Slide 1: 2015 Results
2015 RESULTS February 23, 2016 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 DANONE
Slide 4: 2015: A Year of Transformation Towards 2020
2015: A YEAR OF TRANSFORMATION TOWARDS 2020 2014 2015 … 4
Slide 5: 2015: A Year of Progress and Delivery
2015: A YEAR OF PROGRESS AND DELIVERY TRADING SALES GROWTH OPERATING MARGIN RECURRING EPS 12.91% €2.93 +6.0% +32 bps +12% +4.4% (1) +17 bps (1) +8.4% At constant exchange rates GUIDANCE 2015 Sales Trading operating +4% to +5%(1) Slightly up(1) growth: margin growth: (1) Like-for-like 5
Slide 6: Fresh Dairy US: Steady Progress in Restoring Profitable Growth
FRESH DAIRY US: STEADY PROGRESS IN RESTORING PROFITABLE GROWTH Re-acceleration in the United States Continued expansion of the yogurt category STRONG Q4 PERFORMANCE Yogurt Category Avg Feet/aisle (Grocery) 20.0 19.4 19.3 19.7 19.7 19.7 Sales growth > +4%(1) 19.0 19.0 18.5 18.6 18.2 17.8 Danone(2) #1
Slide 7: Fresh Dairy Europe: Steady Progress in Restoring Profitable Growth
FRESH DAIRY EUROPE: STEADY PROGRESS IN RESTORING PROFITABLE GROWTH Gradual improvement in Europe Portfolio renovation Underlying trend confirming the direction Quarterly sales growth evolution Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 13 13 13 13 14 14 14 14 15 152015 2014 15 15 Model consolidation S
Slide 8: Waters: Developing Pillars of Growth, Managing Transition in China
WATERS: DEVELOPING PILLARS OF GROWTH, ACTIVELY MANAGING TRANSITION IN CHINA Leverage our platforms worldwide China transitioning to a new pattern of growth ● Plain water > +8% FY LFL sales growth ● Protect and keep building strong brand equity ● Monitor and adjust distributor inventories and co-pack
Slide 9: Early Life Nutrition: Strengthening a Model of Strong Profitable Growth
EARLY LIFE NUTRITION: STRENGTHENING A MODEL OF STRONG PROFITABLE GROWTH Leader in our universe Comp 1 Comp 2 Comp 3 ELN universe = Infant Formula + Follow On Milk + Growing-Up Milk + Tailored Nutrition + Dry and Wet Foods Develop base camp Keep pioneering new markets Sales x 2 since 2012 Sales x 3 s
Slide 10: Early Life Nutrition China: A More Sustainable Model of Growth
EARLY LIFE NUTRITION CHINA: A MORE SUSTAINABLE MODEL OF GROWTH UNDER CONSTRUCTION A promising category New market dynamics IMF Market growth > +10% Mom & Baby specialized stores vs. 2014 ≈ 50% of IMF market E-Commerce ≈ 30% of IMF market Modern Trade ≈ 20% of IMF market 2014 2015 2016E 2017E 2018E 2
Slide 11: Medical Nutrition: Sustaining Strong Growth
MEDICAL NUTRITION: SUSTAINING STRONG GROWTH Innovate for sustainable growth Be community-relevant to drive future growth Pediatrics > +10% > +10% LFL sales growth LFL sales growth Adult > +20% > +8% LFL sales growth LFL sales growth 11
Slide 12: Africa: Strengthening Our Platforms
AFRICA: STRENGTHENING OUR PLATFORMS SOURCING INDUSTRIAL SET-UP ROUTE TO MARKET QUALITY Increasing stake Taking control Acquisition AFRICA: BUILD THE FUTURE OF DANONE 12
Slide 13: CSR Engagement to Build Sustainable Performance
CSR ENGAGEMENT TO BUILD SUSTAINABLE PERFORMANCE Target: zero net carbon emissions in the long-term including agriculture ● Direct and shared scope ● Commitment to start reducing of responsibility emissions in absolute terms before 2025 ● -50% carbon intensity ● Social innovator, creating new between
Slide 14: 2015 Key Achievement: Strengthening Our Model
2015 KEY ACHIEVEMENT: STRENGTHENING OUR MODEL OPTIMIZE INVEST ● PORTFOLIO MANAGEMENT ● INNOVATIONS TO FUEL GROWTH ● COST EFFICIENCIES ● REINVESTMENTS BEHIND OUR BRANDS ● RESOURCE ALLOCATIONS ● CAPEX TO PREPARE FUTURE GROWTH BUILD NURTURE ● STRATEGIC RESOURCES ● ONE DANONE ● AFRICA 14
Slide 15: Cécile Cabanis, CFO
Cécile CABANIS CFO DANONE
Slide 16: 2015: A Year of Delivery and Preparation
2015: A YEAR OF DELIVERY AND PREPARATION 2015 2016 … 3-5% 7-10% Sales +4.4% > +5% growth(1) 7-10% 6-8% Trading operating margin +17 bps > + 200bps(3) growth(1) Yearly growth of: Recurring ● Trading operating margin +8.4% EPS growth(2) ● Cash ● Recurring EPS (1) Like-for-like (2) At constant exchange
Slide 17: 2015: Solid Results – Fully in Line with Our Agenda
2015: SOLID RESULTS – FULLY IN LINE WITH OUR AGENDA TRADING SALES GROWTH OPERATING MARGIN RECURRING EPS 12.91% €2.93 +6.0% +32 bps +12% +4.4% (1) +17 bps (1) +8.4% At constant exchange rates ● Balanced model of growth consistent with our agenda towards strong, profitable and sustainable growth ● Sol
Slide 18: 2015: Solid Results – Fully in Line with Our Agenda
2015: SOLID RESULTS – FULLY IN LINE WITH OUR AGENDA TRADING SALES GROWTH OPERATING MARGIN RECURRING EPS 12.91% €2.93 +6.0% +32 bps +12% +4.4% (1) +17 bps (1) +8.4% At constant exchange rates (1) Like-for-like 18
Slide 19: Solid Sales Growth of +4.4%
SOLID SALES GROWTH OF +4.4% Reported +6.0% Like-for-like +4.4% +3.5% +0.9% +2.0% (0.4)% €22,412 mln €21,144 mln 2014 Currency Scope & others Volume Value 2015 ● Q4 2015 like-for-like sales growth: +3.6% / reported growth: +2.2% 19
Slide 20: Geographical Dynamics
GEOGRAPHICAL DYNAMICS(1) EUROPE NORAM ALMA CIS USA+Canada+CIS AsiapacLatamMiddleEastAfrica 9.4% 8.0% 5.1% 4.7% 4.7% 4.2% 2.9% 2.8% 3.2% 2.3% 1.8% 0.4% Q1 15 Q2 15 Q3 15 Q4 15 Q1 15 Q2 15 Q3 15 Q4 15 Q1 15 Q2 15 Q3 15 Q4 15 FY 2015: 3.0% FY 2015: 2.6% FY 2015: 6.7% (1) Like-for-like sales growth 20
Slide 21: Fresh Dairy Products: Steady Progress in Restoring Profitable Growth
FRESH DAIRY PRODUCTS: STEADY PROGRESS IN RESTORING PROFITABLE GROWTH Sales growth Trading operating margin Price/mix Volume 0.2% 0.6% 2.6% 5.0% (1.1)% 3.9% 3.2% 2.0% 9.95% 9.28% (0.6)% (3.1)% (3.3)% (4.8)% FY 2014 FY 2015 Q1 15 Q2 15 Q3 15 Q4 15 +24 bps LFL FY 2015: 0.6% LFL +49 bps at constant exch
Slide 22: Waters: Broad-Based Growth, Transition in China
WATERS: BROAD-BASED GROWTH, TRANSITION IN CHINA Sales growth Trading operating margin Price/mix Volume 10.2% 8.6% 2.0% 4.6% 6.8% 1.1% 6.6% 1.9% 12.88% 5.6% 5.7% 11.37% 2.6% (0.7)% FY 2014 FY 2015 Q1 15 Q2 15 Q3 15 Q4 15 FY 2015: 7.1% LFL -192 bps LFL ● Strong profitable growth model in all regions (
Slide 23: Early Life Nutrition: Strong Profitable Growth
EARLY LIFE NUTRITION: STRONG PROFITABLE GROWTH Sales growth Trading operating margin Price/mix Volume 11.8% 11.1% 10.9% 3.8% 7.2% 7.2% 6.0% 2.4% 19.32% 7.3% 18.83% 4.4% 3.7% 3.6% Q1 15 Q2 15 Q3 15 Q4 15 FY 2014 FY 2015 FY 2015: 9.8% LFL +142 bps LFL ● Strong dynamics in all regions ● Continued stron
Slide 24: Medical Nutrition: Sustaining Strong Profitable Growth
MEDICAL NUTRITION: SUSTAINING STRONG PROFITABLE GROWTH Sales growth Trading operating margin Price/mix Volume 9.1% 7.1% 6.9% 6.8% 5.6% 2.1% 1.1% 2.5% 5.8% 18.28% 17.95% 5.0% 4.3% 3.5% Q1 15 Q2 15 Q3 15 Q4 15 FY 2014 FY 2015 FY 2015: 7.5% LFL +1 bp LFL ● Strong fundamentals of growth in all regions ●
Slide 25: 2015: Solid Results – Fully in Line with Our Agenda
2015: SOLID RESULTS – FULLY IN LINE WITH OUR AGENDA TRADING SALES GROWTH OPERATING MARGIN RECURRING EPS 12.91% €2.93 +6.0% +32 bps +12% +4.4% (1) +17 bps (1) +8.4% At constant exchange rates (1) Like-for-like 25
Slide 26: Trading Operating Margin Improvement
TRADING OPERATING MARGIN IMPROVEMENT REFLECTING PROGRESS IN STRENGHTENING OUR MODEL Reported +32 bps Like-for-like +17 bps (134) bps +233 bps (82) bps +6 bps +9 bps 12.91% 12.59% 2014 reported Scope Forex Margin from Reinvest Others 2015 reported operations 26
Slide 27: 2015: Solid Results – Fully in Line with Our Agenda
2015: SOLID RESULTS – FULLY IN LINE WITH OUR AGENDA TRADING SALES GROWTH OPERATING MARGIN RECURRING EPS 12.91% €2.93 +6.0% +32 bps +12% +4.4% (1) +17 bps (1) +8.4% At constant exchange rates (1) Like-for-like 27
Slide 28: Strong Recurring EPS Growth
STRONG RECURRING EPS GROWTH REFLECTING PROGRESS IN STRENGHTENING OUR MODEL Reported +12.0% Like-for-like +6.5% +1.9% +3.5% +1.4% +2.6% +4.4% (1.8)% € 2.93 € 2.62 2014 Recurring Top Line Margin FFI + Others Taxes Scope Currency 2015 Recurring EPS EPS +8.4% at constant exchange rates 28
Slide 29: Sales and Margin Increase to Support Steady Cash Delivery
SALES AND MARGIN INCREASE TO SUPPORT STEADY CASH DELIVERY Strong cash delivery Free cash-flow excluding exceptional items (€ mln) 1,401 1,529 2014 2015 Strong negative level of working cap/sales Continued rhythm of investment Working cap/sales (%) Capex/sales (%) 2014 2015 (7.0)% 4.7% (8.8)% 4.2% 20
Slide 30: 2015 Net Debt Stable
2015 NET DEBT STABLE € bn 1.5 (0.4) 0.03 (2.8) (0.03) 1.7 Free cash-flow M&A Changes in puts to Dividends Others Total change minority in net debt shareholders 30
Slide 31: 2015 Balance Sheet
2015 BALANCE SHEET Assets(1) Liabilities € mln December December December December 2014 2015 2014 2015 11,745 12,669 15,779 Shareholders’ equity Intangible assets 16,234 7,764 7,799 Net debt(2) 9,022 7,921 2,785 2,772 Other assets Other liabilities 6,075 6,193 Working capital 4,214 4,632 Working cap
Slide 32: 2015 Dividend: A Firm Commitment to Shareholders
2015 DIVIDEND: A FIRM COMMITMENT TO SHAREHOLDERS Dividend proposed at the next AGM on April 28, 2016: € 1.60 per share (+6.7% ; +10 cts vs. 2014) 1.60€ 1.50€ 1.45€ 1.45€ 1.39€ 1.30€ 1.20€ 1.20€ 1.10€ 1.00€ 0.85€ 0.68€ 0.58€ 0.61€ 0.52€ 0.48€ 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 33: 2016: The Transformation Continues
2016: THE TRANSFORMATION CONTINUES 2015 2016 … 33
Slide 34: A Balanced Model to Deliver Our 2020 Ambition
A BALANCED MODEL TO DELIVER OUR 2020 AMBITION VOLATILE UNSTABLE COMPLEX AMBIGUOUS GROWTH PROFIT AGILITY CONSISTENCY ALIMENTATION STRATEGIC RESOURCES CYCLE UNIQUE BRANDS MORE EFFICIENT ACTIVATION FOR NEW MANAGEMENT AS & CATEGORIES OPERATING MODEL GROWTH OPPORTUNITIES A COMPETITIVE ADVANTAGE 34
Slide 35: 2016 Guidance: Anchoring a Profitable & Sustainable Model
2016 GUIDANCE: ANCHORING A PROFITABLE & SUSTAINABLE MODEL 2015 2016 … Within a 3-5% 7-10% Sales range of > +5% growth(1) +3% to +5% 7-10% 6-8% Solid > + 200bps(2) Trading operating improvement margin growth(1) Yearly growth of: ● Trading operating margin ● Cash ● Recurring EPS (1) Like-for-like 35 (
Slide 36: Appendix
APPENDIX 36
Slide 37: Q4 & FY 2015 Impact of Currencies & Scope
Q4 & FY 2015 IMPACT OF CURRENCIES & SCOPE Fresh Dairy Early Life Medical Q4 2015 Waters Total Products Nutrition Nutrition Reported sales growth (0.4)% +1.0% +7.3% +7.6% +2.2% Currency (2.9)% (0.8)% +1.2% +0.8% (1.3)% Scope of consolidation (0.1)% (0.1)% +0.1% +0.0% (0.1)% Like-for-like sales growth
Slide 38: Changes in Exchange Rates
CHANGES IN EXCHANGE RATES ● 27.9% of FY 2015 sales denominated in euros % total FY 15 FY 15 vs FY 14 Q4 15 vs Q4 14 sales (avg) (avg) US dollar 11.7% 19.8% 14.0% Russian ruble 6.8% (25.0)% (17.2)% Chinese yuan 6.8% 17.5% 9.9% British pound 5.8% 11.1% 9.3% Indonesian rupiah 5.7% 6.0% 1.5% Argentine p
Slide 39: Trading Operating Margin by Geographical Area
TRADING OPERATING MARGIN BY GEOGRAPHICAL AREA Like-for-like FY 2014 FY 2015 € mln change Fresh Dairy Products 9.28% 9.95% +24 bps Waters 12.88% 11.37% (192) bps Early Life Nutrition 18.83% 19.32% +142 bps Medical Nutrition 18.28% 17.95% +1 bps Europe 15.67% 17.26% +168 bps CIS+Noram 8.56% 8.67% (19)
Slide 40: From Operating Income to EPS
FROM OPERATING INCOME TO EPS 2014 2015 Non-recurring 2015 € mln recurring recurring items Trading operating income 2,662 2,892 - 2,892 Other operating items - - (682) (682) Operating income 2,662 2,892 (682) 2,210 Total financial expenses (309) (282) (4) (285) Income tax (716) (818) 193 (626) Net in
Slide 41: Cash Bridge
CASH BRIDGE (818) 1,213 (282) (412) (162) (937) 34 2,892 2,593 (61) 1,529 1,468 Trading Depreciation Taxes Financial Others Cash from W cap var Capex Sales of FCF excl Plan for FCF reported Operating results operating assets and European savings and income activities Transaction plan adaptation Fees
Slide 42: Tax Rate Development
TAX RATE DEVELOPMENT € mln 2014 2015 Total income tax (reported) (599) (626) Reported tax rate 32.6% 32.5% Non-current income tax(1) 117 193 Current income tax (716) (818) Underlying tax rate 30.5% 31.3% 42 (1) Tax related to non-current items
Slide 43: Cash-Flow Statement
CASH-FLOW STATEMENT 2014 2015 Operating income 2,662 2,892 Financial income (309) (282) Income tax (716) (818) Non-current income (397) (493) Depreciation and amortization 956 1,217 Net change in provisions / Deferred taxes (51) (31) Dividend received from equity accounted affiliates 18 40 Net chang
Slide 44: Cash-Flow Statement
CASH-FLOW STATEMENT 2014 2015 Cash-flow provided by operating activities, excluding 2,154 2,552 changes in net working capital Change in working capital 35 (182) Cash-flow from operations 2,189 2,369 Capital expenditure (984) (937) Proceeds from the sale of industrial assets 67 31 Business acquisiti
Slide 45: Cash-Flow Statement
CASH-FLOW STATEMENT 2014 2015 Cash-flow used in investing activities and disposals (1,966) (1,519) Increase in capital and additional paid-in capital 33 39 Purchases of treasury stock (net of disposal) 13 198 Dividends paid to Danone shareholders (307) (314) Transactions with non-controlling interes
Slide 46: Stock Price & Shareholding
STOCK PRICE & SHAREHOLDING Danone 2015 stock price evolution (1) Danone 2015 stock performance (1) o Absolute +14.4% o Relative vs. CAC 40 +5.8% o Relative vs. Eurostoxx 50 +10.5% Total shareholder composition (2) Institutional shareholders by geography (2) Institutional shareholders France 77% 16%
Slide 47: 2015 ADR Program
2015 ADR PROGRAM DRs Outstanding as a % of Total Shares Outstanding Data as of December 31, 2015 220 6% % Total Shares Outstanding DRs Outstanding (Mln) 200 180 5% 160 4% 140 120 3% 100 80 2% 60 40 1% 20 0 0% January February March April May June July August September October November December DRs O
Slide 48: Financial Indicators Not Defined in IFRS
FINANCIAL INDICATORS NOT DEFINED IN IFRS Like-for-like changes in Sales, Trading operating income, Trading operating margin, Recurring net income and recurring EPS reflect Danone's organic performance and essentially exclude the impact of: changes in consolidation scope with indicators related to
Slide 49: Financial Indicators Not Defined in IFRS
FINANCIAL INDICATORS NOT DEFINED IN IFRS Recurring net income (or Recurring net income – Group Share) corresponds to the Group share in the Total Recurring net income. Total Recurring net income measures Danone’s recurring performance and excludes significant items that, because of their exceptional