Slide 1: H1 2014 Results
H1 2014 Results July 25, 2014 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: H1 2014 Highlights
H1 2014 Highlights FY 2013 Results Pierre-André Terisse 3
Slide 4: H1 2014 Highlights
H1 2014 HIGHLIGHTS (1) Like-for-like : Based on constant scope of consolidation, constant exchange rates and accounting principles (2) Free cash-flow excluding exceptional items : cash-flows provided or used by operating activities less capital expenditure net of disposals, excluding acquisition cos
Slide 5: H1 2014 Key Achievements
H1 2014 KEY ACHIEVEMENTS OVERCOME MILK INFLATION INNOVATION & MIX STRENGTHEN OUR STRATEGIC IN KEY MARKETS PLATFORMS Q1 margin under pressure as a result EUROPE: Danio and evian La Goutte, Closing of COFCO Mengniu partnership: of record milk prices Looney Drinks Increased stake & Fresh Dairy JV Prici
Slide 6: Geographical Dynamics
GEOGRAPHICAL DYNAMICS EUROPE CIS & NORAM CIS+USA+Canada 16.6% 15.9% 15.3% 16.1% 13.2% ALMA 12.8% 12.7% 12.5% AsiapacLatamMiddleEastAfrica 6.0% Actual 2.2% 2.0% Excluding 1.3% 0.5% 8 recall markets H1 2013 H1 2014 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 6
Slide 7: Dairy Europe: Recovery in Progress to Restore Conditions for Profitable Growth
DAIRY EUROPE: RECOVERY IN PROGRESS TO RESTORE CONDITIONS FOR PROFITABLE GROWTH BREAKDOWN VOLUME/VALUE GROWTH (%) RE-INVENT EUROPE TO CREATE POSITIVE DRIVERS Price/mix Volume VALUE MARKET SHARE EVOLUTION Spain Portugal France Italy UK Germany 7
Slide 8: CIS: Keep Strengthening the Portfolio
CIS: KEEP STRENGTHENING THE PORTFOLIO RUSSIAN SALES BREAKDOWN CIS PERFORMANCE Modern Dairy and High Margin Tradi Stable volume Price/mix dynamics Volume Fermented & Milk Volume down double-digit DECISION TO ADAPT COST STRUCTURE Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 8
Slide 9: NORAM: Pushing the Category Growth Agenda Through Innovations
NORAM: PUSHING THE CATEGORY GROWTH AGENDA THROUGH INNOVATIONS LEADING THE YOGURT CATEGORY RECENT INNOVATIONS 40% Average value market shares Danone(1) 30% Competitor 1 20% Competitor 2 10% 2011 2012 2013 YTD 2014 (1) Danone : including Stonyfield and YoCrunch Source : IRI Multi Outlet CO-LEADING THE
Slide 10: ALMA: Grow and Develop Solid Platforms
ALMA: GROW AND DEVELOP SOLID PLATFORMS ALMA AREA PERFORMANCE Medical Nutrition YTD 2014 growth: >10% Aquadrinks YTD 2014 growth: >25% Fresh Dairy Products YTD 2014 growth: high single digit ELN excluding 8 recall markets YTD 2014 growth: >15% 10
Slide 11: ALMA: Enhance the Danone Platform in Africa
ALMA: ENHANCE THE DANONE PLATFORM IN AFRICA ACCELERATE THE GROWTH OF DANONE’S PORTFOLIO EXPAND DANONE’S GEOGRAPHICAL FOOTPRINT DANONE ACQUIRES A 40% INTEREST IN BROOKSIDE East Africa’s leading Dairy Products company 2013 revenues of around €130 million Region’s largest milk collection network (1
Slide 12: China: Keep Turning ELN Engine Back to Full Speed
CHINA: KEEP TURNING ELN ENGINE BACK TO FULL SPEED STRONG ACTIVATION CAMPAIGNS SUSTAINABILITY ENABLERS Blue house exclusive launch at Walmart Build category recognition Master geographies and channels Be the closest to mums Efficient investment model to secure profitability Secure global supply chain
Slide 13: H2 2014 Agenda - Deliver on 2014 Key Priorities
H2 2014 AGENDA - DELIVER ON 2014 KEY PRIORITIES TURNING AROUND EUROPE GROW AND NAVIGATE IN ALMA 2013 2014 +12.8% H1 LFL sales growth excluding 8 recall markets Fresh Dairy Products sales growth trend evolution KEEP WINNING CIS & NORAM TURN ELN ENGINE BACK TO FULL SPEED Estimated sales recovery path
Slide 14: H1 2014 Results
H1 2014 Results FY 2013 Results Pierre-André Terisse 14
Slide 15: H1 2014 - Key Figures
H1 2014 - KEY FIGURES (1) +2.2% like-for-like Sales €10,467 mln -5.3% reported (1) -10.0% like-for-like Trading operating income €1,180 mln -20.0% reported -159 bps like-for-like(1) Trading operating margin 11.27% -207 bps reported -11.5% like-for-like(1) (2) Underlying net income €683 mln -21.9% re
Slide 16: H1 2014 - Sales Growth Analysis
H1 2014 - SALES GROWTH ANALYSIS +2.2% Like-for-like (5.3)% Reported €11,058 mln €10,467 mln 16
Slide 17: Q2 2014 - Sales Growth Analysis
Q2 2014 - SALES GROWTH ANALYSIS +2.3% Like-for-like (5.5)% €5,720 mln Reported €5,406 mln 17
Slide 18: Total Group – Solid Underlying Trends on High Comps
TOTAL GROUP – SOLID UNDERLYING TRENDS ON HIGH COMPS Like-for-like sales growth per quarter Like-for-like sales growth per semester Strong impact of the Fonterra false alert Underlying topline remains solid 18
Slide 19: Sales Performance by Division
Sales performance by Division 19 19
Slide 20: Fresh Dairy Products - Value Driven Growth
FRESH DAIRY PRODUCTS - VALUE DRIVEN GROWTH Price/mix Volume Like-for-like sales growth per quarter Like-for-like sales growth per semester 8.8% 9.8% 4.6% 4.9% 3.9% 3.1% 2.6% 1.7% 0.7% 2.9% 4.1% 2.4% 7.6% 0.2% 3.6% 2.1% 1.7% 0.8% 0.5% (1.0)% (0.4)% (3.7)% (5.7)% (7.4)% H1 2013 H1 2014 Q1 13 Q2 13 Q3
Slide 21: Fresh Dairy Products - Selected Innovations Q2
FRESH DAIRY PRODUCTS - SELECTED INNOVATIONS Q2 Danet Drink Mleczny start yogurt Spain Poland Danoninho Camadinha Oikos Greek Frozen Yogurt & Creamery Danone para Beber - Looney Brazil United States Tunes / Spain 21
Slide 22: Waters - Sustained Strong Growth
WATERS - SUSTAINED STRONG GROWTH Price/mix Volume Like-for-like sales growth per quarter Like-for-like sales growth per semester 16.9% 13.1% 11.2% 10.5% 9.6% 8.6% 8.1% 8.9% Solid volume growth in all regions Balanced growth with positive mix driven by Aquadrinks 22
Slide 23: Waters - Selected Innovations Q2
WATERS - SELECTED INNOVATIONS Q2 Bonafont Kids Copa Brazil evian Essence bottle roll-out evian La Goutte France France 23
Slide 24: Early Life Nutrition - Solid Underlying Growth
EARLY LIFE NUTRITION - SOLID UNDERLYING GROWTH Like-for-like sales growth per quarter Like-for-like sales growth per semester 17.1% 14.8% 14.3% 14.0% 15.2% 13.5% 13.3% 14.9% 9.3% 10.0% 9.1% 8.3% 10.8% 7.3% 7.8% 5.2% 2.7% (5.9)% (4.8)% (7.3)% (6.4)% (7.9)% (1.0)% (2.9)% (2.0)% (1.3)% (6.9)% (8.4)% (7
Slide 25: Early Life Nutrition - Selected Innovations Q2
EARLY LIFE NUTRITION - SELECTED INNOVATIONS Q2 Jumbo pack Blédilait croissance Milupino & Aptamil Tetra France Germany & Austria Dumex PreciNutri International China Olvarit Friends – Meal pouches Nutrilon Mama Fruit pouch The Netherlands China 25
Slide 26: Medical Nutrition - Sustained Growth
MEDICAL NUTRITION - SUSTAINED GROWTH Like-for-like sales growth per quarter Like-for-like sales growth per semester 6.3% 5.8% 7.3% 6.4% 6.3% 5.2% 5.5% 4.7% Price/mix Solid performance driven by volume growth Volume Growth across all categories 26
Slide 27: Medical Nutrition - Selected Innovations Q2
MEDICAL NUTRITION - SELECTED INNOVATIONS Q2 Roll-out of Souvenaid Infatrini Powder Poland, Sweden, Finland & Middle East region & Brazil Switzerland 27
Slide 28: Trading Operating Income and Margin
TRADING OPERATING INCOME AND MARGIN H1 2013 H1 2014 € mln Trading operating income 1,475 1,180 (1) Other operating items (291) (96) Operating income 1,184 1,084 Trading operating margin 13.34% 11.27% (1) Other operating items mainly include costs related to the European plan for savings and adaptati
Slide 29: H1 2014 - Margin Development
H1 2014 - MARGIN DEVELOPMENT Reported (207) bps Intervertir les boites scope and forex 29
Slide 30: H1 2014 - Margin Development
H1 2014 - MARGIN DEVELOPMENT LIKE-FOR-LIKE MARGIN BRIDGE 30
Slide 31: Record Milk Prices
RECORD MILK PRICES DANONE FARMGATE PRICE (€/TON) 31
Slide 32: Trading Operating Margin by Business Lines & Geographical Areas
TRADING OPERATING MARGIN by business lines & geographical areas Like-for-like H1 2013 H1 2014 change Fresh Dairy Products 9.91% 7.81% (168) bps Waters 13.18% 12.50% +38 bps Early Life Nutrition 20.49% 17.42% (270) bps Medical Nutrition 19.31% 17.56% (92) bps Europe 14.28% 14.56% +60 bps CIS+Noram 9.
Slide 33: From Operating Income to EPS
FROM OPERATING INCOME TO EPS H1 2013 H1 2014 Non-current H1 2014 € mln underlying underlying items Trading operating income 1,475 1,180 - 1,180 Other operating items - - (96) (96) Operating income 1,475 1,180 (96) 1,084 Total financial expenses (152) (156) (3) (159) Income tax (402) (303) 19 (284) N
Slide 34: H1 2014 - Analysis of Underlying Fully Diluted EPS Growth
H1 2014 - ANALYSIS OF UNDERLYING FULLY DILUTED EPS GROWTH Reported 34
Slide 35: Cash Drivers
CASH DRIVERS FREE CASH-FLOW EXCLUDING EXCEPTIONAL ITEMS (€ MLN) WORKING CAPITAL (€ MLN) CAPITAL EXPENDITURES (€ MLN) % of sales -6.4% -8.3% -7.0% % of sales 4.1% 5.7% 4.4% 35
Slide 36: H1 2014 - FCF to Net Debt Change
H1 2014 - FCF TO NET DEBT CHANGE (1,674) 36
Slide 37: Synthetic Balance Sheet
SYNTHETIC BALANCE SHEET Assets(1) Liabilities € mln December 13 June 14 December 13 June 14 Shareholders’ equity Intangible assets Net debt(2) Other assets Other liabilities Working capital Working capital 26,967 28,295 26,967 28,295 (1) Excluding assets included in net debt (2) Net of cash, cash eq
Slide 38: 2014 Outlook
2014 OUTLOOK 2014 OUTLOOK 38
Slide 39: 2014 Guidance
2014 GUIDANCE (1,027) 2014 objectives Sales growth(1) +4.5% to +5.5% (1) Stable Trading operating margin ± 20 bps Free cash-flow excluding around €1.5 bn exceptional items(2) (1) Like-for-like : Based on constant scope of consolidation, constant exchange rates and accounting principles (2) Free cash
Slide 40: 2014 - An Unbalanced Year
2014 - AN UNBALANCED YEAR TOPLINE MARGIN Actual Forecast Forecast 120 Actual 120 110 110 +2.2% 100 100 90 90 11.27% 80 80 70 70 60 60 S1 S2 S1 S2 S1 S2 S1 S2 2013 2014 2013 2014 Negative effect of the 2013 comparison base and carryover of the Fonterra crisis Strong rebound expected in H2 2014
Slide 41: H2 2014 Agenda
H2 2014 AGENDA BRING DANONE BACK TO THE DELIVER ON 2014 PRIORITIES AGENDA OF A … 41
Slide 42: Appendix
APPENDIX APPENDIX 42
Slide 43: Tax Rate Development
TAX RATE DEVELOPMENT H1 2013 H1 2014 € mln Total income tax (reported) (315) (284) Reported tax rate 29.0% 30.7% Non-current income tax(1) 87 19 Current income tax (402) (303) Underlying tax rate 30.3% 29.6% (1) Tax related to non-current items 43
Slide 44: Share Price & Shareholding
SHARE PRICE & SHAREHOLDING DANONE H1 2014 SHARE PRICE EVOLUTION DANONE H1 2014 STOCK PERFORMANCE (June 30) Absolute +3.7% Relative vs. CAC 40 +0.7% Relative vs. Eurostoxx 50 -0.4% SHAREHOLDING BY INVESTOR (1) INSTITUTIONAL SHAREHOLDING BY GEOGRAPHY (1) France Institutional shareholders United Kingdo
Slide 45: Q2 2014 - Impact of Currencies and Scope
Q2 2014 - IMPACT OF CURRENCIES AND SCOPE Fresh Dairy Early Life Medical Waters Total Products Nutrition Nutrition Reported sales growth (7.8)% +6.8% (13.6)% +4.3% (5.5)% Currency (8.6)% (8.2)% (6.4)% (3.4)% (7.8)% Scope of consolidation (1.6)% +1.9% +2.0% +0.4% (0.0)% Like-for-like sales growth +2.4
Slide 46: H1 2014 - Impact of Currencies and Scope
H1 2014 - IMPACT OF CURRENCIES AND SCOPE Fresh Dairy Early Life Medical Waters Total Products Nutrition Nutrition Reported sales growth (6.3)% +4.1% (13.1)% +3.1% (5.3)% Currency (9.3)% (8.9)% (6.6)% (3.7)% (8.3)% Scope of consolidation (0.1)% +1.8% +1.9% +0.5% +0.8% Like-for-like sales growth +3.1%
Slide 47: Q2 2014 - Sales by Business & Geographical Area
Q2 2014 - SALES BY BUSINESS & GEOGRAPHICAL AREA Like-for-like Q2 2013 Q2 2014 € mln sales growth Fresh Dairy Products 3,071 2,831 +2.4% Waters 1,104 1,179 +13.1% Early Life Nutrition 1,206 1,042 (9.2)% Medical Nutrition 339 354 +7.3% Europe 2,155 2,208 +0.1% CIS+Noram 1,197 1,176 +7.0% ALMA 2,368 2,
Slide 48: H1 2014 - Sales by Business & Geographical Area
H1 2014 - SALES BY BUSINESS & GEOGRAPHICAL AREA Like-for-like Like-for-like sales growth H1 2013 H1 2014 € mln sales growth Fresh Dairy Products 6,023 5,640 +3.1% Waters 1,991 2,074 +11.2% Early Life Nutrition 2,383 2,071 (8.4)% Medical Nutrition 661 682 +6.3% Europe 4,160 4,261 +0.3% CIS+Noram 2,36
Slide 49: Q2 2014 Like-for-Like Sales Growth Breakdown Volume/Value
Q2 2014 LIKE-FOR-LIKE SALES GROWTH Breakdown volume/value Volume Price/mix Total Like-for-like Fresh Dairy Products (7.4)% +9.8% +2.4% Waters +7.0% +6.1% +13.1% Early Life Nutrition (7.9)% (1.3)% (9.2)% Medical Nutrition +6.2% +1.1% +7.3% Europe (2.3)% +2.4% +0.1% CIS+Noram (9.0)% +16.0% +7.0% ALMA
Slide 50: H1 2014 Like-for-Like Sales Growth Breakdown Volume/Value
H1 2014 LIKE-FOR-LIKE SALES GROWTH Breakdown volume/value Volume Price/mix Total Like-for-like Fresh Dairy Products (5.7)% +8.8% +3.1% Waters +6.2% +5.0% +11.2% Early Life Nutrition (6.4)% (2.0)% (8.4)% Medical Nutrition +5.3% +1.0% +6.3% Europe (1.4)% +1.7% +0.3% CIS+Noram (6.4)% +13.8% +7.4% ALMA
Slide 51: H1 2014 - Cash Bridge
H1 2014 - CASH BRIDGE ©) DANONE €min (Ge) 37 a (79) 286 207 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 in Fees Europe 51
Slide 52: Changes in Exchange Rates
CHANGES IN EXCHANGE RATES 28.8% of sales denominated in € % total H1 14 vs H1 Q2 14 vs Q2 H1 14 sales 13 (avg) 13 (avg) Russian ruble 10.1% (15.2)% (13.8)% US dollar 10.1% (4.2)% (4.8)% Chinese yuan 6.5% (3.8)% (5.9)% Indonesian rupiah 5.3% (20.4)% (8.5)% Mexican peso 5.3% (8.2)% (19.8)% British pou
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