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CAC 40 chart decryption at closing – Friday, November 9, 2018 Biggest increase



(AOF) – DANONE (+ 3.57% to 65.61 euros)

Agribusiness groups rebounded, investors prefer defensive stocks.

AOF – LEARN MORE

Strength of value

– The world leader in the food industry: first in fresh milk products under the brands Activia, Gervais, Alpro, Oikos and Actimel, the second largest in baby nutrition (Bledina, Dumex, SGM, Aptamil …) and third in bottled water (Mizone, Evian and Acqua) and medical nutrition;

– Long-term strategies aimed at simplifying the business portfolio, increasing brand visibility, 5 of which exceed 500 million in turnover;

– The aim of Danone 2030 for the food revolution: to innovate to give back all the fun, to get B Corp certification, to develop a committed brand, to entrust the future to employees who, at the end of 2018, will be asked to contribute to the 2030 road map;

– Sales of € 26.7 billion divided between milk or vegetable products (EDP) by 52%, special nutrients for 29% and bottled water for 19%;

– Strong international position, with Europe and North America contributing 53% of sales, with groups focusing on 6 priority countries – Mexico, Indonesia, China, Russia, the United States and Brazil;

– Strengthening in plant-based products with the acquisition of Alpro Belgium, the European leader in vegetable dairy products;

– Ability to increase operating margin despite a decline in sales over the past two years;

– One of the best companies in the world in terms of "corporate social responsibility".

Weakness value

– Economic instability in "key" developing countries;

– Strong increase in milk prices in Europe and the United States;

– Negative effects of the exchange rate with the dollar, pound sterling and Turkish lira;

– Difficulties in dairy products in Brazil and the United States;

– Risk of losing turnover in Morocco (boycott of dairy products) and in Russia (threat of prohibition for sanitation reasons);

– Increase in debt after the purchase of a WhiteWave;

– Investors' doubts about Danone's "new balance" are considered too profitable for producers and a reduction in marketing costs.

How to follow grades

– High sensitivity to changes in commodity prices, especially milk which accounts for 10% of changes, health risks and weather hazards for water;

– Ambition 2020: annual sales growth of between 4 and 5%, operating margin of more than 16%, debt to income ratio of less than 3, return on capital invested around 12%, with 2017/2020 cost savings plan, with coverage of € 1 billion;

– Restructuring discussions carried out in the United States and Brazil;

– Successful renegotiation of capital partnerships with Yakult Japan;

– The return of rumors of offers by Americans Kraft Heinz or Kraft Foods;

– 2018 target of "double digit profit per share growth";

– Companies can theoretically operate, without reference shareholders, but block with dissuasive measures (multiple voting rights, limited votes for GA, financial authorization during the period of the public offer …) and the presence of Caisse des dépôts.

food

In 2017, this sector benefited from accelerating its growth to 3.9%, against 1.1% in 2016. Against the backdrop of the continuing price war, players recorded good performance in the export market. representing 21% of sector turnover. Exports generated a trade surplus of 7.6 billion euros last year, with French exports jumping 7 percent. The National Association of Food Industries (Ania) aims to restore French exports. After becoming the largest food exporter in 2004, France is now in fourth place, behind the United States, Germany and the Netherlands. The challenge is all the more important because the domestic market shows signs of weakness: the economy is recovering less quickly than the rest of the industry. In addition, companies in this sector have decreased in their margins by 6 points in ten years. The Ania explains this trend with the price war launched since 2013 by major retailers.


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