DANONE Press release - February 23, 2016
TRANSFORMATION IN MOTIONSales growth1: +4.4%
Trading operating margin: 12.91% (+17 bps1)
Recurring EPS: 2.93€ (+8.4% at constant exchange rates)
2016 targets: profitable growthSales growth1: within a range of +3% to +5%
Solid improvement1 of trading operating margin
All references in this document (including 2015 results and 2016 targets sections above) to like-for-like changes, trading operating income, trading operating margin, recurring net income, recurring income tax rate, recurring EPS, free cash-flow, free cash-flow excluding exceptional items, and net financial debt, correspond to financial indicators not defined by IFRS that are used by Danone. Their definitions, as well as their reconciliation with financial statements, are listed on pages 10 to 12.
CEO EMMANUEL FABER'S COMMENTS
"Over the past 18 months, we have been making the changes necessary to take up the challenges of a new and ever changing world, as we pursue our purpose to provide pleasurable, healthier, sustainable hydration and eating options to our consumers each and every day.
With organic growth of +4.4% and trading operating margin up +17 basis points like-for-like, our results are very solid and perfectly aligned with our objectives. They confirm that we have taken this mission to a new level, paving the way for strong, profitable and sustainable growth by 2020.
We have further sharpened the consumer relevance of our brands, invested more in research and reshaped our organization for greater efficiency and deeper expertise. At the same time, we have enhanced our knowledge and capabilities to protect and grow our businesses, and have moved toward an optimal combination of more agility and discipline in our resource allocation and decision processes.
Our choices in 2015 delivered these solid results, which came from the combination of our businesses in both developed and emerging markets across all four of our categories.
In 2016, in a global context that remains volatile, Danone will continue to invest behind its brands and will mark a further important step to develop a balanced model of strong, profitable and sustainable growth.
I am grateful to the 100,000 people at Danone for what they achieved last year and have full confidence in their engagement as we start a new year of our journey, in which our ambition remains unchanged: create value for all our stakeholders: our employees, our consumers, customers, suppliers and our shareholders."
HIGHLIGHTS
€ million (unless stated otherwise) | 2014 | 2015 | As reported | Like-for-like |
Sales | 21,144 | 22,412 | +6.0% | +4.4% |
Trading operating income | 2,662 | 2,892 | +8.7% | +5.7% |
Trading operating margin | 12.59% | 12.91% | +32 bps | +17 bps |
Recurring net income - Group share | 1,561 | 1,791 | +14.7% | +9.1% |
Net income - Group share | 1,119 | 1,282 | +14.6% | +7.4% |
Recurring EPS (€) | 2,62 | 2.93 | +12.0% | +6.5% |
EPS (€) | 1.88 | 2.10 | +11.9% | - |
Free cash-flow excluding exceptional items | 1,401 | 1,529 | +9.2% | - |
1 Like-for-like
FULL-YEAR 2015 SALES
€ million except % | Q4 2014 Q4 2015 | Change* | Volume growth* | FY 2014 FY 2015 | Change* | Volume growth* |
Fresh Dairy Products | 2,693 | 2,682 | +2.6% | -0.6% | 11,129 | 11,057 | +0.6% | -3.0% |
Waters | 944 | 953 | +1.9% | +2.6% | 4,186 | 4,768 | +7.1% | +5.1% |
Early Life Nutrition | 1,241 | 1,332 | +6.0% | +3.6% | 4,397 | 4,994 | +9.8% | +4.7% |
Medical Nutrition | 384 | 413 | +6.8% | +4.3% | 1,432 | 1,593 | +7.5% | +4.7% |
Europe | 2,105 | 2,167 | +2.3% | +1.9% | 8,522 | 8 900 | +3.0% | +1.0% |
CIS & North America1 | 1,042 | 1,064 | +4.2% | -2.4% | 4,525 | 4,471 | +2.6% | -3.8% |
ALMA2 | 2,114 | 2,147 | +4.7% | +2.9% | 8,097 | 9,041 | +6.7% | +2.8% |
Total | 5,261 | 5,379 | +3.6% | +1.3% | 21,144 | 22,412 +4.4% | +0.9% |
Like-for-like
In the fourth quarter of 2015, consolidated sales stood at €5,379 million, up +3.6% like-for-like. Growth reflects a
+1.3% rise in volume and a +2.3% rise in value.
Fourth-quarter sales rose 2.2% as reported, including changes in exchange rates (-1.3%) and in the scope of consolidation (-0.1%). The exchange-rate effect reflects negative trends in currencies including the Russian ruble and the Brazilian real. Changes in the scope of consolidation result primarily from the deconsolidation in July 2014 of Fresh Dairy Products operations in China, and the sale in December 2014 of the Fresh Dairy Products business in Indonesia.
Fresh Dairy Products division - Fourth quarter 2015The Fresh Dairy Products division reported sales up +2.6% like-for-like, buoyed as anticipated by renewed growth in North America. Growth includes a slight -0.6% decline in volumes and a steep +3.2% rise in value.
Business in the CIS & North America area picked up markedly:
In the United States, growth gathered pace over the quarter, driven by targeted investments backing brands and by the category's return to growth.
In Russia, with consumer demand sluggish, we continued to enhance our portfolio through higher prices and a positive mix effect, once again offsetting the significant decline in volumes in low value- added segments.
In Europe, the division pursued a concerted effort to gradually steer its business back to profitable structural growth. Fourth-quarter trends are largely in line with those observed in the third quarter of the year. This includes, in particular, the sequential improvement in volumes, supported by the favorable basis of comparison signaling the end of PRGM (Profitable Revenue Growth Management).
Finally, the ALMA region reported a marked rise in sales reflecting contrasting performances in emerging countries, with positive results in Argentina, Mexico and Japan, and a slowdown in Brazil in a very volatile economy.
1 North America = United States and Canada
2 ALMA = Asia-Pacific / Latin America / Middle East / Africa
The Waters division reported sales up +1.9% like-for-like. As anticipated, drivers were, first, strong double-digit growth for the division as a whole, excluding China, and second, Danone's transitioning of the Mizone brand in China which started in the third quarter. This resulted in an unfavorable geographical mix and a -0.7% price mix effect.
In Europe, the Waters division generated solid growth thanks to strong performances for both evian and Volvic brands that continue to benefit from the raft of initiatives deployed to enhance their organization, portfolio structure, distribution and innovation. Volvic's fourth-quarter sales were boosted by the successful launch of its new Star Wars™ collectors' range in France.
The ALMA region (excluding China) also turned in a robust performance which was driven by Aqua in Indonesia and strong sales growth in Latin America (including Argentina and Mexico). Momentum came from the fast-moving aquadrink segment and from continued growth in plain waters.
In China, sales retreated as anticipated. In the complex Chinese environment, Danone continued to adjust inventories of Mizone to meet shifting trends in consumption and to support Mizone's medium and long-term growth potential. A gradual return to a normalized growth pattern is expected in the second half of 2016.
The Early Life Nutrition division saw sales rise a steep +6.0% like-for-like despite a very favorable basis for comparison. This reflects +3.6% growth in sales volume and a +2.4% value increase.
In Europe, sales were boosted by Chinese consumers' confirmed appetite for international brands Aptamil and
Nutrilon, through exports to China.
In China, Danone pushed ahead with efforts to build a sustainable model of growth by continuing to invest in the Aptamil and Nutrilon brands, and by forging a structure for its local internet offering using a direct distribution model, while developing sales through specialized stores.
Sales trends for the Dumex brand (China) have not changed from previous quarters. Dumex's future tie-up with Yashili will let Danone take part in the creation of a platform of strong local brands in a market that holds very significant potential.
Finally, division business in the rest of the world remains upbeat, with double-digit growth in sales in both Latin America and Africa.
The Medical Nutrition division reported excellent like-for-like growth of +6.8%, with volumes up +4.3% and a price mix effect of +2.5%.
The division turned in solid performances in all geographical areas, in particular in ALMA, driven by growth in Brazil and China, and in Europe, with very good performances in the United Kingdom, the Benelux and Germany.
In keeping with the trend observed in the first three quarters of the year, all segments contributed to growth in the fourth quarter, with the pediatric range (Neocate and Nutrini) and Nutrison brand within the adult range doing particularly well.
2015 TRADING OPERATING MARGIN: +17 bps (like-for-like)
Danone's trading operating margin stood at 12.91%, up +32 bps as reported, reflecting a:
+17 bps rise like-for-like
+6 bps rise due to changes in the scope of consolidation that included deconsolidation of some Fresh Dairy Products operations in China and Indonesia, and a
+9 bps rise due to trends in exchange rates.
2014 2015 Change
(like-for-like)
Fresh Dairy Products | 9.28% | 9.95% | +24 bps |
Waters | 12.88% | 11.37% | -192 bps |
Early Life Nutrition | 18.83% | 19.32% | +142 bps |
Medical Nutrition | 18.28% | 17.95% | +1 bp |
Europe | 15.67% | 17.26% | +168 bps |
CIS and North America1 | 8.56% | 8.67% | -19 bps |
ALMA2 | 11.60% | 10.71% | -120 bps |
Total 12.59% 12.91% +17 bps
2015 saw an increasingly volatile and complex environment in a number of geographical areas. In this context, Danone demonstrated its capacity to adjust its profitable growth model in line with its roadmap and 2020 ambition of strong, profitable and sustainable growth.
In keeping with its 2015 targets, Danone reported a +17 bps rise in trading operating margin on a like-for-like basis, despite a slowdown that hit the entire category of non-alcoholic beverages in China and weakened the Waters division's margin.
In China, Danone is actively monitoring the transition of its Mizone brand toward a normalized pattern of growth and in recent months has begun a process of inventory adjustment with distributors, while maintaining targeted sales and marketing outlays, a dynamic innovation policy, and optimization of structural costs. These adjustments are set to continue in 2016, with growth returning gradually as of the second half of the year.
Outside of China, the Waters division delivered strong results driven by the many initiatives launched in recent years-from optimization of its product portfolio in Europe to the development of aquadrinks in emerging countries and strict cost controls.
2015 also benefited from the transformation program's positive results in Fresh Dairy Products, where margins were up +24 bps like-for-like. Against a backdrop of favorable price trends in raw materials, Danone pursued structural efforts to enhance the value of its brand portfolio and optimize its cost base, while stepping up investment in its brands, thus mobilizing all growth drivers and making its equation for profitable growth sustainable in 2016.
Lastly, Danone once again benefited from profitable growth in Medical Nutrition, where geographical expansion and growth in innovative brands provided momentum, and in Early Life Nutrition, which was sustained by the success of international brands and strong demand in China.
1 North America = United States and Canada
2 ALMA = Asia Pacific / Latin America / Middle East / Africa
Groupe Danone SA issued this content on 23 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 23 February 2016 06:55:28 UTC
Original Document: http://media.corporate-ir.net/media_files/IROL/13/131801/press/Danone_FY_2015_Results_UK.pdf
