Slide 1: Danone – One Planet. One Health
DANONE ONE PLANET. ONE HEALTH
Slide 2: 2017 Half-Year Results
2017 HALF-YEAR RESULTS July 27, 2017 Emmanuel Faber, CEO Cécile Cabanis, CFO I 2 I
Slide 3: Forward-looking statements
• This document is presented by Danone. It contains certain forward-looking statements concerning Danone. In some cases, you can identify these forward-looking statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “forese
Slide 4: H1 2017: pivotal period in our transformation agenda
Emmanuel Faber H1 2017: pivotal period in our transformation agenda I 4 I
Slide 5: Efficiency and growth: 2020 objectives and 2017 guidance
2015 2014 2016 H1 2017 2017 2020 Efficiency 2020 objectives LFL sales growth > 4% to 5% Growth Recurring operating margin > 16% Reduced leverage ratio(1) to < 3.0x 2017 guidance ROIC(1) improved to ~ 12% Double-digit recurring EPS growth (at constant FX) (1) Please refer to financial indicators defi
Slide 6: H1 2017 key metrics
+0.4% +91bps +11.0% +24.4% (1) (1) (2) (3) Net Recurring Operating Recurring Free Cash Sales Margin EPS Flow (1) Like-for-like New Danone – please refer to financial indicators definition (2) At constant exchange rates (3) On a reported basis, excluding exceptional items I 6 I
Slide 7: Organization adaptation, protein efficiency program, WhiteWave synergies
Adaptation of Dairy Start of Protein Start of WhiteWave Europe organization efficiency program synergy delivery • From 9 to 5 clusters • Organization & processes in place € 1 BN • Brand management SAVINGS (2020) • Employee engagement restored organization • One-Sales Team in action • R&D, Supply Cha
Slide 8: H2 priorities: Europe and Brazil turnaround, WhiteWave integration
Pursue Europe and Brazil turnaround Integrate WhiteWave Sustain Alpro growth Deliver first synergies momentum in H2 Grow direct channel Continue in China to build strong local Address growing growth platforms tailored nutrition Prepare post-transition needs in China I 8 I
Slide 9: New relationship to food and drinks; transparency; people behind the brand
New relationship to food and drinks Transparency People behind the brand I 9 I
Slide 10: New relationship to food and drinks: plant-based and desserts expansion
New relationship to food New relaand tionship drinks to food a nd drinks Accelerated Plant-based & desserts expansion Grow adjacent categories Top 10 of Tesco’s category launch New line extension Launching into Almond Launches in Q3 Launched in April in UK More ingredients, more protein, less sugar
Slide 11: Accelerated shift towards new channels
New relationship to food New relaand tionship drinks to food a nd drinks Accelerated shift towards new channels Moments of consumption Keep expanding a strong direct model in China On the go evian #1 SKU in Amazon Prime in France Breakfast I 11 I
Slide 12: Young & Local heritage brands
Young & Local heritage brands > 10% (1) (1) Q2 Net Sakes Like-for-like New Danone I 12 I
Slide 13: Transparency: non-GMO yogurt choice
Tra nspa rency Danone 1st large, non-organic yogurt maker to offer a choice of yogurts made with non-GMO ingredients from farm to cup July 2017 2018 Brands Will Be MORE I 13 I
Slide 14: People behind the brand
People Fresh, healthy F&B incubator Pop-up store Active investment behind the brand vending in urban experience in VC funds office locations in London Access to emerging consumer trends in China I 14 I
Slide 15: Fit today and tomorrow
Fit today and tomorrow DANONC ONE PLANET. ONE HEALTH
Slide 16: Cécile Cabanis: Secure short-term delivery, prepare and build tomorrow
Cécile Cabanis Secure short-term delivery, prepare and build tomorrow DANONE ONE PLANET. ONE HEALTH 1161
Slide 17: H1 2017 highlights
• China transition, Brazil turmoil +11.0% • Softer US F&B industry +0.4% (1) (2) Net Sales Recurrig EPS Pilots launched +91bps (1) +24.4% (3) Recurring Operating Margin Free Cash Flow • Q2 quarter of transition • Sale of Stonyfield (20x EBITDA) • First synergies ≈ €10m (1) Like-for-like New Danone (
Slide 18: Q2 net sales bridge
LFL New Danone(1): +0.2% €6,664 m +1.3% -2.1% +2.3% -0.4% +14.9% €5,746 m Q2 2016 WhiteWave Scope Currency Volume Value Q2 2017 Reported base effect (2) (excl. WW) Reported (1) “Like-for-like New Danone” corresponds to like-for-like growth for Danone and WhiteWave combined, including the contributio
Slide 19: Results by division
Essential Dairy and Essential Dairy and Specialized Waters Plant-Based Plant-Based Nutrition Noram International €1.3 bn -2.9% €2.2 bn -1.8% €1.8 bn +5.5% €1.4 bn +0.3% -67bps -33bps +320bps +37bps €3.6 bn -1.5% €3.0 bn +2.3% +24bps +175bps (1) Like-for-Like New Danone I 19 I
Slide 20: EDP Noram
EDP Noram Quarter of transition Start of integration Net Sales Margin Q2 17 H1 17 -2.9%(1) - 67bps 11.66%(2) • Soft US Food & Beverage industry • Fixing short-term execution issues • Resilient Yogurt in retail US • Continued strong growth momentum in Creamers • H1 margin impacted by raw materials co
Slide 21: EDP International
EDP International Fixing short-term challenges and preparing for sequential growth acceleration Net Sales Margin Q2 17 H1 17 -1.8%(1) -33bps 8.36%(2) • Adjusting plans in former Dairy Europe • Managing persistent deteriorating context in Brazil • Continuing growth momentum in CIS and Mexico • Accele
Slide 22: Specialized Nutrition
Specialized Nutrition Accelerate growth momentum Leverage strong fundamentals Net Sales Margin Q2 17 H1 17 +5.5%(1) +320bps 24.23%(2) • Early Life Nutrition: strong performance, resuming China growth • Advanced Medical Nutrition: strong performance relying on solid fundamentals • Significant margin
Slide 23: Waters
Waters Sustain broad-based growth momentum Prepare the post transition in China Net Sales Margin Q2 17 H1 17 +0.3%(1) +37bps +12.17%(2) • China: high base of comps; prepare the post transition • Europe: solid growth sequential improvement • Latin America: HSD growth with very strong dynamic in Mexic
Slide 24: Profitable growth, discipline on financial metrics
Profitable growth Discipline on financial metrics +0.4% +91bps +11.0% +24.4% (1) (1) (2) (3) Net Recurring Operating Recurring Free Cash Sales Margin EPS Flow (1) Like-for-like New Danone (2) At constant exchange rates (3) On a reported basis, excluding exceptional items I 24 I
Slide 25: Recurring operating margin bridge
Reported: +81 bps LFL New Danone(1): +91 bps +62 bps 14.18% +62 bps +26 bps -16 bps 13.37% -33 bps -21 bps H1 2016 WhiteWave Scope Currency Margin from Reinvest Overheads H1 2017 Reported base effect (2) (excl. WW) operations and Others Reported (1) “Like-for-like New Danone” corresponds to like-for
Slide 26: Profitable growth, discipline on financial metrics
Profitable growth Discipline on financial metrics +0.4% +91bps +11.0% +24.4% (1) (1) (2) (3) Net Recurring Operating Recurring Free Cash Sales Margin EPS Flow (1) Like-for-like New Danone (2) At constant exchange rates (3) On a reported basis, excluding exceptional items I 26 I
Slide 27: Recurring EPS bridge
+11.1% Reported +0.2% -2.6% +2.6% +6.9% -1.6% +0.4% +5.1% € 1.69 +11.0% € 1.52 At constant FX H1 2016 WhiteWave Net Sales Margin FFI Tax&others Scope Currency H1 2017 Reported base effect (excl. WW) Reported Recurring EPS Recurring EPS I 27 I
Slide 28: Profitable growth, discipline on financial metrics
Profitable growth Discipline on financial metrics +0.4% +91bps +11.0% +24.4% (1) (1) (2) (3) Net Recurring Operating Recurring Free Cash Sales Margin EPS Flow (1) Like-for-like New Danone (2) At constant exchange rates (3) On a reported basis, excluding exceptional items I 28 I
Slide 29: Free cash flow, working capital and capex
FCF excl. exceptional items (€m) 923 742 FCF FCF H1 2016 H1 2017 Working Capital / Net Sales (%) Capex / Net Sales (%) H1 2016 H1 2017 H1 2016 H1 2017 (5.9)% (5.0)% 3.2% 3.0% (1) On a reported basis, excluding exceptional items I 29 I
Slide 30: Net debt evolution
in € billion +10.7 €bn +0.3 (0.1) +11.4 18.2 (0.9) 7.5 Net debt FCF M&A Dividends Others Net debt 31/12/2016 Puts(1) 30/06/2017 (1) including 10.9bn€ of net cash outflow on WhiteWave purchase and 0.5bn€ of WhiteWave bond I 30 I
Slide 31: Double-digit recurring EPS growth at constant exchange rate
2015 2015 20162016 2017 2017 2020 + Moderate “LfL New Danone ” Sales Growth Sustained Recurring Operating Margin Improvement (“LfL New Danone” basis) Double-digit recurring EPS growth at constant exchange rate GROWTH PROFIT AGILITY CONSISTENCY I 31 I
Slide 32: 2020 objectives and 2017 guidance
2015 2014 2016 H1 2017 2017 2020 Efficiency 2020 objectives LFL sales growth > 4% to 5% Growth Recurring operating margin > 16% Reduced leverage ratio(1) to < 3.0x 2017 guidance ROIC(1) improved to ~ 12% Double-digit recurring EPS growth (at constant FX) (1) Please refer to financial indicators defi
Slide 33: Appendix
fs \ DANONEe . ¥ ONE PLANET. ONE HEALTH je APPENDIX
Slide 34: Sales growth reconciliation by division
Q2 2017 EDP International EDP Noram Specialized Nutrition Waters Total Reported sales growth +6.5% +112.9% +5.4% (0.9)% +16.0% Currency +3.1% +2.5% +0.0% (1.2)% +1.3% WhiteWave base effect +6.2% +113.3% +0.1% +0.0% +14.9% Scope of consolidation (1.0)% (0.0)% (0.2)% +0.0% (0.4)% « Like-for-like New (
Slide 35: FX impact on net sales
FX Impact H1 17 vs H1 16 (avg) on Net Sales H1 Russian Ruble 1.4% 24.6% Brazilian Real 0.7% 19.9% British Pound -0.6% -9.5% United States Dollar 0.5% 3.1% Turkish Lira -0.4% -17.2% Egyptian Pound -0.2% -51.1% Indonesian Rupiah 0.2% 3.9% Mexican Pesos -0.2% -4.1% Argentine Peso 0.1% -6.0% South Afric
Slide 36: Recurring operating margin by division
€ min H1 2016 H1 2017 Like-for-like change1 EDP International 8.17% 8.36% (33) bps EDP NORAM 14.02% 11.66% (67) bps Specialized Nutrition 20.78% 24.23% +320 bps Waters 11.79% 12.17% +37 bps Europe & NORAM 15.99% 15.40% +24 bps Rest of the world 10.73% 12.87% +175 bps Total 13.37% 14.18% +91 bps (1)
Slide 37: H1 income statement
H1 2016 H1 2017 recurring recurring Non-recurring H1 2017 € mln Recurring operating income 1,478 1,720 - 1,720 Other operating items - - (134) (134) Operating income 1,478 1,720 (134) 1,586 Total financial expenses (136) (202) 35 (166) Income tax (431) (459) 29 (430) Net income of affiliates 78 47 (
Slide 38: Recurring operating income to free cash flow
388 (459) (202) 27 (220) (367) 1,720 89 (2) 1,420 923 921 Recurring Depreciation/ Taxes Financial Others Cash from W cap var Capex Sales of FCF excl Plan for FCF Operating Amort results operating assets and European savings and reported income activities transaction plan adaptation in Fees Europe I
Slide 39: Balance sheet
in € billion Assets(1) Liabilities Dec. 2016 Jun. 2017 Dec. 2016 Jun. 2017 12,535 Shareholders’ Intangible assets 25,725 equity 13,194 15,803 18,174 Net debt(2) 7,472 Other assets 10,240 Other liabilities 9,372 4,111 2,960 Working capital 4,964 5,913 6,513 7,057 Working capital 30,139 41,878 30,139
Slide 40: Danone H1 2017 stock price evolution and performance
Danone H1 2017 stock price evolution(1) Danone H1 2017 stock performance(1) Index December 31, 2016: €60.2 120 June 30, 2017: €65.81 115 110 Absolute +9.3% 105 Relative vs. CAC 40 +4.0% 100 Relative vs. Eurostoxx 50 +4.7% 95 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 (1) At 30/06/2017 I 40 I
Slide 41: Like-for-like New Danone definition
Additional indicator of like-for-like changes: “like-for-like New Danone” changes Since completion of WhiteWave acquisition, WhiteWave and Danone’s activities have been combined and are generating synergies. Separate reporting of WhiteWave and Danone in their pre-acquisition forms thus no longer ref
Slide 42: Argentina like-for-like methodology
Since inflation in Argentina—already structurally high—accelerated further in 2014, in particular following the sharp, steep devaluation of the peso in January, using an identical exchange rate to compare 2014 figures with those for the prior year did not accurately reflect Danone's organic performa
Slide 43: Financial indicator definitions
Recurring operating income is defined as Danone’s operating income excluding Other operating income and expenses. Other operating income and expenses is defined under Recommendation 2013-03 of the French ANC (format of consolidated financial statements for companies reporting under international rep