Slide 1: H1 2015 Results
H1 2015 RESULTS July 24, 2015 Emmanuel FABER, CEO Cécile CABANIS, CFO 1
Slide 2: Disclaimer
DISCLAIMER This document contains certain forward-looking statements concerning Danone. Although Danone believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ material
Slide 3: Emmanuel Faber, CEO
Emmanuel FABER CEO 3
Slide 4: H1 2015 - A Step Towards 2020
H1 2015 - A STEP TOWARDS 2020 2014 2015 … 4
Slide 5: H1 2015 Key Achievements
H1 2015 KEY ACHIEVEMENTS OPTIMIZE INVEST o Dairy Europe continued o Dairy additional portfolio optimization reinvestment o CIS optimization o Innovations to develop categories BUILD NURTURE o New organization design o Stronger model in ELN China 5
Slide 6: H1 2015 Highlights - Solid Financial Results
H1 2015 HIGHLIGHTS - SOLID FINANCIAL RESULTS TOPLINE MARGIN [1] EPS [2] +8.8% 12.12% €1.37 +85 bps +18.5% +4.6% +53 bps +6.8% Like-for-like Like-for-like Like-for-like [1] Trading operating margin 6 [2] Underlying fully diluted earning per share
Slide 7: Geographical Dynamics
GEOGRAPHICAL DYNAMICS NORAM EUROPE ALMA CIS USA+Canada+CIS AsiapacLatamMiddleEastAfrica 13.5% 14.0% 9.4% 7.8% 8.0% 7.0% 4.8% 2.8% 2.9% 3.3% 2.8% 1.8% 2.0% 2.0% 0.5% 0.1% 0.4% 0.5% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 8.7% 7.4% 2.
Slide 8: USA Dairy - Renew Growth Dynamics and Consolidate Leadership
USA DAIRY - RENEW GROWTH DYNAMICS AND CONSOLIDATE LEADERSHIP Newleader Danone strong occasion in a Grow category aisle space… promising category Kg/cap Evolution of Per Capita Consumption +10% Average feet/aisle 8 20% 20.0’ 7 7.1 7.1 7.2 6 6.9 19.0’ 19% 6.4 6.6 6.5 5 5.7 5.9 18.0’ 18% 5.4 4 4.9 17.0
Slide 9: Europe Dairy - Complete Transformation and Prepare Path for Growth
EUROPE DAIRY - COMPLETE TRANSFORMATION AND PREPARE PATH FOR GROWTH Our resources Our results RIGHT EFFICIENT PORTFOLIO SOURCING PRGM Positive H1 in Positive H1 in EFFICIENT RIGHT Europe Spain OPERATIONS ORGANIZATION INVESTMENTS A&P > +150 BPS 9
Slide 10: China - Strengthen the Business Model
CHINA - STRENGTHEN THE BUSINESS MODEL Strong fundamentals for future growth opportunities • Upgrade of the quality and food safety practices • Urbanization and demographics • Role of R&D and science Co-build a stronger local platform Leverage success of international with Mengniu &Yashili brands & I
Slide 11: Cécile Cabanis, CFO
Cecile : CABANIS > we © :
Slide 12: Solid Q2 Top Line Performance
SOLID Q2 TOP LINE PERFORMANCE TOPLINE MARGIN EPS +8.8% 12.12% €1.37 +85 bps +18.5% +4.6% +53 bps +6.8% Like-for-like Like-for-like Like-for-like 12
Slide 13: Q2 2015 - Reported Sales at +9.5%
Q2 2015 - REPORTED SALES AT +9.5% +9.5% reported 3.0% 1.5% (0.5)% 5.5% €5,921 mln €5,406 mln Q2 2014 Currency Scope & others Volume Value Q2 2015 +4.5% like-for-like o H1 2015 like-for-like growth : +4.6% / reported growth: +8.8% 13
Slide 14: Total Company - Solid H1 Equation on Road to Sustainable Profitable Growth
TOTAL COMPANY - SOLID H1 EQUATION ON ROAD TO SUSTAINABLE PROFITABLE GROWTH TOPLINE MARGIN 7.5% 6.9% 4.8% 4.5% +53 bps LFL 2.2% 2.3% 11.27% 12.12% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 H1 2014 H1 2015 o Solid Q2 performance on track with roadmap o Strong improvement of gross margin through price/mix im
Slide 15: Fresh Dairy Products - Complete Transformation
FRESH DAIRY PRODUCTS - COMPLETE TRANSFORMATION TOPLINE MARGIN +50 bps LFL 9.8% 7.6% 7.8% 6.8% 3.9% 2.4% 5.0% 0.7% 0.2% 2.0% 9.17% 7.81% (1.0)% (3.1)% (3.7)% (4.8)% (7.4)% (7.1)% (7.8)% (1.1)% H1 2014 H1 2015 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Price/mix Volume o PRGM program almost completed in Euro
Slide 16: Waters - Continued Strong and Well-Balanced Growth
WATERS - CONTINUED STRONG AND WELL-BALANCED GROWTH TOPLINE MARGIN 13.1% 12.3% 11.8% 10.2% 3.3% 8.9% 6.1% 3.5% 8.6% +10 bps LFL 2.0% 4.6% 3.5% 8.3% 9.0% 12.50% 12.86% 7.0% 6.6% 5.4% 5.6% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 H1 2014 H1 2015 Price/mix Volume o All regions positive contributing to the gl
Slide 17: Early Life Nutrition - Building Sustainable Growth
EARLY LIFE NUTRITION - BUILDING SUSTAINABLE GROWTH TOPLINE MARGIN 28.1% 19.2% 16.6% +20 bps LFL 9.3% 11.8% 11.1% 7.2% 3.8% 9.9% 11.5% 4.4% 7.3% 17.42% 16.47% (4.8)% (7.9)% (2.9)% (1.3)% (7.7)% (9.2)% H1 2014 H1 2015 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Price/mix Volume o Strong fundamentals of growth
Slide 18: Medical Nutrition - Steady and Sustainable Dynamics
MEDICAL NUTRITION - STEADY AND SUSTAINABLE DYNAMICS TOPLINE MARGIN 10.1% 8.7% 9.1% +50 bps LFL 7.3% 4.5% 7.1% 2.4% 5.2% 1.1% 5.6% 2.1% 0.9% 17.56% 17.57% 6.2% 5.6% 6.3% 4.3% 5.0% 3.5% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 H1 2014 H1 2015 Price/mix Volume o Positive results in all regions o Strong H1 m
Slide 19: H1 2015 Margin - Solid Increase to Support Sustainable Growth Model
H1 2015 MARGIN - SOLID INCREASE TO SUPPORT SUSTAINABLE GROWTH MODEL TOPLINE MARGIN [1] EPS +8.8% 12.12% €1.37 +85 bps +18.5% +4.6% +53 bps +6.8% Like-for-like Like-for-like Like-for-like 19 [1] Trading operating margin
Slide 20: Reported Margin Increase of 85 bps
REPORTED MARGIN INCREASE OF 85 BPS Reported 85 bps Like-for-like 53 bps 65 bps 240 bps 122 bps 19 bps 13 bps 12.12% 11.27% H1 2014 Currency Scope Margin from Reinvest Others H1 2015 Reported operations Reported 20
Slide 21: H1 2015 EPS - Strong Increase Driven by Sales and Margin Growth
H1 2015 EPS - STRONG INCREASE DRIVEN BY SALES AND MARGIN GROWTH TOPLINE MARGIN EPS [1] +8.8% 12.12% €1.37 +85 bps +18.5% +4.6% +53 bps +6.8% Like-for-like Like-for-like Like-for-like [1] Underlying fully diluted earning per share 21
Slide 22: H1 2015 EPS Mirrors a Sustainable and Profitable Growth Model
H1 2015 EPS MIRRORS A SUSTAINABLE AND PROFITABLE GROWTH MODEL reported 18.5% Like-for-like 6.8% 4.5% 2.8% (5.2)% 7.2% 4.6% 4.7% € 1.37 € 1.16 Underlying EPS Top Line Margin FFI + Others Taxes Currency Scope Underlying EPS H1 2014 H1 2015
Slide 23: H1 2015 - Sales & Margin Increase to Foster Cash Generation
H1 2015 - SALES & MARGIN INCREASE TO FOSTER CASH GENERATION Free cash-flow excluding exceptional items (€ mln) 1,115 576 286 H1 2014 H2 2014 H1 2015 Working capital (€ mln) Capital expenditures (€ mln) June 30, 2014 December 31,2014 June 30,2015 (1,443) (1,502) 527 (1,861) 457 378 H1 2014 H2 2014 H1
Slide 24: H1 2015 Free Cash-Flow to Net Debt Change
H1 2015 FREE CASH-FLOW TO NET DEBT CHANGE € mln 545 (1,423) (384) (359) 120 732 Free cash-flow M&A Changes in puts to Dividends Others Change in net debt minority shareholders minorities 24
Slide 25: H1 2015 Balance Sheet
H1 2015 BALANCE SHEET Assets(1) Liabilities € mln December 14 June 15 December 14 June 15 12,782 Shareholders’ equity 16,446 11,745 Intangible assets 16,234 Net debt(2) 7,764 8,148 8,821 7,921 2,825 Other assets 2,785 Other liabilities 4,925 6,075 6,437 Working capital 4,214 Working capital 28,369 3
Slide 26: H1 2015 - A Step Towards 2020
H1 2015 - A STEP TOWARDS 2020 2014 2015 … 26
Slide 27: 2015 Guidance - Anchoring the New Sustainable Model
2015 GUIDANCE - ANCHORING THE NEW SUSTAINABLE MODEL 2015 objectives Sales growth(1) 4% to 5% Trading operating margin(1) Slightly up 27 (1) Like-for-like: excludes the impact of changes in the basis for comparison, which include exchange rates and scope of consolidation
Slide 28: Appendix
APPENDIX 28
Slide 29: Trading Operating Margin by Geographical Area
TRADING OPERATING MARGIN BY GEOGRAPHICAL AREA Like-for-like H1 2014 H1 2015 € mln change Europe 14.56% 16.29% +182 bps CIS+Noram 7.23% 7.75% +1 bps ALMA 10.09% 10.29% (53) bps Total 11.27% 12.12% +53 bps 29
Slide 30: From Operating Income to EPS
FROM OPERATING INCOME TO EPS H1 2014 H1 2015 Non-current H1 2015 € mln underlying underlying items Trading operating income 1,180 1,381 - 1,381 Other operating items - - (509) (509) Operating income 1,180 1,381 (509) 872 Total financial expenses (156) (155) 1 (154) Income tax (303) (398) 99 (299) Ne
Slide 31: Cash Bridge
CASH BRIDGE € mln (398) 772 (155) (322) (342) (378) 1,381 1,278 18 (30) 576 545 Trading Depreciation Taxes Financial Others Cash from W cap var Capex Sales of assets FCF excl Plan for savings FCF reported Operating results operating and transaction European plan and adaptation income activities fees
Slide 32: Share Price Data
SHARE PRICE DATA Danone H1 share price evolution Danone H1 stock performance (1) 130 Absolute +6.5% 120 110 Relative vs. CAC 40 -5.6% 100 Relative vs. Eurostoxx 50 -2.3% 90 Dec-14 Feb-15 Apr-15 Jun-15 (1) At 30/06/2015 32
Slide 33: Q2 & H1 2015 - Impact of Currencies & Scope
Q2 & H1 2015 - IMPACT OF CURRENCIES & SCOPE Fresh Dairy Early Life Medical Q2 2015 Waters Total Products Nutrition Nutrition Reported sales growth +0.9% +22.0% +17.6% +13.3% +9.5% Currency +3.5% +10.6% +5.9% +5.7% +5.5% Scope of consolidation (1.5)% +1.2% +0.6% +0.5% (0.5)% Like-for-like sales growt
Slide 34: Changes in Exchange Rates
CHANGES IN EXCHANGE RATES o 27.2% of H1 2015 sales denominated in € % total H1 15 H1 15 vs. H1 Q2 15 vs. Q2 sales 14 (avg) 14 (avg) US dollar 11.6% 22.9% 24.1% Chinese yuan 7.6% 21.8% 24.6% Russian ruble 7.1% (25.4)% (17.5)% Indonesian rupiah 5.8% 11.0% 9.8% British pound 5.7% 12.2% 13.0% Mexican pe