Slide 1: FY 2020 Results
FY 2020 RESULTS February 19th, 2021 I 1 I
Slide 2: Disclaimer
Disclaimer • This presentation 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”, “guid
Slide 3: CEO Introduction
CEO Introduction What you will hear from us today… A brief history Contrasted performance in 2020, after 5 years of consistent and competitive delivery Danone’s reinvention is underway, around 4 pillars Strengthened governance I 3 I
Slide 4: A brief history
A brief history Contrasted performance in 2020, after 5 years of consistent and competitive delivery Danone’s reinvention is underway, around 4 pillars Strengthened governance I 4 I
Slide 5: 5 years of consistent and competitive delivery
5 years of consistent and competitive delivery Sales growth, margin and EPS delivery ahead of larger panel up to 2019 Like-for-like sales growth Recurring operating margin and EPS Essential Dairy Total Company Specialized Nutrition Waters Recurring operating margin Recurring EPS and Plant-based +6.9
Slide 6: 5 years of consistent and competitive delivery: improving sales growth and earnings
5 years of consistent and competitive delivery Improving sales growth and earnings in line with key peers Recurring EPS Life-for-like sales growth Recurring operating margin 2015-2019 average growth 2015-2019 average growth 2014-2019 evolution +9.8% +8.1% +3.3% +3.4% +610bps +7.4% +3.1% +464bps +5.3
Slide 7: Contrasted performance in 2020
A brief history Contrasted performance in 2020, after 5 years of consistent and competitive delivery Danone’s reinvention is underway, around 4 pillars Strengthened governance I 7 I
Slide 8: 2020 made our frame of action more relevant than ever
2020 made our frame of action more relevant than ever We bring Health through food to as many people as possible Healthier Local Leader Sustainable Agile Purpose I 8 I
Slide 9: Committed to sustainable value creation
Committed to sustainable value creation Through our business, brand and trust model Focus on profitable Recognized superior Fostering inclusion and sustainable growth environmental performance engagement +15% AAA 91% CDP ranking for the 2nd year in a row of employees recommend Plant-Based 2020 like-
Slide 10: Closing 2020 with priorities delivered through the Covid crisis
Closing 2020 with priorities delivered through the Covid crisis Focus on competitive profitable growth and absolute cash 14% Recurring operating margin €2.1bn Free cash flow LFL sales Sequential improvement Q4 vs Q3: -1.4% vs -2.5% growth FY: -1.5% LFL; contrasted performance by category I 10 I
Slide 11: Market share strength
Market Share strength Across key categories and brands Infant Milk Formula Dairy & Waters Essential Dairy I 11 I
Slide 12: EDP back to solid performance, highest LFL sales growth since 2012
EDP back to solid performance, highest LFL sales growth since 2012 Dairy growing low-single-digit in 2020 & CIS Modern & Traditional Dairy Dairy Europe is back to growth Dairy US: Broad-based sales growth portfolios fueling growth recovery 2017 2018 2019 2020 +1% ~ -2% ~ -3% ~ -7% Like-for-like sale
Slide 13: Dairy reaping the fruits of the repositioning strategy
EDP back to solid performance, highest LFL sales growth since 2012 Dairy reaping the fruits of the repositioning strategy Restored category relevance & market share gains Restored category relevance & market share gains Health & Immunity Smart Indulgence > +10% > +20bps MS > +5% > +23bps MS LFL sale
Slide 14: Another year of accelerated innovation
Another year of accelerated innovation 36% of revenues generated from products launched less than 2 years ago % of Innovation in Net Sales (1) ~ x2 36% 20% 16% 2016 2018 2020 (1) Innovations and renovations over the last 24 months I 14 I
Slide 15: Innovation model will be adapted to the new context
Innovation model will be adapted to the new context SKU rationalization to allow for more selective and meaningful innovation Successful dynamic portfolio management 2021 plan 2020 example # of SKUs cut 2020 2021 +10% volume output on performing assets ~ -500 Double-digit growth in 2020 -30% in # SK
Slide 16: 2020, the last year of the WhiteWave integration
2020, the last year of the WhiteWave integration Value creation plan delivered Growth engine since Legacy WW driving Value creation plan the acquisition growth in 2020 fully delivered 2016 – 2020 CAGR 2020 like for like sales growth Integration Synergies Original plan Delivery +11% ~ $300m overdeliv
Slide 17: Danone's reinvention is underway, around 4 pillars
A brief history Contrasted performance in 2020, after 5 years of consistent and competitive delivery Danone’s reinvention is underway, around 4 pillars Strengthened governance I 17 I
Slide 18: Four pillars to reconnect with mid-term profitable growth ambition
Four pillars to reconnect with Danone’s mid-term profitable growth ambition And restore shareholder value creation Reviewing our Investing for Optimizing Reshaping the portfolio, making portfolio superiority execution across organization selective divestures and differentiation the value chain and b
Slide 19: Four pillars to reconnect with mid-term profitable growth ambition
Four pillars to reconnect with Danone’s mid-term profitable growth ambition And restore shareholder value creation Reviewing our Investing for Optimizing Reshaping the portfolio, making portfolio superiority execution across organization selective divestures and differentiation the value chain and b
Slide 20: Plant-based now representing c. 20% of EDP revenues
Plant-based now representing c. 20% of EDP revenues Reaching scale thanks to accelerated geographic and portfolio expansion Plant-based now Continued category Accelerated contributing at scale penetration gains expansion +15% +5pts ~ €750m ~ +60% LFL sales growth since 2016 (1) revenus in 2020 vs 20
Slide 21: Portfolio superiority and differentiation through incremental innovation
Portfolio superiority and differentiation through incremental innovation YoPro and Two Good, reinventing the High Protein and Greek segments 2020 revenues ~€ 130 m 3 years after launch 2020 revenues ~€ 100 m 2 years after launch I 21 I
Slide 22: ~€2bn revenues from eCommerce in 2020
~ €2bn revenues from eCommerce in 2020 Growth fueled by consumer adoption and market share gains ~ €2bn revenues in 2020 (1) 75% of businesses gaining eCom ~ +40% like for like sales growth (1) market share in Europe EDP (3) + 162 bps ~ 10% + 190 bps + 340 bps of Company 2020 sales (2) (1) Excluding
Slide 23: Four pillars to reconnect with mid-term profitable growth ambition
Four pillars to reconnect with Danone’s mid-term profitable growth ambition And restore shareholder value creation Reviewing our Investing for Optimizing Reshaping the portfolio, making portfolio superiority execution across organization selective divestures and differentiation the value chain and b
Slide 24: Delivering superior consumer value for profitable growth
Delivering superior consumer value for profitable growth With unmatched science and technology in Plant-based, Probiotics and Proteins Plant-based Accelerating brand support in 2021 ~+ 8% LFL sales growth vs LY Probiotics Proteins I 24 I
Slide 25: Design to Deliver integration already in action with Alpro
Delivering superior consumer value for profitable growth Design to Deliver integration already in action with Alpro Unique 40-year ingredient dataset ~4.0 relative market share Direct farmer relationships First brand of choice (18-24yo) (1) Proprietary processing capabilities Unique x2 technology Co
Slide 26: Four pillars to reconnect with mid-term profitable growth ambition
Four pillars to reconnect with Danone’s mid-term profitable growth ambition And restore shareholder value creation Reviewing our Investing for Optimizing Reshaping the portfolio, making portfolio superiority execution across organization selective divestures and differentiation the value chain and b
Slide 27: Local First: organization design as a lever for growth and resilience
Local First: organization design as a lever for growth and resilience From category-led independent businesses to geography-led cross-category units FROM 3 BUSINESSES OPERATING IN PARALLEL TO CROSS-CATEGORY LOCAL ENTITIES Local cross-category consumer centricity Brand Brand Brand Synergized manufact
Slide 28: A fitter and more agile organization
A fitter and more agile organization €700m savings on SG&A by 2023 to fuel growth and restore margins €1bn Overheads (% of NS, 2019) Cost of goods sold €300m and logistic costs Extra productivity ~20% SG&A €700m costs reduction in 3 years to restore competitiveness and invest in growth Danone Averag
Slide 29: Four pillars to reconnect with mid-term profitable growth ambition
Four pillars to reconnect with Danone’s mid-term profitable growth ambition And restore shareholder value creation Reviewing our Investing for Optimizing Reshaping the portfolio, making portfolio superiority execution across organization selective divestures and differentiation the value chain and b
Slide 30: Accelerating in major Plant-Based adjacencies
Accelerating in major Plant-Based adjacencies Welcoming Follow Your Heart in the Danone Plant-based family #1 position in US plant-based sliced cheese (1) #2 position in US plant-based shredded cheese (1) Leading position in plant-based mayonnaise (1) In Natural and Conventional Grocery channels I 3
Slide 31: Disciplined capital allocation to drive shareholder returns
Disciplined capital allocation to drive shareholder returns With clear and well-balanced priorities Continued disciplined capital allocation Capital allocation priorities to drive shareholder returns Investment in profitable sustainable growth Strategic review of Argentina and Vega on track Sustaina
Slide 32: Four pillars to reconnect with mid-term profitable growth ambition
Four pillars to reconnect with Danone’s mid-term profitable growth ambition And restore shareholder value creation Reviewing our Investing for Optimizing Reshaping the portfolio, making portfolio superiority execution across organization selective divestures and differentiation the value chain and b
Slide 33: Strengthened governance
A brief history Contrasted performance in 2020, after 5 years of consistent and competitive delivery Danone’s reinvention is underway, around 4 pillars Strengthened governance I 33 I
Slide 34: Strengthening our governance
Strengthening our governance To oversee Management’s delivery of the plan, including Local First A Board reaching 70% A newly created Strategy & Entreprise à Mission independence & gender parity Transformation Committee Mission Committee After 2021 Shareholders’ Meeting New Lead Monitoring progress
Slide 35: 2020 financial review
2020 financial review Juergen Esser CFO I 35 I
Slide 36: Sales bridge
Sales bridge Sequential LFL improvement in Q4 vs Q3 FY 20 sales bridge Quarterly LFL sales growth Reported growth -6.6% €25,287m +3.7% -5.0% +0.3% -1.5% €23,620m -0.4% -0.1% LFL growth: -1.5% -1.4% -2.5% -5.7% FY 2019 Currency Argentina(2) Scope Volume Value FY 2020 Q1 Q2 Q3 Q4 and others(1) 2020 20
Slide 37: Specialized Nutrition
Specialized Nutrition Sequential improvement vs Q3 Quarterly LFL sales growth Q4 developments China +7.9% ▪ Domestic channels back to growth in Q4; cross-border declining -45% +5.8% ▪ Solid market share performance: Aptamil, number one multinational brand -2.2% -3.1% -0.9% in China IMF, holding mark
Slide 38: Essential Dairy & Plant-based
Essential Dairy & Plant-based Back to solid performance in 2020 Quarterly LFL sales growth Plant-based reaching €2.2bn sales, growing +15% LFL in FY 2020 ▪ Alpro, Silk and So Delicious growing double-digit ▪ Alpro now a c. €750m brand +4.6% +3.7% +3.6% +3.4% +1.6% +1.1% Q4 developments FY 2019 Q1 20
Slide 39: Waters
Waters Volumes and mix impact from muted out-of-home consumption Quarterly LFL sales growth Q4 developments +1.5% Product, format and channel performance driven by lockdowns -6.8% ▪ Out-of-home channels declining –20% and small formats down -30% -13.5% -15.6% -16.8% ▪ Average price per liter severel
Slide 40: FY 2020 recurring operating margin
FY 2020 recurring operating margin Margin deterioration mostly driven by Covid-related negative mix and extra costs -117 bps Scope Margin from Incremental and FX operations costs related Investments Overheads and others 15.2% to Covid +34 bps -102 bps 14.0% -62 bps +28 bps -14 bps Like-for-like -150
Slide 41: EPS
EPS Decline of recurring EPS driven by operating performance; cost of carbon per share -4% EPS bridge Carbon-adjusted EPS +1.2% -13.2% €3.85 +0.2% €3.34 €3.34 -12.6% +0.8% €2.99 €2.95 -0.6% -1.0% cost of carbon per share: €1.41 €1.68 -4% vs LY driven by decrease of carbon emissions ‘carbon-adjusted
Slide 42: Cash flow and balance sheet
Cash flow and balance sheet Protecting cash generation and gearing through disciplined capital allocation Free cash flow Working capital Capex Net Debt €2.1bn -3.1% €962m 2.8x Net debt/ EBITDA 8.7% conversion rate Negative channel mix 4.1% of Net Sales €11.9bn Net debt I 42 I
Slide 43: Proposed dividend of 1.94€ per share
Proposed dividend of 1.94€ per share in cash at next AGM on April 29th, 2021 Balanced decision reflecting confidence in company resilience €1.60 €1.70 €1.90 €1.94 €2.10 €1.94 Dividend 2015 2016 2017 2018 2019 2020 proposed Payout ratio 55% 55% 54% 54% 55% 58% I 43 I
Slide 44: 2021 Outlook
2021 Outlook 2 phase year, return to profitable growth as of H2 Continued uncertainties on duration and level of restrictions across all geographies in H1 2021 Macro outlook Progressive reopening of economies assumed starting from H2, driven by progressive roll-out of vaccination programs Tough Q1 d
Slide 45: Reiterating Financial Targets
Reiterating Financial Targets Long-term goal Mid-term ambition 2022 target 3% to 5% LFL (1) sales growth > 15% operating mid to high teens margin (2) operating margin(2) (1) Like-for-like (2) Recurring operating margin I 45 I
Slide 46: Leading in sustainability
Leading in sustainability Through financial disclosure Engaged in the UN Compliant with TCFD Supporting the Global Compact framework Audencia academic CFO Task Force research chair Together with 40+ corporates Piloting non-financial and investors worldwide reporting standards with the European Union
Slide 47: Conclusion
Conclusion Emmanuel Faber Chairman & CEO I 47 I
Slide 48: Appendix
\ DANONG ONE PLANET. ONE HEALTH Appendix
Slide 49: Q4 2020 sales by reporting entity – breakdown volume/value
Q4 2020 sales by reporting entity – breakdown volume/value By reporting entity By geographical area Essential Dairy Specialized Europe Rest of Company Waters & Plant-based Nutrition & Noram the World Q4 net sales €5,628m €3,131m €1,753m €743m €3,252m €2,376m Like-for-like -1.4% +3.6% -3.1% -15.6% -1
Slide 50: Q4 2020 sales by reporting entity and by geographical area
Q4 2020 sales by reporting entity and by geographical area Essential Dairy Specialized Waters Company & Plant-based Nutrition Europe and Noram Sales €2,182m €738m €332m €3,252m LFL growth +4.6% -5.0% -21.9% -1.0% Rest of the world Sales €950m €1,015m €411m €2,376m LFL growth +1.7% -1.7% -10.2% -1.9%
Slide 51: Q4 & FY 2020 impact of currencies & scope
Q4 & FY 2020 impact of currencies & scope Q4 2020 Essential Dairy Specialized Nutrition Waters Total & Plant-based Reported sales growth -6.1% -9.8% -22.8% -9.8% Argentina organic contribution to growth +0.3% +0.3% +0.4% +0.3% Currency and others(1) -9.8% -6.7% -7.5% -8.5% IAS 29 impact -0.2% -0.4%
Slide 52: Changes in exchange rates
Changes in exchange rates % total FY 2020 FY 20 vs FY 19 (avg) Q4 20 vs Q4 19 (avg) United States Dollar 21.5% -2.0% -7.2% Chinese Renminbi 6.8% -1.8% -1.2% Russian Ruble 6.0% -12.6% -22.4% Indonesian Rupiah 5.7% -4.4% -8.9% British Pound 5.4% -1.3% -4.7% Mexican Peso 3.8% -12.1% -13.0% Brazilian Re
Slide 53: Recurring operating margin
Recurring operating margin Recurring operating profit FY 2019 FY 2020 Change (€m) and margin (%) €m Margin (%) €m Margin (%) Reported Like-for-like Essential Dairy & Plant-based 1,345 10.2% 1,303 10.2% -6 bps -36 bps Specialized Nutrition 1,908 25.3% 1,763 24.5% -74 bps -126 bps Waters 593 13.0% 251
Slide 54: Balance sheet
Balance sheet Assets(1) Liabilities in € million 31/12/19 31/12/20 31/12/19 31/12/20 17,378 16,298 24,846 Shareholders’ equity 23,037 Intangible assets 12,819 11,941 Net debt(2) 10,177 9,733 Other assets 3,825 3,798 Other liabilities Working capital 5,778 5,448 6,779 6,181 Working capital 40,801 38,
Slide 55: Tax rate development
Tax rate development € mln 2019 2020 Total income tax (reported) (793) (762) Reported tax rate 27.7% 30.6% Non-current income tax(1) 163 66 Current income tax (956) (828) Underlying tax rate 27.5% 27.5% (1) Tax related to non-current items I 55 I
Slide 56: Cash-flow statement
Cash-flow statement 2019 2020 Recurring operating income 3,846 3,317 Financial income (370) (310) Income tax on operating and financial income (956) (828) Non-current income net of tax (446) (453) Depreciation and amortization 1,386 1,452 Net change in provisions / Deferred taxes 151 (5) Dividend re
Slide 57: Cash-flow statement
Cash-flow statement 2019 2020 Cash flow provided by operating activities, excluding changes in net working capital 3,755 3,199 Change in working capital (311) (232) Cash flow from operations 3,444 2,967 Capital expenditure (951) (962) Proceeds from the sale of industrial assets 16 43 Business acquis
Slide 58: Cash-flow statement
Cash-flow statement 2019 2020 Cash flow used in investing activities and disposals (1,008) (610) Increase in capital and additional paid-in capital 55 30 Purchases of treasury stock (net of disposal) - 0 Perpetual subordinated notes issued or repaid during the period (22) (22) Dividends paid to Dano
Slide 59: EBITDA calculation
EBITDA calculation 2019 2020 Operating income 3,237 2,798 Depreciation, amortization and impairment of property, plant and equipment and intangible assets 1,386 1,452 EBITDA 4,623 4,250 I 59 I