Get documents about "Danone-Fiche-120727-Investment-case-PLUS-A
Document Sample
DANONE
PLUS
Country France Market cap. EUR 30.6 bn
Sector Food & Beverages Free float 95%
Reuters code DANO.PA Closing price EUR 47.54
Valoren 487663 Web site www.danone.com
Profile
Danone is the 5th largest food group in the world and has refocused on 3 of the
most dynamic food businesses - Dairy Products (DPs), bottled mineral water and
baby food and clinical nutrition. Danone is the world leader in these businesses and
has a diversified geographical profile (65% of sales outside Europe, of which 55% in
emerging countries) and a penetration potential which remains high.
Strengths/opportunities Weaknesses/risks
World leader in Fresh Dairy Products, Sensitivity to changes in the price of
no.2 in mineral water and baby food milk
All categories show growth and are Limited risk due to differentiated
not concentrated, except for waters products (R&D and strong brands)
Significant economies of scale dis-
criminating marketing effect
DJ stoxx
Danone
F & Bev
Investment conclusions
(EUR) (EUR)
Danone’s mission is “to promote health through nutrition for the greatest number”. Performance
It operates a strategy based on innovation and geographical expansion (55% of sales -1M 0.4% 5.6%
in emerging countries where the dynamic is very sustained). As the only player
-3M -12.9% -0.8%
which is present uniquely in businesses with low penetration and with healthy con-
-12M -8.2% 11.8%
notations, Danone plays the role of “market opener” and builds strong competitive
Change in earnings per share
positions for its long-term growth. The group is the market leader in the majority of
the countries where it is present. It claims world leadership in FDPs (6x the no. 2) 2011 6.9% 0.9%
and a position as the worldwide number two in mineral water and baby food (be- 2012e 7.2% 9.8%
hind Nestlé in both cases). Despite a more difficult economic situation in (southern) 2013e 11.9% 10.0%
Europe and continued, punitive commodity prices, Danone benefits from several P / E (x)
drivers: integration and repositioning of Unimilk in Russia, relaunch of Oikos Greek 2011 16.4 18.7
yogurt in the US and rapid expansion in mineral waters and baby food in emerging 2012e 15.3 17.0
countries, guaranteeing excellent prospects for profitable growth. 2013e 13.7 15.5
P / BV (x)
Risk
2011 2.4 3.3
The unfavourable decisions by the EFSA concerning the group’s health benefit 2012e 2.2 3.0
claims could adversely impact the image of certain FDP products. The continued 2013e 2.1 2.8
deterioration on the European market could prevent the group from passing on Dividend yield
price rises in FDPs.
2011 2.9% 2.7%
Valuation 2012e 3.1% 3.0%
Since the Reset programme (relaunch of volumes and repositioning) in 2009, Da- 2013e 3.5% 3.3%
none has once again achieved the greatest organic growth rate in the food sector Beta vs. Sector Market
without heeding the sirens of expensive acquisitions, which should allow it to re- 6M 1.14 0.65
claim and justify its historical premium over its peers of around 10%. Sources : B&Cie, Bloomberg, Datastream IBES
Key figures
2010 2011 2012e 2013e 2014e Sales in 2011
in EUR million
Sales 17 010 19 318 20 796 22 322 24 013 Medical
Sales growth 13.5% 13.6% 7.7% 7.3% 7.6% food
Ebit 2 498 2 729 2 957 3 212 3 496 6%
Waters
Operating margin 15.2% 14.7% 14.2% 14.4% 14.6% 17%
Net profit 1 870 1 671 1 871 2 093 2 327
ROE 15.7% 13.8% 14.5% 15.2% 15.7%
EV/Sales (x) 2.28 1.97 1.79 1.63 1.48 Dairy
Net debt / Equity 60.6% 55.9% 44.6% 36.0% 27.8% Baby food products
Free cash flow 1 688 1 872 2 025 2 032 2 248 19% 58%
Dividend per share (€) 1.30 1.39 1.49 1.67 1.86
Earnings per share (€) 2.71 2.90 3.10 3.47 3.86
27 July 2012 | Research Department | Christophe Laborde
All information and advice is given in good faith but without legal responsibility
16, rue de Hollande | CP 5515 | CH-1211 Geneva 11 | T. +41 58 258 00 00 | F. +41 58 258 00 40 | research@bordier.com | www.bordier.com
GENEVA N YO N BERN ZÜRICH PARIS LONDON MONTEVIDEO S I N G A P O RE T U R K S A N D C A I CO S
Design ClPa
