There are certain French companies whose shares are popular with many investors. This is the case of certain companies in the food-processing sector such as the very famous Danone company which we have all heard about and which generates a very important turnover thanks to a competitive strategy. Find out here, thanks to some practical information, but also some important data, how to analyse this action.
Firstly, we know that Danone's share price is particularly sensitive to variations in the price of certain raw materials essential to the manufacture of its products. This is particularly the case with the price of milk and fruit, which are raw materials widely used by this industry.
As part of its development strategy in emerging countries, Danone also fears an increase in local products, which could weigh on its profitability in relation to the investments made and prevent its main brands from becoming well established in the retail sector.
For some time now, Danone has also been making a lot of noise about its medical nutrition business that could be resold, according to some rumours, to a competing company such as Nestlé or Hospira. Such a divestiture could of course have a significant impact on the company's results.
It goes without saying that, as with any other stock, Danone's results will have an undeniable influence on its share price at the time of publication.
Finally, it is important to note that Danone is theoretically operable since it does not include a reference shareholder. However, for the time being, it is blocking this type of transaction through certain dissuasive measures such as double voting rights, limited voting at shareholders' meetings or financial authorisation during a public offer period. The presence of Caisse des Dépôts in its capital is also a brake on a possible takeover bid.
Few people are aware of this at present, but the creation of the Danone company as we know it today is the result of a merger between two companies in the 1970s. More precisely, Danone was born in 1973, from the merger of the BSN company, specialised in the manufacture of glass, and the Gervais Danone company, specialised in the food industry.
The Danone group is today one of the leaders of the food market on an international level with 191 production sites throughout the world and an activity involving many countries including the United States, Europe and some Asian and South American countries.
Nowadays, Danone is known to everyone and is recognised as one of the most successful food companies and leader in its sector. It should be noted that although the group previously owned the famous "Lu" brand, this was sold in 2007 and is therefore no longer part of Danone.
Its activity is divided into several major sectors, mainly the production and distribution of dairy products, but also baby food, packaged water and other products related to medical nutrition.
Photo credits: ©ricochet64/123RF.COM
The Danone group is, of course, one of the big names in the world's food industry. But it faces many competitors operating in the same or related fields of activity. We invite you to discover here which are the most competitive companies as far as Danone is concerned and their ranking according to the average annual turnover realised each year :
Nestlé is number one in this sector with a turnover of around 95 billion dollars per year.
Unilever is in second place in this ranking of the agro-food giants with 53 billion dollars of average turnover per annum.
The Kraft Food group ranks third in the world in terms of turnover with 42 billion dollars.
Finally, Yoplait is 5th and last in this ranking with only 4 billion dollars of average turnover.
In addition to its competitors, Danone also has partners that enable it to remain competitive and gain even more market share.
In particular, it is a partner of Pepsi-Co with whom it has pooled part of their portfolios for the sale of beverages.
Danone has also partnered with Nestlé to manufacture plant-based plastic bottles for their beverages in 2017.
Finally, Danone has signed a partnership with Starbucks with the aim of creating the Evolution Fresh by Dannon brand and establishing itself on the yoghurt market in the United States.
It goes without saying that the Danone group's first asset is its positioning on the global food industry market. Indeed, the French group is currently the international leader in this sector and is also extremely well positioned in a few activities and types of products in particular. Indeed, Danone is notably the international leader in the fresh dairy products sector and alone accounts for more than 48% of sales. The company is the second largest seller of infant nutrition products, accounting for more than 23% of sales. Finally, Danone is the world number three in the bottled water sector with a 22% market share. It also benefits from an interesting position in the field of medical nutrition.
Investors in Danone shares also appreciate the long-term strategy implemented by the company. This strategy has the main objective of simplifying the group's business portfolio, but also of strengthening the visibility of its brands. Today, five of the company's brands alone generate sales of more than €500 million. Of course, the group's long-term strategy also includes the development of its activities and a long-term presence in emerging countries, which are currently the focus of much interest.
As part of this international development strategy, Danone has the intelligence to concentrate its most important projects in a few priority countries. These include Mexico, Indonesia, China, Russia, the United States and Brazil. These 6 countries offer many advantages, including a large population and therefore significant potential.
The Danone group has already strengthened its position on the US market. This has been made possible in particular thanks to the diversification of its activities in certain niches such as vegetable milk or organic dairy products through the purchase of a few American companies such as Mead Johnson or WhiteWave. Thanks to these recent acquisitions, Danone has succeeded in climbing to the top of the list of companies offering organic products and has doubled its presence in the United States.
Finally, the last advantage of the Danone share concerns the very rating of this company, which is among the best rated in the world, particularly in terms of its social responsibility. It thus gains the confidence of investors around the world.
Although the group's international development strategy is already bearing fruit, Danone's first disadvantage is its very significant exposure to the European market and particularly to the Western European market where it generates more than 40% of its sales. A drop in consumption in this region of the world could therefore have very significant consequences on its share price.
On the other hand, several specific sectors of activity of the Danone group have been showing a slight slowdown for some time. This is notably the case in the field of infant nutrition, and more particularly in the Chinese market, but also in the bottled water sector, also on the Chinese market but also on the European market.
Another important sector of activity for the Danone group, fresh dairy products, is struggling to consolidate in the United States. Indeed, the American market presents very strong price competition in this area. In Europe, this sector is also suffering the consequences of the doubts expressed about the rebound capacity of the Activia brand.
Finally, another investor concern this time concerns the recent acquisition of the WhiteWave company in 2017 for more than $12 billion. This company has indeed issued a profit warning in 2016 and therefore presents some financial risks that should not be overlooked.
The sites that deal with stock market information on the Danone share cite it under different codes. On the Reuters site, for example, it can be found under the name BN.PA, and on the Bloomberg site it can be found under the name BN FP. On the DataStream site, it is found under the code F :BSN, the ISIN code of this share is FR0000120644 and on some websites, this share is simply called DA.
The date of distribution of the dividend on Danone shares depends on the Board of Directors and the meeting which will determine the group's ability to generate a profit, its financial situation and any other important factor. This meeting will of course take place after the publication of the annual results. You can learn more about the history of this dividend directly on Danone's website.
Currently and at the beginning of 2020, the number of Danone shares outstanding on the market is 686,120,806. Each share has been put into circulation at a nominal value of €0.25 each. It should also be noted that the share price is quoted continuously on the NYSE Euronext Paris market. The Danone share is listed on compartment A of this market and the company is one of the largest market capitalisations in France.
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