How doesdairyprocessors face currentturbulent times? Damien LACOMBE, SODIAAL

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1 How doesdairyprocessors face currentturbulent times? Damien LACOMBE, SODIAAL

2 Damien LACOMBE Dairy farmer Chairman of Sodiaal'sBoard of Directors Hisobjective: «to becompetitivewithcooperativevalues»

3 Damien LACOMBE EDF Conference LA BAULE 2016 How do dairy processors face current turbulent times?

4 Sodiaal ata glance 2

5 Key figures 13,200 FARMS 5 BILLION LITRES OF MILK COLLECTED > 5 billion TURNOVER EMPLOYEES WORKING FOR SODIAAL 3

6 Territorial Coverage NORTH REGION 1,240 PRODUCERS 530 MILLION LITRES WEST BRITTANY 1,850 PRODUCERS 800 MILLION LITRES EAST BRITTANY 1,860 PRODUCERS 830 MILLION LITRES PAYS DE LOIRE 980 PRODUCERS 430 MILLION LITRES EAST CENTRAL 1,408 PRODUCERS 620 MILLION LITRES MASSIF CENTRAL 1,840 PRODUCERS 450 MILLION LITRES SOUTH EAST 2,170 PRODUCERS 602 MILLION LITRES SOUTH WEST 1,819 PRODUCERS 550 MILLION LITRES 4

7 Our diversity 5

8 Our cheesebusiness units 390 kt OF CHEESE SOLD 2 nd LARGEST OPERATOR IN CHEESE MARKET 2 billion TURNOVER 5,000 EMPLOYEES > Joint leader in pressed cooked pâtés > Leader in Raclette cheese > Leader in Brie de Meaux cheese > Undisputed stakeholder in PDO and quality seal cheeses 40 sites PROCESSING * *50% ownership with Savencia Fromage & Dairy 7

9 Our drinkingmilk/ Milkfatbusiness units 1.3 billion LITRES OF MILK SOLD 22 million LITRES OF CREAM 100 kt OF BUTTER 1,500 EMPLOYEES 8 sites PROCESSING 1.2 billion TURNOVER CANDIA Markets: > Leader in drinking milk in France > Number 2 for butter in France 8

10 Our powderand ingredientsbusiness units 518 kt OF POWDERED MILK, INGREDIENTS AND WHEY 920 million TURNOVER 1,500 EMPLOYEES 14 sites PROCESSING KEY MARKET PLAYER IN NUTRITION AND DAIRY INGREDIENTS > Strong international focus > 80% of volume exported > World leader in demineralised whey > Benchmark operator in animal food and reconstituted powders > Leader in granulated milk powder ** **50% ownership with Laïta 9

11 Our yogurtand frozenproductsbusiness units 1.5 MT 600 kt 15 kt FROZEN PRODUCTS CHILLED PRODUCTS WORLDWIDE IN FRANCE 1.4 billion TURNOVER 9 sites PROCESSING 2,500 EMPLOYEES STRONG POSITIONS IN THE MARKET Number 2 in the world for ultra fresh products (worldwide franchises, the Yoplait brand - owned in partnership with General Mills) Number 2 in the world for chilled dairy products. *** ***Yoplait SAS 49% owned by Sodiaal and 51% by General Mills. Yoplait Marques Internationales 50% owned by Sodiaal and 50% by General Mills 10

12 Food service Industry SODIAAL FOOD EXPERTS > Sodiaal Food Experts is dedicated to the catering industry business, selling specific products manufactured by Candia, Entremont, Monts & Terroirs to professionals in this sector. > Sodiaal Food Experts is a major catering industry stakeholder, offering 5 professional dairy product families to meet the needs of 5 professional trades: - Traditional and gourmet catering - Artisans, bakers, pastry chefs, delicatessen - Theme catering - Fast food and mobile catering - Mass catering 11

13 Our strategy 12

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15 Our vision for the post-quota period Our strategic focuses We led last year a strategical analysis : Sodiaal 2020 We had many discussions with our farmers on this vision 1 FOCUS FOCUS 2 FOCUS 3 FOCUS 4 Be an efficient and successful group Improve our competitiveness on our domestic market Resolutely take our place in international growth Unite the dairy cooperative to the benefit of its members The extreme volatility of the market will push us to develop our agility and ability to act together to ensure we add as much value as possible to our milk. A large proposition of our milk will still be consumed in Europe. This large domestic market is subject to intense competition which may well intensify with the lifting of the quotas and the power of the larger customers. This market will nonetheless be balanced by a strained world market situation. We are keen to seek out added value in countries where dairy product consumption is growing. For exports, our cooperative model is essentially based on products manufactured from our members milk The notion of critical mass will be crucial If we are to continue following our major customers and counterbalance the effects of volatility. 13

16 Focus on ourmain currentchallenge : volatility! Our vision : four levels to manage the milk prices " hyper- volatility Done Double volume / double price system Short term Fixed price contrats connected with futures market Medium term Derivatives contracts(fixed price and guaranteed margin) connected with long term contracts with clients Long term Margin insurance 15

17 ThankYou for your attention!!