Slide 1: Full Year Results 2017
FULL YEAR RESULTS 2017 February 16, 2018 Emmanuel Faber, Chairman and CEO Cécile Cabanis, CFO I 1 I
Slide 2: Disclaimer
Disclaimer • This press release 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,” “objective” “believe,” “forecast,” “fore
Slide 3: 2017 Highlights
2017 Highlights Emmanuel Faber Chairman and CEO I 3 I
Slide 4: Our ambition: Healthier, Responsible, Sustainable
Our ambition Leading the way to create and share sustainable value Healthier Responsible Sustainable eating and drinking business stewardship value I 4 I
Slide 5: We delivered very strong recurring EPS growth
We delivered very strong recurring EPS growth In line with guidance 2017 2017 OBJECTIVE RESULTS Recurring EPS Recurring EPS at constant FX at constant FX > 12% +14.2% I 5 I
Slide 6: A solid execution… 2017: another year of progress
A solid execution… 2017: another year of progress RECURRING NET SALES OPERATING MARGIN FREE CASH FLOW +2.5% +70bps +18.4% (1) (1) (2) € 24.7 bn 14.36% € 2.1 bn (1) Like-for-like New Danone (2) On a reported basis I 6 I
Slide 7: … in a responsible way
… in a responsible way Creating sustainable value for all stakeholders +14.2% 88% -10.5% 5 OF VOLUME SOLD ARE SUITABLE FOR DAILY REDUCTION OF CARBON 2017 RECURRING EPS (1) CONSUMPTION (2) INTENSITY FULL SCOPE (3) B CORP ENTITIES (1) At constant exchange rate (2) This percentage refers to water, yogu
Slide 8: Significant progress on B-Corp roadmap
Paving the way to societal accountability as a Food Revolution leader Significant progress on B-Corp roadmap 5 entities certified to date DanoneWave on track to get certified in 2018 €2bn syndicated credit loan with now environmental and social Aguas Argentina criteria impacting payable margin I 8 I
Slide 9: Execution against strategic priorities
Execution against strategic priorities Solid progress towards 2020 Acceleration of innovation pipeline 1 ACCELERATE GROWTH Strong activations of our brands Strategic digital partnerships 2 MAXIMIZE EFFICIENCIES 1 st year delivery of synergies ahead of plan Preparation of Protein program 3
Slide 10: Execution against strategic priorities
Execution against strategic priorities Solid progress towards 2020 Acceleration of innovation pipeline 1 ACCELERATE GROWTH Strong activations of our brands Strategic digital partnerships 2 MAXIMIZE EFFICIENCIES 1 st year delivery of synergies ahead of plan Preparation of Protein program 3
Slide 11: Accelerated launch of innovations
Accelerated launch of innovations Focus on differentiation, setting the stage for the future Neocate Relaunch Syneo Mizone Pro of flagship Prebiotics Adjacent categories Young Danone brand Lemonades + Probiotics Plant-based through new brands and local premiumization brands Reinvent smart calories 1
Slide 12: Danimals: US Non-GMO Pledge
Strong brand activation to engage with consumers in a new way Danimals: US Non-GMO Pledge 2017 Sales growth +9% www.dannonpledge.com > 90% of products already Non-GMO Project Verified end of 2017, ahead of plan Danimal’s value market shares (Kids segment) 41% 33% 2014 2015 2016 2017 Source: IRI Mulo
Slide 13: Executing our 2 brands in China
Strong brand activation to engage with consumers in a new way Executing our 2 brands in China with a differentiated purpose Become the #1 culturally resonant parenting brand Become the #1 socially responsible parenting brand Full of Nature Strength I 13 I
Slide 14: One Planet. One Health.
Strong brand activation to engage with consumers in a new way One Planet. One Health. I 14 I
Slide 15: Accelerated shift towards digital
Accelerated shift towards digital Strategic partnerships and investments in e-commerce Superior Growing online shopping e-commerce presence Efficient Optimized precision marketing supply chain I 15 I
Slide 16: Danone Manifesto Ventures investments
Disrupt innovation through investments in new models 7 Danone Manifesto Ventures investments to date Leading French F&B revolution Increasing fresh food accessibility Drive growth and pioneer sustainability Leading ‘Harmless’, Fair for Life with unconventional via vending / connected fridge in new d
Slide 17: Execution against strategic priorities
Execution against strategic priorities Solid progress towards 2020 Acceleration of innovation pipeline 1 ACCELERATE GROWTH Strong activations of our brands Strategic digital partnerships 2 1st year delivery of synergies ahead of plan MAXIMIZE EFFICIENCIES Preparation of Protein program 3 A
Slide 18: WhiteWave synergies, chapter one
WhiteWave synergies, chapter one Delivery on track, ahead of plan 2017 2018 2020 Onboarding phase Second wave Full run-rate 2017 OBJECTIVE 2017 DELIVERY 2018 OBJECTIVE 2020 OBJECTIVE > 10% > $50m > 60% $300m of run-rate synergies above objective of run-rate synergies HQ consolidation Major part in
Slide 19: Preparing for Protein delivery
Preparing for Protein delivery €1bn sustainable savings through efficiencies 2017 2018 2020 Foundations in place 1 st year of delivery Full delivery 10 clusters activated out of 30 clusters Priority to efficiency in 2018 Process in place: 15 playbooks created €100m €300m Onboarding preparation
Slide 20: Execution against strategic priorities
Execution against strategic priorities Solid progress towards 2020 Acceleration of innovation pipeline 1 ACCELERATE GROWTH Strong activations of our brands Strategic digital partnerships 2 MAXIMIZE EFFICIENCIES 1 st year delivery of synergies ahead of plan Preparation of Protein program 3
Slide 21: Active portfolio management
Active portfolio management Continued discipline in capital allocation Starting a new partnership phase with Yakult in probiotics Enhanced Optimized — — strategic collaboration stake in line with capital to promote probiotics allocation discipline Strategic partnership Financial discipline I 21 I
Slide 22: Execution against strategic priorities
Execution against strategic priorities Solid progress towards 2020 Acceleration of innovation pipeline 1 ACCELERATE GROWTH Strong activations of our brands Strategic digital partnerships 2 MAXIMIZE EFFICIENCIES 1 st year delivery of synergies ahead of plan Preparation of Protein program 3
Slide 23: Reinforcing governance, ongoing Board refreshment
Reinforcing governance, ongoing Board refreshment Towards balance, efficiency, diversity and expertise Changes submitted for vote at next AGM on April, 26th 2018 Emmanuel FABER i Michel LANDEL i Guido BARILLA Cécile CABANIS 16 members 64% Chairman & CEO Lead independent director independent(1) Franc
Slide 24: Strengthened management model
Strengthened management model EXCOM: 7 MEMBERS STREAMLINED Focus Diversity Speed REGIONAL LEADERSHIP REINFORCED Closer to market 15 regional leaders empowered on global decisions Cross-regional collaboration 30 LOCAL CLUSTERS I 24 I
Slide 25: 100,000 engaged Danoners
100,000 engaged Danoners 2017 Danone People Survey 86% of employees engagement (1) + 4pts vs. 2015 + 8pts vs. FMCG norm. (2) + 1pt vs. High Perf. norm. (2) (1)% of people saying : « I will work beyond what is required in my job to help Danone to succeed » (2) Source: Towers Watson I 25 I
Slide 26: Starting 2018 with strong foundations
Starting 2018 with strong foundations… Leading the way to create and share sustainable value Healthier Responsible Sustainable eating and drinking business stewardship value I 26 I
Slide 27: … reinforcing our confidence for 2020
… reinforcing our confidence for 2020 Recurring LFL sales growth operating margin 4 to 5% >16% Consistent EPS Growth < 3.0x ~12% Net debt / EBITDA (1) ROIC(1) (1) See definition in 2017 Interim Financial report I 27 I
Slide 28: Financial review
Financial review Cécile Cabanis CFO I 28 I
Slide 29: We delivered very strong recurring EPS growth
We delivered very strong recurring EPS growth In line with guidance 2017 2017 OBJECTIVE RESULTS Recurring EPS Recurring EPS at constant FX at constant FX > 12% +14.2% I 29 I
Slide 30: A solid execution… 2017: another year of progress
A solid execution… 2017: another year of progress RECURRING NET SALES OPERATING MARGIN FREE CASH FLOW +2.5% +70bps +18.4% (1) (1) (2) € 24.7 bn 14.36% € 2.1 bn (1) Like-for-like New Danone (2) On a reported basis I 30 I
Slide 31: Navigating a volatile environment in 2017
Navigating a volatile environment in 2017 Volatility management embedded in our growth model MILK PRICE US CRUDE OIL BREXIT EMERGING INFLATION INCREASE GBP DEVALUATION COUNTRIES VOLATILITY UE Milk price EUR / GBP US Milk Price 67$ 0.89£ 37$ 0.73£ 2016 2017 2016 2017 2016 2017 Milk*: ~ +10% in 2017 P
Slide 32: We delivered strong results
We delivered strong results 2017: another year of progress RECURRING NET SALES OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% +70bps +14.2% +18.4% (1) (1) (2) (3) € 24.7 bn 14.36% € 3.49 € 2.1 bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 32 I
Slide 33: Q4 2017 sales bridge
Q4 2017 sales bridge +3.7% like-for-like(1) growth, confirming acceleration LFL -1.9% New Danone(1): +3.7% €6,095 m -5.7% +5.4% +17.7% -1.7% €5,355 m Q4 2016 Reported White Wave base Scope Currency Volume Value Q4 2017 Reported effect(2) (1) Like-for-like New Danone (2) Corresponds to the contributi
Slide 34: Q4 and FY 2017 by reporting entity
Q4 and FY 2017 by reporting entity (1) Specialized Nutrition EDP Noram EDP International Waters SALES Q4 2017 €1.8 bn +8.4% €1.3 bn -0.4% €2.1 bn -0.3% €1.0 bn +10.3% Volume / Value +1.2% / +7.2% -2.6% / +2.2% -6.4% / +6.1% +4.7% / +5.6% RECURRING OPERATING 23.73% +197 bps 12.28% +2 bps 9.02% -29 bp
Slide 35: Specialized Nutrition
Specialized Nutrition Strong profitable growth, relying on a unique portfolio and perfect execution FY 17 Sales growth: +9.3% FY 17 margin(1): +197 bps SALES GROWTH 9M 2017 +9.5% +8.4% 9M 2017 Q4 2017 All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 35 I
Slide 36: Specialized Nutrition: strong sales growth in Q4
Strong profitable growth, relying on unique portfolio and perfect execution Strong sales growth in Q4 for both ELN and AMN Early Life Nutrition: high single-digit growth in Q4 (1) Advanced Medical Nutrition China > 30% growth in Q4 (1) (AMN) ~25% Peak in number of births in H2 2016: accelerated ma
Slide 37: EDP Noram
EDP Noram Year of onboarding Sequential improvement in growth Strong synergies delivery FY 17 Sales growth: -2.0% FY 17 margin(1): +2 bps SALES GROWTH -0,4% -2,6% 9M 2017 Q4 2017 All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 37 I Credit photo: Revolution Digital
Slide 38: EDP Noram: sequential improvement in growth
Sequential improvement in growth; strong synergies delivery Q4 sales growth positive excluding Fresh Foods Yogurt ~10% Plant-based US Yogurt: continued value market share gains in Q4 ~10% Coffee Creamers Continued roll-out of non-GMO yogurts across brands ~40% Premium Dairy Double digit growth o
Slide 39: EDP International
EDP International Continued progress FY 17 Sales growth: -1.3% FY 17 margin(1): -29 bps SALES GROWTH -0,3% -1,6% 9M 2017 Q4 2017 All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 39 I
Slide 40: EDP International: continued progress
Continued progress Q4 sales growth positive excluding Brazil Europe: progress on turnaround Europe ~20% Latam ~40% Progress in Activia CIS ~20% Positive signs from Danone relaunch Aspame ~20% Continued momentum from young and local brands Q4 2017 Alpro: sustained strong growth Latam: strong
Slide 41: Waters
Waters Solid profitable growth End of transition in China FY 17 Sales growth: +4.7% FY 17 margin(1) : +12 bps SALES GROWTH +10.3% +3.2% 9M 2017 Q4 2017 All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 41 I
Slide 42: Waters: solid profitable growth
Solid profitable growth ; end of transition in China Double digit sales growth in Q4 Q4 2017 Europe + Noram ~25% Plain water: double-digit growth (1) ~40% Positive trends across regions Aspame(2) ~35% Strong growth in Europe driven by MS gains and a dynamic innovation Latam pipeline(Germany, Spa
Slide 43: We delivered strong results
We delivered strong results 2017: another year of progress RECURRING NET SALES OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% +70bps +14.2% +18.4% (1) (1) (2) (3) € 24.7 bn 14.36% € 3.49 € 2.1 bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 43 I
Slide 44: Very strong improvement in recurring operating margin
Very strong improvement in recurring operating margin Above €600m of productivity gains Reported: +58 bps LFL New Danone(1): +70 bps 14.36% +23 bps 13.77% +57 bps +1 bp -11 bps +21 bps -33 bps FY 2016 WhiteWave Scope (excl. Currency Margin from Sales & Overheads FY 2017 Reported base effect (2) Whit
Slide 45: We delivered strong results
We delivered strong results 2017: another year of progress RECURRING NET SALES OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% +70bps +14.2% +18.4% (1) (1) (2) (3) € 24.7 bn 14.36% € 3.49 € 2.1 bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 45 I
Slide 46: Very strong recurring EPS growth
Very strong recurring EPS growth +14.2% at constant FX; Fully in line with 2017 guidance +12.6% Reported -2.0% +1.1% +5.3% -1.7% -1.6% +2.5% +9.1% €3.49 €3.10 +14.2% At constant FX xxx xxx xxx xxx xxx Tax &xxx xxx xxx xxx FY 2016 WhiteWave Net Sales Margin Financing others Scope Currency FY 2017 Rep
Slide 47: From Recurring operating income to Net income
From Recurring operating income to Net income € million 2016 recurring 2017 recurring 2017 Non-recurring items Total FY 2017 Recurring operating income 3,022 3,543 - 3,543 Other operating income and expenses - - 192 192 Operating income 3,022 3,543 192 3,734 Total Financial expenses (280) (400) (38)
Slide 48: We delivered strong results
We delivered strong results 2017: another year of progress RECURRING NET SALES OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% +70bps +14.2% +18.4% (1) (1) (2) (3) € 24.7 bn 14.36% € 3.49 € 2.1 bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 48 I
Slide 49: Very strong cash delivery: +18.4%
Very strong cash delivery: +18.4% Solid cash conversion Free Cash Flow (€m) 2,083 1,760 FY 2016 FY 2017 Working Capital / Net Sales (%) Capex / Net Sales (%) -4.5% -7.1% 4.2% 3.9% FY 2016 FY 2017 FY 2016 FY 2017 I 49 I
Slide 50: Change in net debt
Change in net debt in € billion +€7.9bn (1.4) (2,1) 11.1 0.4 15.4 7.5 Net debt 31/12/2016 Dividends M&A Puts(1) Refinancing & others FCF Net debt 31/12/2017 (1) including 10.9bn€ of net cash outflow on WhiteWave purchase I 50 I
Slide 51: Balance sheet
Balance sheet Assets (1) € million Liabilities Dec. 2016 Dec. 2017 Dec. 2016 Dec. 2017 14,574 Shareholders’ equity 24,945 13,194 Intangible assets 15,803 15,372 Net debt(2) 7,472 Other assets 9,372 9,679 2,960 3,566 Other liabilities 6,513 6,620 Working capital Working capital 4,964 5,508 30,139 40,
Slide 52: 2017 Dividend: +11.8% increase
2017 Dividend: + 11.8% increase A firm commitment to shareholders Dividend proposed at the next AGM on April 26, 2018 €1.90 per share (+11.8% ; +20 cts vs. 2016) Payment in either cash or shares at shareholder option 1.90€ 1.70€ 1.60€ 1.50€ 1.45€ 1.45€ 1.39€ 1.30€ 1.20€ 1.20€ 1.10€ 2007 2008 2009 20
Slide 53: 2018 outlook: Volatility to continue…
2018 outlook: Volatility to continue… Ensure a consistent recurring EPS growth Small and local brands Continued volatility in emerging markets Persistent strong input cost inflation (Milk, PET…) Raw materials Ongoing impact from GBP (Brexit) Accelerated industry transformation Brexit Channel
Slide 54: Acceleration towards 2020
Acceleration towards 2020 2017 2020 Sales +2.5% Acceleration towards 2020 4-5% Growth(1) Recurring op. margin 14.4% Sustained margin improvement(1) >16% FCF €2.1bn Consistent pace of deleverage <3x Net debt/Ebitda(3) Recurring Consistent recurring EPS growth(2) +14.2% Consistent recurring EPS growth
Slide 55: 2018: a year of execution and delivery
2018: a year of execution and delivery 2017 2018 2020 2018 objective DOUBLE-DIGIT RECURRING EPS GROWTH at constant exchange rate excluding Yakult transaction impact(1) (1) See definition on page 13 of 2017 Full Year Results Press release I 55 I
Slide 56: Appendix
\ DANONe ONE PLANET. ONE HEALTH APPENDIX
Slide 57: Q4 & FY 2017 impact of currencies & scope
Q4 & FY 2017 impact of currencies & scope Q4 2017 EDP International EDP Noram Specialized Waters Total Nutrition Reported sales growth +0.4% +107.4% +3.7% +2.2% +13.8% Currency -4.4% -8.4% -4.5% -7.2% -5.7% Scope of consolidation -1.0% -13.2% +0.0% -0.3% -1.9% WhiteWave base effect +6.1% +129.4% -0.
Slide 58: Changes in exchange rates
Changes in exchange rates % total FY 17 sales FY 17 vs FY 16 (avg) Q4 17 vs Q4 16 (avg) United States Dollar 19.0% -2.0% -8.4% Russian Ruble 6.8% 12.1% -1.3% Chinese Renminbi 6.3% -3.7% -5.4% Indonesian Rupiah 5.5% -2.7% -10.3% British Pound 5.1% -6.5% -2.1% Argentine Peso 4.4% -12.9% -19.2% Mexican
Slide 59: Recurring operating margin by reporting entity and geographical area
Recurring operating margin by Reporting entity and geographical area € min FY 2016 FY 2017 Like-for-like New Danone change EDP International 8.88% 9.02% -29 bps EDP Noram 14.02% 12.28% +2 bps Specialized Nutrition 21.39% 23.73% +197 bps Waters 11.40% 11.70% +12 bps Europe & Noram 16.84% 15.52% -14 b
Slide 60: Cash bridge
Cash bridge € million 974 953 Depreciation Taxes 400 Financial 79 results Others 127 W cap var 969 3,543 Capex 95 2 3,085 Sales of Plan for assets and savings and Transaction 2,083 adaptation 2,085 Fees in Europe Recurring Cash from FCF reported FCF excl. Operating operating European income activiti
Slide 61: Tax rate development
Tax rate development € mln 2016 2017 Total income tax (reported) (804) (842) Reported tax rate 30.6% 25.5% Non-current income tax(1) 48 111 Current income tax (852) (953) Underlying tax rate 31.1% 30.3% (1) Tax related to non-current items I 61 I
Slide 62: Cash-flow statement
Cash-flow statement 2016 2017 Operating income 3,022 3,543 Financial income (280) (400) Income tax (852) (953) Non-current income (64) 264 Depreciation and amortization 786 974 Net change in provisions / Deferred taxes (15) (200) Dividend received from equity accounted affiliates 53 55 Net change in
Slide 63: Cash-flow statement
Cash-flow statement 2016 2017 Cash flow provided by operating activities, excluding changes in net working capital 2,615 3,085 Change in working capital 37 (127) Cash flow from operations 2,652 2,958 Capital expenditure (925) (969) Proceeds from the sale of industrial assets 27 45 Business acquisiti
Slide 64: Cash-flow statement
Cash-flow statement 2016 2017 Cash flow used in investing activities and disposals (848) (11,437) Increase in capital and additional paid-in capital 46 47 Purchases of treasury stock (net of disposal) 32 13 Perpetual subordinated notes issued during the period 1,245 Dividends paid to Danone sharehol
Slide 65: Stock price & shareholding
Stock price & shareholding Danone 2017 stock price evolution(1) Danone 2017 stock performance(1) 120 > Absolute +16.2% 115 110 > Relative vs. CAC 40 +6.9% 105 > Relative vs. Eurostoxx 50 -9.1% 100 95 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Total sha
Slide 66: 2017 ADR program
2017 ADR program DRs Outstanding as a % of Total Shares Outstanding Data as of December 31, 2017 160 000 000 4,3% 4,2% 140 000 000 4,1% 120 000 000 4,0% 100 000 000 3,9% 3,8% 80 000 000 3,7% 60 000 000 3,6% 40 000 000 3,5% 3,4% 20 000 000 3,3% 0 3,2% DRs Outstanding Pct of Shares in ADR Form > Ticke
Slide 67: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS 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
Slide 68: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS “Like-for-like New Danone” changes (or “Like-for-like including WhiteWave starting in April 2017” changes) in sales and recurring operating margin reflect the organic performance of Danone and WhiteWave combined. This indicator corresponds to like-for-like ch
Slide 69: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS 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 co
Slide 70: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS Yakult Transaction Impact corresponds to the amount to deduct from Danone’s 2017 recurring net income to reflect an interest in Yakult in 2017 identical to the interest prevailing in 2018 following the completion of the intended partial disposal. It is comput