2011 Year in Review
Looking back at 2011, how would you describe the year?
Franck Riboud: 2011 was a tough year, but also a very positive one. Tough because of the very unsettled macroeconomic environment in Europe—that’s no surprise—and because skyrocketing raw material prices put pressure on our cost structures and our entire organization. But 2011 was ultimately a very positive year for Danone, since we successfully overcame these fierce headwinds. And our results confirm that it was another successful year: we met all our targets— ambitious targets that we stuck to despite the crisis. Organic sales growth reached 7.8% for the full year, and we achieved our target for growth in margin, while our free cash flow continued to rise steeply, gaining over 9%. One major explanation for this success was our conviction very early on—several years ago, in fact—that the business models underpinning Danone’s longstanding markets in mature economies were set for serious upheavals, probably for several years. So we adopted a battle plan emphasizing efficiency, quality of execution, and focus—that’s no mystery.
What do you see as the most important development in 2011?
FR: This shift in geographical focus. These days you hear a lot about the emergence of a new world order. At Danone, we’ve remained true to our traditions even as we’ve shifted into the world of the future. And 2011 was a tipping point—the first year that emerging economies accounted for over 50% of our sales. From now on, more than one euro of every two that we generate in sales will come from emerging countries. In 2011 they provided 80% of our growth in sales—and 100% of growth in our operating profit. In fact, if you look at our top 10 national markets, you’ll see that five of them are emerging economies: Russia, which is nearly our number one market now, but also Mexico, Indonesia, China and Argentina.