels
Danone-Unimilk
Danone-Unimilk
Danone-Unimilk
Danone-Unimilk
Russia GM - Y. Legros
Ukraine GM - D. Marchetti
Kazakhstan GM - D. Manzini
Belarus GM - E. Eygi
(1)
org. chart - Q3 2012
Integration Pilot in Ukraine
BEFORE (combined)
AFTER
SALES 2 teams - 3.5% Sales 58 distributors 2 contracts in MT
1 team - 2.9% Sales 28 distributors 100% exclusive 1 contract in MT
INDUSTRIAL & LOGISTICS 3 days planning horizon in UM Product losses 2.1% Sales Low cold chain standard in 2 plants
18 months planning horizon all plants Product losses 1.3% Sale 1 cold chain standard for all skus Logistic cost per ton reduced by 6%
OVERHEADS 2 headoffices 5.9% Sales
1 headoffice 5.0% Sales
Integration status in Russia Building organization with focus on
Next steps
• Growth • Profitability • Sustainability
• RTM and Logistics integration in key cities • Moving from Danone Unimilk to New Danone Russia
Accomplishments • • • •
Unification of the main functions Integrated budgeting process Moving to common offices in Moscow and other regions Merge of regional sales teams
7/2011
9/2011
10/2011
2012
3/2011
12/2010 9/2010
6/2010 Collaboration initiatives
Deal approval
Deal announcement
Strategic Plan & Joint Sales Team Pilot Operating Models announced
SAP Pilot
Joint Joint HQ, & Company Joint Danone Management Unimilk
New Danone Russia
Growth in CIS continues (combined results for Danone and Unimilk 2005-2012) Sales (kRUR) 90,000,000 80,000,000 70,000,000
Ukraine
60,000,000 50,000,000
Kazakhstan
40,000,000
Belarus
30,000,000 Russia 20,000,000 10,000,000 0 2005
2006
2007
2008
2009
2010
2011
2012 (est.)
Volume (t) 1,800,000 1,600,000 1,400,000 Ukraine
1,200,000 1,000,000
Kazakhstan
800,000 600,000
Belarus
400,000 Russia
200,000 0 2005
2006
2007
2008
2009
2010
2011
2012 (est.)
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Consumers’ Confidence on positive track in 2012 in line with Russian GDP
(1)
Source: Rosstat
Consumer income is up & inflation is down Consumers focus on routine “normal” life Real Disposable Income (%, vs. LY) 104
102.8
103
102.4
103.6
102 101 100
2012: 2013:
101.4
100.2
99
98.7
98 97 96 Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Inflation Estimate: 2012: 106.0% 2013: 106.0%
(1)
Real Disposable Income Estimate:
Source: Rosstat, Euromonitor, Central Bank of RF
103.1% 104.2%
CIS: a major growth area for Danone dairy Average consumption of Fresh Dairy Products 1 cup a day
1 cup every 2 days
1 cup a week
Purchasing power growth
Danone Unimilk CIS Ambition
CIS Dairy to reach Dairy division’s standards • Steady top line growth driven by traditional and modern dairy categories • Steady profitability improvement by more than 100 bps per year driven primarily by mix, productivities and fixed cost absorption • Significant FCF generation
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Russia: steady growth region Russian economy stands at the 6th place of GDP calculated on the basis of the purchasing power parity (€ bio, 2011) US A Chin a Japa n Indi a German y Russia Brazi l U K Franc e Ital y
11 650 8 732
Starting from the early 2000s Russian GDP grew at a steady rate of approximately 5-6% per year
52%
Real GDP (€ bio)
275%
3 434 36%
277
6.40% 646
854
4.30% 1 978 1 436
3 416 181% 2 406
45%
1 841
113%
1 773
86%
1 769
54%
1 711
45%
1 427
32%
200 0
2005
2009
2011
201 5
Growth rate 2011/2000 GDP based on PPP per capita (€ per capita) 5.20% 5.20% 10 041 8 152 200 0 (2)
2005
4.44% 10 419
12 932
16 369
2009
2011
201 5
(1) Calculated in current prices Estimate based on the data from IMF
Other CIS Countries: also optimistic UKRAINE 2.70% 73
33 200 0
2005
Real GDP (€ bio)
5.2% 82
128
2009
2011
KAZAKHSTAN
174
201 5
7.50%
9.70% 20
48
81
200 0
2005
2009
144
2011
214
201 5
BELARUS 5.30%
5.80%
–4–
11
26
34
43
200 0
2005
2009
2011
(2)
(1) Calculated in current prices Estimate based on the data from IMF
52
201 5
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Danone before Unimilk: creating a large profitable platform in Russia 1992 Danone mono-brand store opened in the Moscow center 1995 Opening of the first Danone plant in Russia (Togliatti, Samara region) 2000 Opening of the state-of-the-art plant in Chekhov, Moscow region 2001-2008 Steady double-digit growth, both in volume and sales
kRUB
kT
350
2009 Keeping volumes in crisis, but loosing Sales
300 250 200 150 100 50
2010 Back to double-digit growth
Sales, kRUB
Danone before Unimilk: developing business in CIS 1998
2005
Registration of Danone branch in Ukraine kRU B 600 500 400 300 200 100 -
Ukraine Vol and Sales growth development
Acquisition of a local plant in Ukraine - Danone Dnipro created
kT 50 40 30 20 10
2004 2005 2006 2007 2008 2009 2010
2007
Registration of Danone branch in Kazakhstan
2008
Registration of Danone branch in Belarus
Sales, kRUB
Volume, kT
kRU B
k T 25 20
2010
Opening of Danone plant near Almaty – the first modern dairy plant in Kazakhstan
15 10 2008
2009
2010 Sales, kRUB
Volume, kT
5
Merging Danone and Unimilk in 2010
• •
Danone controls 57.5%, ex-Unimilk shareholders 42.5% Danone has majority at the board of Directors
Danone + Unimilk Snapshot
•
Danone entered Russian market in 1992
•
Unimilk established in 2002
•
4 plants in CIS
•
25 plants in CIS
•
Annual sales* 2010: 700 mln €
•
Annual sales* 2010: 1.3 bn €
•
Focus on “blockbuster” brands; developing mainstream modern category
•
Numerous brands allowing the company to address the vast majority of the market
•
Russian Fresh dairy market**
•
Russian Fresh dairy market**
• •
•
25.6% market share #1 player
• •
Russian Total dairy market*** • •
11.2% market share #3 player
•
13.9% market share #3 player
Russian Total dairy market*** • •
15.4% market share #2 player
(1) * Based on 2010 exchange rate : 40.31 RUR/€ (2) ** Source: Nielsen Retail Audit, National Urban, FM 2011 (3) *** Source: Nielsen Retail Audit, National Urban, FM 2011;
Danone Unimilk: Complementarities of Businesses Portfolio
Regions
Focus on Premium and Health
More focused on “the West”
Industrial Distribution & supply chain Modern retail and Direct RTM
Best-in-class practices
+
=
DANONE UNIMILK
Focus on traditional with reach to all population
More focused on “the East”
Presence in traditional channels
Large network
Leader of the dairy market in Russia and CIS Russia becomes #1 Market for Danone Fresh Dairy Division
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Governance of the Company BOARD OF DIRECTORS 4 Danone - 3 ex-Unimilk
CEO – Filip Kegels
Danone-Unimilk
Danone-Unimilk
Danone-Unimilk
Danone-Unimilk
Russia GM - Y. Legros
Ukraine GM - D. Marchetti
Kazakhstan GM - D. Manzini
Belarus GM - E. Eygi
(1)
org. chart - Q3 2012
Integration Pilot in Ukraine
BEFORE (combined)
AFTER
SALES 2 teams - 3.5% Sales 58 distributors 2 contracts in MT
1 team - 2.9% Sales 28 distributors 100% exclusive 1 contract in MT
INDUSTRIAL & LOGISTICS 3 days planning horizon in UM Product losses 2.1% Sales Low cold chain standard in 2 plants
18 months planning horizon all plants Product losses 1.3% Sale 1 cold chain standard for all skus Logistic cost per ton reduced by 6%
OVERHEADS 2 headoffices 5.9% Sales
1 headoffice 5.0% Sales
Integration status in Russia Building organization with focus on
Next steps
• Growth • Profitability • Sustainability
• RTM and Logistics integration in key cities • Moving from Danone Unimilk to New Danone Russia
Accomplishments • • • •
Unification of the main functions Integrated budgeting process Moving to common offices in Moscow and other regions Merge of regional sales teams
7/2011
9/2011
10/2011
2012
3/2011
12/2010 9/2010
6/2010 Collaboration initiatives
Deal approval
Deal announcement
Strategic Plan & Joint Sales Team Pilot Operating Models announced
SAP Pilot
Joint Joint HQ, & Company Joint Danone Management Unimilk
New Danone Russia
Growth in CIS continues (combined results for Danone and Unimilk 2005-2012) Sales (kRUR) 90,000,000 80,000,000 70,000,000
Ukraine
60,000,000 50,000,000
Kazakhstan
40,000,000
Belarus
30,000,000 Russia 20,000,000 10,000,000 0 2005
2006
2007
2008
2009
2010
2011
2012 (est.)
Volume (t) 1,800,000 1,600,000 1,400,000 Ukraine
1,200,000 1,000,000
Kazakhstan
800,000 600,000
Belarus
400,000 Russia
200,000 0 2005
2006
2007
2008
2009
2010
2011
2012 (est.)
Agenda
CIS: Opportunities for growth Danone Unimilk: the right growth platform Integration results Still big potential
Consumers’ Confidence on positive track in 2012 in line with Russian GDP
(1)
Source: Rosstat
Consumer income is up & inflation is down Consumers focus on routine “normal” life Real Disposable Income (%, vs. LY) 104
102.8
103
102.4
103.6
102 101 100
2012: 2013:
101.4
100.2
99
98.7
98 97 96 Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Inflation Estimate: 2012: 106.0% 2013: 106.0%
(1)
Real Disposable Income Estimate:
Source: Rosstat, Euromonitor, Central Bank of RF
103.1% 104.2%
CIS: a major growth area for Danone dairy Average consumption of Fresh Dairy Products 1 cup a day
1 cup every 2 days
1 cup a week
Purchasing power growth
Danone Unimilk CIS Ambition
CIS Dairy to reach Dairy division’s standards • Steady top line growth driven by traditional and modern dairy categories • Steady profitability improvement by more than 100 bps per year driven primarily by mix, productivities and fixed cost absorption • Significant FCF generation
