Slide 1: H1 2016 Results
H1 2016 RESULTS July 28, 2016 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: H1 2016 Key Highlights
H1 2016 KEY HIGHLIGHTS © DANONE CORPORATE COMMUNICATION © DANONE CORPORATE COMMUNICATION MARCH 2016 MARCH 2016
Slide 4: H1 2016 key highlights: strong results, another key step towards the 2020 ambition
H1 2016 key highlights PROGRESSING ON CONTINUING TO BUILD A SOLID …IN A CHALLENGING KEY BATTLES AND BALANCED MODEL… CONTEXT Sustain the re-acceleration Return to growth Build a sustainable model Pursue Mizone’s transition STRONG RESULTS: ANOTHER KEY STEP TOWARDS THE 2020 AMBITION ● Sales growth: +3.
Slide 5: H1 2016: Strong results, another quarter of delivery
H1 2016: Strong results, another quarter of delivery RECURRING SALES GROWTH OPERATING MARGIN(2) RECURRING EPS 13.37% €1.52 -3.0% +125 bps +10.7% +3.8% (1) +93 bps (1) +16.1% At constant exchange rates (1) Like-for-like growth 5 (2) Formerly known as “Trading operating margin” (respectively as “Tradi
Slide 6: Q2 2016 like-for-like sales growth at +4.1%
Q2 2016 like-for-like sales growth at +4.1% Reported (3.0)% Like-for-like +4.1% (7.7)% +3.1% €5,921 mln +1.0% €5,746 mln +0.6% Q2 2015 Currency Scope & others Volume Value Q2 2016 ● Organic sales growth in line with expectations ● Reported sales impacted by currencies (Argentine peso, Russian ruble,
Slide 7: Q2 2016 sales regional dynamics
Q2 2016 sales(1) regional dynamics EUROPE NORAM ALMA CIS USA+Canada+CIS AsiapacLatamMiddleEastAfrica -0.2% +4.8% +8.0% ● Continued improvement in ● Confirmed momentum in ● Mizone transition in process Dairy Dairy US ● Sequential step-up of local ● Slowdown of indirect sales to ● Resilient CIS platfo
Slide 8: Q2 & H1 2016 divisional dynamics
Q2 & H1 2016 divisional dynamics(1) +3.0% +2.7% +7.2% +7.1% SALES 1.4% 2.9% Q2 2016 5.3% 5.5% 5.2% 4.2% 1.9% (2.2)% (2.8)% MARGIN H1 2016 +56 bps (121) bps +353 bps +105 bps 8 (1) Like-for-like growth Price/mix Volume
Slide 9: Progressing on Key Battles
PROGRESSING ON KEY BATTLES © DANONE CORPORATE COMMUNICATION © DANONE CORPORATE COMMUNICATION MARCH 2016 MARCH 2016
Slide 10: Dairy US: Sustaining the re-acceleration
Dairy US: Sustaining the re-acceleration Successfully drive innovations… …to nurture solid momentum… H1 16 35.6% market share +1.2 pt vs LY H1 16 Mid-single digit sales growth(1) …with a long-term vision (1) Like-for-like 10
Slide 11: Dairy Europe: Returning to profitable growth
Dairy Europe: Returning to profitable growth 2016: a key year for global brand relaunches First positive results in Q2: on track towards a return to growth Back to positive sales growth 11
Slide 12: Waters: Expanding platforms across markets and pursuing Mizone transition in China
Waters: Expanding platforms across markets and pursuing Mizone transition in China Outside China China Expand a balanced portfolio across markets A slowing category ● Fortify plain water & step-up in aquadrinks From To > +10%(1) Mid-single digit 0 to low-single digit > +8%(1) growth in 2014 growth s
Slide 13: ELN China: Building a sustainable model
ELN China: Building a sustainable model Strong foundations to adapt the model… …in a fast-changing market context ● Strong brand equity ● Market growth driven by MBS and e-commerce Market Growth: Low to Mid Single Digit(1) #1 ● Leading e-commerce position ● New regulation on cross-border e-commerce
Slide 14: Financial Metrics
FINANCIAL METRICS © DANONE CORPORATE COMMUNICATION © DANONE CORPORATE COMMUNICATION MARCH 2016 MARCH 2016
Slide 15: Very strong improvement in recurring operating margin
Very strong improvement in recurring operating margin Reported +125 bps Like-for-like +93 bps (101) bps +146 bps +48 bps +18 bps +14 bps 13.37% 12.12% H1 2015 Scope Forex Margin from Reinvest Others H1 2016 reported operations reported ● Strong progress in rebalancing the growth model in a favorable
Slide 16: Strong recurring EPS growth reflecting a more balanced model
Strong recurring EPS growth reflecting a more balanced model Reported +10.7% Like-for-like +13.5% +2.3% (0.3)% (5.4)% +2.6% +7.7% +3.8% €1.52 €1.37 H1 2015 Net Sales Margin FFI + Others Taxes Currency Scope H1 2016 recurring EPS recurring EPS ● +16.1% growth at constant exchange rates ● +13.5% like-
Slide 17: Solid cash improvement driven by NOPAT increase
Solid cash improvement driven by NOPAT increase Solid cash generation Free cash-flow excluding exceptional items (€ mln) 742 576 H1 2015 H1 2016 Sound control of working capital Continued rhythm of investment Working cap/sales (%) Capex/sales (%) June 30,2015 June 30,2016 3.3% 3.2% (6.9)% (5.9)% H1
Slide 18: Free cash-flow to net debt
Free cash-flow to net debt € mln (203) 193 731 (1,031) (497) (187) Free cash-flow M&A Changes in put to Dividends Others Change minority in net debt shareholders 18
Slide 19: 2016: The transformation continues towards our 2020 ambition
2016: The transformation continues towards our 2020 ambition 2015 2016 … Sales Within a 3-5% 7-10% range of > +5% growth(1) +3% to +5% 7-10% 6-8% Range of > + 200bps(2) Recurring operating +50 bps to margin growth(1) +60 bps Yearly growth of: ● Recurring operating margin ● Cash ● Recurring EPS (1) L
Slide 20: 2016 guidance: Anchoring a profitable and sustainable model
2016 guidance: Anchoring a profitable and sustainable model 2016 GUIDANCE SALES(1) Within a range of +3% to +5% RECURRING OPERATING MARGIN(1) Range of +50 bps to +60 bps 20 (1) Like-for-like growth
Slide 21: Appendix
APPENDIX 21
Slide 22: Q2 & H1 2016 impact of currencies & scope
Q2 & H1 2016 impact of currencies & scope Fresh Dairy Early Life Medical Q2 2016 Waters Total Products Nutrition Nutrition Reported sales growth (5.5)% (4.5)% +3.6% +0.4% (3.0)% Currency (9.6)% (7.1)% (4.8)% (4.9)% (7.7)% Scope of consolidation +1.1% (0.1)% +1.2% (1.8)% +0.6% Like-for-like sales gro
Slide 23: Changes in exchange rates
Changes in exchange rates 27.7% of H1 2016 sales denominated in € % total H1 16 H1 16 vs H1 15 Q2 16 vs Q2 15 sales (avg) (avg) US dollar 12.4% (0.1)% (2.1)% Chinese yuan 7.1% (4.9)% (7.1)% Russian ruble 6.3% (17.7)% (21.7)% Indonesian rupiah 6.2% (3.3)% (3.4)% British pound 5.6% (6.0)% (8.4)% Mexic
Slide 24: Recurring operating margin by regional areas
Recurring operating margin by regional areas Like-for-like H1 2015 H1 2016 € mln change Europe 16.29% 16.57% +30 bps CIS+Noram 7.75% 9.54% +177 bps ALMA 10.29% 12.15% +135 bps Total 12.12% 13.37% +93 bps 24
Slide 25: From operating income to EPS
From operating income to EPS H1 2015 H1 2016 Non-recurring H1 2016 € mln recurring recurring Recurring operating income 1,381 1,478 - 1,478 Other operating items - - 21 21 Operating income 1,381 1,478 21 1,499 Total financial expenses (155) (136) 0 (136) Income tax (398) (431) 23 (408) Net income of
Slide 26: Cash bridge
Cash bridge € mln 398 (431) (136) (9) (236) (358) 17 1,478 1,318 (11) 742 731 Trading Depreciation / Taxes Financial Others Cash from W cap var Capex Sales of assets FCF excl Plan for FCF reported Operating Amortization results operating and European savings and income activities transaction plan ad
Slide 27: Balance sheet
Balance sheet € mln ASSETS(1) LIABILITIES December June 2016 December June 2016 2015 2015 12,669 11,989 Shareholders’ equity 15,779 15,582 Intangible assets Net debt(2) 7,799 8,296 9,022 8,929 Other assets Other liabilities 2,772 2,925 6,193 6,532 Working capital Working capital 4,632 5,230 29,433 2
Slide 28: Stock price data
Stock price data H1 2016 stock price evolution H1 2016 stock price performance (1) Index 105 - December 31, 2015: €62.28 - June 30, 2016: €63.41 100 ● Absolute +1.8% 95 ● Relative vs. CAC 40 +10.4% ● Relative vs. Eurostoxx 50 +14.7% 90 Dec-15 Feb-16 Apr-16 Jun-16 28 (1) At 30/06/2016
Slide 29: Financial indicators not defined in IFRS
Financial indicators not defined in IFRS Like-for-like changes in Sales, recurring operating income, recurring 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 relate
Slide 30: 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