FULL YEAR RESULTS 2017

Transcription

1 FULL YEAR RESULTS 2017 February 16, 2018 Emmanuel Faber, Chairman and CEO Cécile Cabanis, CFO I 1 I

2 Disclaimer This press release contains certain forward-looking statements concerning Danone. In some cases, you can identify these forwardlooking statements by forward-looking words, such as estimate, expect, anticipate, project, plan, intend, objective believe, forecast, foresee, likely, may, should, goal, target, might, will, could, predict, continue, convinced, and confident, the negative or plural of these words and other comparable terminology. Forward looking statements in this document include, but are not limited to, statements regarding Danone s operation of its business, and the future operation, direction and success of Danone s business. 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 materially from those anticipated in these forwardlooking statements. For a detailed description of these risks and uncertainties, please refer to the Risk Factor section of Danone s Registration Document (the current version of which is available on Subject to regulatory requirements, Danone does not undertake to publicly update or revise any of these forward-looking statements. This document does not constitute an offer to sell, or a solicitation of an offer to buy Danone securities. All references in this presentation to like-for-like changes, like-for-like New Danone changes, recurring operating income, recurring operating margin, recurring net income, recurring income tax rate, recurring EPS, Yakult Transaction Impact, free cash flow and net financial debt correspond to financial indicators not defined in IFRS used by Danone and are defined at the end of this presentation. Due to rounding, the sum of values presented in this document may differ from totals as reported. Such differences are not material. I 2 I

3 2017 Highlights Emmanuel Faber Chairman and CEO I 3 I

4 Our ambition Leading the way to create and share sustainable value Healthier eating and drinking Responsible business stewardship Sustainable value I 4 I

5 We delivered very strong recurring EPS growth In line with guidance 2017 OBJECTIVE Recurring EPS at constant FX 2017 RESULTS Recurring EPS at constant FX > 12% +14.2% I 5 I

6 A solid execution 2017: another year of progress NET SALES RECURRING OPERATING MARGIN FREE CASH FLOW +2.5% (1) 24.7 bn +70bps (1) 14.36% +18.4% (2) 2.1 bn (1) Like-for-like New Danone (2) On a reported basis I 6 I

7 in a responsible way Creating sustainable value for all stakeholders +14.2% 88% -10.5% RECURRING EPS (1) OF VOLUME SOLD ARE SUITABLE FOR DAILY CONSUMPTION (2) REDUCTION OF CARBON INTENSITY FULL SCOPE (3) B CORP ENTITIES (1) At constant exchange rate (2) This percentage refers to water, yogurt and other daily dairy products, baby milks & foods, milks and milk powders, beverages with 0% sugar and medical nutrition. Based on official public health Recommendation, these categories are generally suitable for daily consumption. (3) Compared to 2015 baseline, based on constant scope of consolidation and constant methodology; In line with our commitment of reduction of 50% in carbon intensity full scope (scopes 1, 2 and 3) by 2030, which is validated by the Science Based Targets Initiative Notes (2) and (3) do not take into account WhiteWave A- 20% of LTI as of 2018 Climate change I 7 I

8 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 Aguas Argentina 2bn syndicated credit loan with now environmental and social criteria impacting payable margin I 8 I

9 Execution against strategic priorities Solid progress towards ACCELERATE GROWTH Acceleration of innovation pipeline 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 ALLOCATE CAPITAL WITH DISCIPLINE Active portfolio management STREAMLINED ORGANIZATION I 9 I

10 Execution against strategic priorities Solid progress towards ACCELERATE GROWTH Acceleration of innovation pipeline 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 ALLOCATE CAPITAL WITH DISCIPLINE Active portfolio management STREAMLINED ORGANIZATION I 10 I

11 Accelerated launch of innovations Focus on differentiation, setting the stage for the future Plant-based premiumization Adjacent categories through new brands Young and local brands Relaunch of flagship Danone brand Neocate Syneo Prebiotics + Probiotics Mizone Pro Lemonades Reinvent smart calories 100% Non-GMO Launched in 5 months Cross fertilization with WhiteWave Activia Cereals range Actimel trendy flavours Ultra-Premium Infant Milk Aquadrinks Premium Subplatforms Soft Functional Infusions I 11 I

12 Strong brand activation to engage with consumers in a new way Danimals: US Non-GMO Pledge > 90% of products already Non-GMO Project Verified end of 2017, ahead of plan 2017 Sales growth +9% Danimal s value market shares (Kids segment) 41% 33% Source: IRI Mulo I 12 I

13 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

14 Strong brand activation to engage with consumers in a new way One Planet. One Health. I 14 I

15 Accelerated shift towards digital Strategic partnerships and investments in e-commerce Superior online shopping Growing e-commerce presence Efficient precision marketing Optimized supply chain I 15 I

16 Disrupt innovation through investments in new models 7 Danone Manifesto Ventures investments to date Leading French F&B revolution with unconventional premium indulgence (Paris) Increasing fresh food accessibility via vending / connected fridge innovation (Chicago) Drive growth and pioneer sustainability in new deep ocean water category (Los Angeles/Hawaii) Leading Harmless, Fair for Life business model development offering premium plant-based beverages (San Francisco/Thailand) Partner to expand network and expertise in early stage, US packaged F&B ecosystem (New-York) Redefining model for healthy, organic frozen baby food prep in France (Bordeaux) Access tech / digital expertise and identify next gen partners for F&B brands (Atlanta) July March Sept Nov Dec I 16 I

17 Execution against strategic priorities Solid progress towards ACCELERATE GROWTH Acceleration of innovation pipeline Strong activations of our brands Strategic digital partnerships 2 MAXIMIZE EFFICIENCIES 1st year delivery of synergies ahead of plan Preparation of Protein program 3 ALLOCATE CAPITAL WITH DISCIPLINE Active portfolio management STREAMLINED ORGANIZATION I 17 I

18 WhiteWave synergies, chapter one Delivery on track, ahead of plan 2017 Onboarding phase 2018 Second wave 2020 Full run-rate 2017 OBJECTIVE 2017 DELIVERY 2018 OBJECTIVE 2020 OBJECTIVE > 10% of run-rate synergies > $50m above objective > 60% of run-rate synergies $300m HQ consolidation Sales force merge G&A / Shared back-office Major part in cost synergies Procurement Sales Force consolidation G&A / shared back office Procurement Topline synergies Distribution expansion Commercial scale effect I 18 I

19 Preparing for Protein delivery 1bn sustainable savings through efficiencies 2017 Foundations in place st year of delivery 2020 Full delivery 10 clusters activated out of 30 clusters Process in place: 15 playbooks created Onboarding preparation of the next 20 clusters Incentives in place for successful delivery Top-20 cross-program identified (marketing, logistics ) Priority to efficiency in m in margin Mostly from travel costs, consultancy, IT/IS, real estate and marketing efficiency 300m in margin From 1bn gross savings I 19 I

20 Execution against strategic priorities Solid progress towards ACCELERATE GROWTH Acceleration of innovation pipeline 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 ALLOCATE CAPITAL WITH DISCIPLINE Active portfolio management STREAMLINED ORGANIZATION I 20 I

21 Active portfolio management Continued discipline in capital allocation Starting a new partnership phase with Yakult in probiotics Enhanced strategic collaboration to promote probiotics Optimized stake in line with capital allocation discipline Strategic partnership Financial discipline I 21 I

22 Execution against strategic priorities Solid progress towards ACCELERATE GROWTH Acceleration of innovation pipeline 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 ALLOCATE CAPITAL WITH DISCIPLINE Active portfolio management STREAMLINED ORGANIZATION I 22 I

23 Reinforcing governance, ongoing Board refreshment Towards balance, efficiency, diversity and expertise Changes submitted for vote at next AGM on April, 26 th 2018 Emmanuel FABER Chairman & CEO i Michel LANDEL Lead independent director i Guido BARILLA Cécile CABANIS 16 members 64% independent (1) Franck RIBOUD Honorary Chairman Frédéric BOUTTEBA Gregg ENGLES i Clara GAYMARD 43% women i Gaëlle OLIVIER i Benoît POTIER Isabelle SELLIER i Jean-Michel SEVERINO 36% non-french Increased focus on Consumer expertise i Virginia STALLINGS Bettina THEISSIG i Serpil TIMURAY i Lionel ZINSOU i Independent Director (1) Directors representing employees are not taken into account in the determination of above percentages I 23 I

24 Strengthened management model EXCOM: 7 MEMBERS STREAMLINED Focus Diversity Speed REGIONAL LEADERSHIP REINFORCED 15 regional leaders empowered on global decisions Closer to market Cross-regional collaboration 30 LOCAL CLUSTERS I 24 I

25 100,000 engaged Danoners 2017 Danone People Survey 86% of employees engagement (1) + 4pts vs pts 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

26 Starting 2018 with strong foundations Leading the way to create and share sustainable value Healthier eating and drinking Responsible business stewardship Sustainable value I 26 I

27 reinforcing our confidence for 2020 LFL sales growth Recurring operating margin 4 to 5% < 3.0x Consistent EPS Growth >16% ~12% Net debt / EBITDA (1) ROIC (1) (1) See definition in 2017 Interim Financial report I 27 I

28 Financial review Cécile Cabanis CFO I 28 I

29 We delivered very strong recurring EPS growth In line with guidance 2017 OBJECTIVE Recurring EPS at constant FX 2017 RESULTS Recurring EPS at constant FX > 12% +14.2% I 29 I

30 A solid execution 2017: another year of progress NET SALES RECURRING OPERATING MARGIN FREE CASH FLOW +2.5% (1) 24.7 bn +70bps (1) 14.36% +18.4% (2) 2.1 bn (1) Like-for-like New Danone (2) On a reported basis I 30 I

31 Navigating a volatile environment in 2017 Volatility management embedded in our growth model MILK PRICE INFLATION US CRUDE OIL INCREASE BREXIT GBP DEVALUATION EMERGING COUNTRIES VOLATILITY UE Milk price US Milk Price 67$ EUR / GBP $ Milk*: ~ +10% in PET: > 10% in H (*)Worldwide I 31 I

32 We delivered strong results 2017: another year of progress NET SALES RECURRING OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% (1) +70bps (1) +14.2% (2) +18.4% (3) 24.7 bn 14.36% bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 32 I

33 Q sales bridge +3.7% like-for-like (1) growth, confirming acceleration -1.9% LFL New Danone (1) : +3.7% 6,095 m +17.7% -5.7% -1.7% +5.4% 5,355 m Q Reported White Wave base effect(2) (1) Like-for-like New Danone (2) Corresponds to the contribution of WhiteWave over the period from October 1 to December 31, 2016 Scope Currency Volume Value Q Reported I 33 I

34 Q4 and FY 2017 by reporting entity (1) Specialized Nutrition EDP Noram EDP International Waters SALES Q 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 MARGIN FY % +197 bps 12.28% +2 bps 9.02% -29 bps 11.70% +12 bps (1) Like-for-Like New Danone I 34 I

35 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 % +8.4% 9M 2017 Q All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 35 I

36 Strong profitable growth, relying on unique portfolio and perfect execution Strong sales growth in Q4 for both ELN and AMN Advanced Medical Nutrition (AMN) ~25% Early Life Nutrition: high single-digit growth in Q4 (1) China > 30% growth in Q4 (1) Peak in number of births in H2 2016: accelerated market demand Early Life Nutrition (ELN) Q ~75% Continued market share gains in all channels Other markets Strong momentum in Latin America Stable trend in Europe Tailored Nutrition: strong growth across all regions Advanced Medical Nutrition: mid-to-high single-digit growth in Q4 (1) All categories and regions contribute to growth Continued strong performance of Neocate, Nutrison and Nutrini (1) Like-for-like Now Danone sales growth I 36 I

37 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 Q All data in like-for-like New Danone (1) Recurring Operating Margin improvement Credit photo: Revolution Digital I 37 I

38 Sequential improvement in growth; strong synergies delivery Q4 sales growth positive excluding Fresh Foods Yogurt Plant-based Coffee Creamers Premium Dairy Fresh Foods Q ~10% ~10% ~20% ~20% ~40% US Yogurt: continued value market share gains in Q4 Continued roll-out of non-gmo yogurts across brands Double digit growth of emerging yogurts (Plant-based) Coffee creamers: continued solid growth Solid market fundamentals Growth across portfolio driven by PB creamers and seasonal flavored Plant-based (food, beverages & nutrition): growth acceleration Reacceleration of plant-based beverage, posting solid growth Continued focus on expanding recent innovations Very strong momentum for Vega Premium Dairy: continued pressure Challenging industry organic milk dynamics Innovations in emerging growth areas to spur demand I 38 I

39 EDP International Continued progress FY 17 Sales growth: -1.3% FY 17 margin (1) : -29 bps SALES GROWTH -1,6% -0,3% 9M 2017 Q All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 39 I

40 Continued progress Q4 sales growth positive excluding Brazil Europe ~20% Latam CIS ~20% Aspame ~20% Q ~40% Europe: progress on turnaround Progress in Activia Positive signs from Danone relaunch Continued momentum from young and local brands Alpro: sustained strong growth Latam: strong fundamentals outside Brazil Mexico: strong growth Brazil: double digit negative; transformation plan in progress CIS: solid momentum supported by a winning strategy (1) Like-for-like New Danone sales growth I 40 I

41 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 Q All data in like-for-like New Danone (1) Recurring Operating Margin improvement I 41 I

42 Solid profitable growth ; end of transition in China Double digit sales growth in Q4 Q Europe + Noram Aspame(2) ~25% ~40% Plain water: double-digit growth (1) Positive trends across regions Latam ~35% Strong growth in Europe driven by MS gains and a dynamic innovation pipeline(germany, Spain and UK) Plain Waters Aquadrinks ~2/3 ~1/3 Aquadrinks: high-single digit growth (1) Mainly driven by Turkey, Argentina and China End of transition in China Strong sales growth in a growing category ; market share stable at 5% Positive results from recent innovation Mizone Pro (1)Like-for-like New Danone sales growth (2) Aspame: Asia, Pacific, Africa, Middle-East I 42 I

43 We delivered strong results 2017: another year of progress NET SALES RECURRING OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% (1) +70bps (1) +14.2% (2) +18.4% (3) 24.7 bn 14.36% bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 43 I

44 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% +1 bp +57 bps +21 bps -11 bps -33 bps FY 2016 Reported WhiteWave base effect (2) Scope (excl. WhiteWave) Currency Margin from operations Sales & Marketing Overheads & Others FY 2017 Reported (1) Like-for-like New Danone (2) Corresponds to the contribution of WhiteWave over the period from April 1 to December 31, 2016 I 44 I

45 We delivered strong results 2017: another year of progress NET SALES RECURRING OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% (1) +70bps (1) +14.2% (2) +18.4% (3) 24.7 bn 14.36% bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 45 I

46 Very strong recurring EPS growth +14.2% at constant FX; Fully in line with 2017 guidance +12.6% Reported +5.3% -2.0% -1.7% +1.1% -1.6% +2.5% +9.1% % At constant FX xxx xxx WhiteWave xxx Net Sales xxx Margin xxx Financing Tax & xxx others Scope xxx Currency xxx xxx base effect (1) (Incl. Hybrid) (excl. WhiteWave) FY 2016 Reported Recurring EPS FY 2017 Reported Recurring EPS (1) Corresponds to the contribution of WhiteWave over the period from April 1 to December 31, 2016 I 46 I

47 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 Operating income 3,022 3, ,734 Total Financial expenses (280) (400) (38) (438) Income tax (852) (953) 111 (842) Net income from associates (2) 109 Net income 2,019 2, ,563 Non-controlling interests (1) 110 Net income Group share 1,911 2, ,453 I 47 I

48 We delivered strong results 2017: another year of progress NET SALES RECURRING OPERATING MARGIN RECURRING EPS FREE CASH FLOW +2.5% (1) +70bps (1) +14.2% (2) +18.4% (3) 24.7 bn 14.36% bn (1) Like-for-like New Danone (2) At constant exchange rates (3) on a reported basis I 48 I

49 Very strong cash delivery: +18.4% Solid cash conversion Free Cash Flow ( m) 1,760 2,083 FY 2016 FY 2017 Working Capital / Net Sales (%) Capex / Net Sales (%) -7.1% -4.5% 4.2% 3.9% FY 2016 FY 2017 FY 2016 FY 2017 I 49 I

50 Change in net debt in billion + 7.9bn (1.4) (2,1) (1) Net debt 31/12/2016 Dividends M&A Puts Refinancing & others FCF Net debt 31/12/2017 (1) including 10.9bn of net cash outflow on WhiteWave purchase I 50 I

51 Balance sheet Assets (1) million Liabilities Dec Dec Dec Dec ,574 Shareholders equity 24,945 Intangible assets 15,803 13,194 15,372 Net debt (2) 7,472 Other assets 9,372 9,679 2,960 3,566 Other liabilities Working capital 4,964 5,508 6,513 6,620 Working capital 30,139 40,132 30,139 40,132 (1) Excluding assets included in net debt (2) Net of cash, cash equivalents, marketable securities, other short-term investments and financial instrument assets I 51 I

52 2017 Dividend: % increase A firm commitment to shareholders Dividend proposed at the next AGM on April 26, per share (+11.8% ; +20 cts vs. 2016) Payment in either cash or shares at shareholder option I 52 I

53 2018 outlook: Volatility to continue Ensure a consistent recurring EPS growth Continued volatility in emerging markets Small and local brands Persistent strong input cost inflation (Milk, PET ) Raw materials Ongoing impact from GBP (Brexit) Accelerated industry transformation Brexit Channel shifts I 53 I

54 Acceleration towards Sales Growth (1) +2.5% Acceleration towards % Recurring op. margin 14.4% Sustained margin improvement (1) >16% FCF 2.1bn Consistent pace of deleverage <3x Net debt/ebitda (3) Recurring EPS growth (2) +14.2% Consistent recurring EPS growth EPS Consistent recurring EPS growth (1) Like-for-like New Danone sales growth (2) At constant exchange rate (3) See definition in 2017 Interim Financial report I 54 I

55 2018: a year of execution and delivery 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

56 APPENDIX I 56 I

57 Q4 & FY 2017 impact of currencies & scope Q EDP International EDP Noram Specialized Nutrition Waters Reported sales growth +0.4% % +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% % -0.2% -0.6% +17.7% Like-for-like New Danone sales growth -0.3% -0.4% +8.4% +10.3% +3.7% Total FY 2017 EDP International EDP Noram Specialized Nutrition Waters Reported sales growth +2.4% +80.8% +7.1% +1.0% +12.5% Currency -0.1% -2.4% -1.8% -3.4% -1.6% Scope of consolidation -1.0% -5.4% -0.2% -0.1% -1.1% WhiteWave base effect +4.8% +90.6% -0.2% -0.2% +12.7% Like-for-like sales New Danone growth -1.3% -2.0% +9.3% +4.7% +2.5% Total I 57 I

58 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 Pesos 4.3% -3.1% -4.2% Brazilian Real 3.3% 6.9% -7.0% Turkish Lira 1.8% -18.9% -20.8% Egyptian Pound 0.3% -45.0% -25.9% I 58 I

59 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 bps Rest of the World 10.72% 13.02% +183 bps Total 13.77% 14.36% +70 bps I 59 I

60 Cash bridge million Depreciation Taxes 400 Financial results 79 Others 127 W cap var 969 3,543 3,085 Capex 95 Sales of assets and Transaction Fees 2,083 2 Plan for savings and adaptation in Europe 2,085 Recurring Operating income Cash from operating activities FCF reported FCF excl. European plan I 60 I

61 Tax rate development mln Total income tax (reported) (804) (842) Reported tax rate 30.6% 25.5% Non-current income tax (1) Current income tax (852) (953) Underlying tax rate 31.1% 30.3% (1) Tax related to non-current items I 61 I

62 Cash-flow statement Operating income 3,022 3,543 Financial income (280) (400) Income tax (852) (953) Non-current income (64) 264 Depreciation and amortization Net change in provisions / Deferred taxes (15) (200) Dividend received from equity accounted affiliates Net change in interest income (expense) 0 80 Expense related to stock options and GPS Other items (60) (299) Cash flow provided by operating activities, excluding changes in net working capital 2,615 3,085 I 62 I

63 Cash-flow statement Cash flow provided by operating activities, excluding changes in net working capital ,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 Business acquisitions and other investments, net of cash and cash equivalent acquired (66) (10,949) Proceeds from the sale of business Change in long-term loans and other long-term assets 6 (4) Cash flow used in investing activities and disposals (848) (11,437) I 63 I

64 Cash-flow statement Cash flow used in investing activities and disposals (848) (11,437) Increase in capital and additional paid-in capital Purchases of treasury stock (net of disposal) Perpetual subordinated notes issued during the period 1,245 Dividends paid to Danone shareholders (985) (279) Transactions with non controlling interests* (383) (193) Settlement of debt hedge financial instruments 50 (52) Bonds issued or raised during the period 11,237 0 Bonds repaid during the period (638) (1,487) Increase (decrease) in other current and non-current financial debt (442) (564) Increase (decrease) in other short-term investments (10,531) 9,559 Cash flow used in financing activities (1,616) 8,289 Exchange rate differances and others (151) 272 Increase (decrease) in cash * Including dividends and capital increase I 64 I

65 Stock price & shareholding Danone 2017 stock price evolution (1) Danone 2017 stock performance (1) > Absolute +16.2% > Relative vs. CAC % > Relative vs. Eurostoxx % 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 shareholder composition (2) Institutional shareholders by geography (2) 9% 7% 6% 1% 6% 77% 5% Institutional Retail Company related 78% Trading & Miscellaneous Unidentified (1) At 31/12/2017 (2) Source: NASDAQ Advisory Services; Danone Shareholder Analysis dated January 2018 based on available information as of end November % 4% 6% 6% 6% 20% 6% 8% 9% 11% 18% 46% 1% United States France United Kingdom Switzerland 47% Belgium Rest of Europe Rest of the world I 65 I

66 2017 ADR program DRs Outstanding as a % of Total Shares Outstanding Data as of December 31, ,3% 4,2% 4,1% 4,0% 3,9% 3,8% 3,7% 3,6% 3,5% 3,4% 3,3% 3,2% DRs Outstanding Pct of Shares in ADR Form > Ticker: DANOY > CUSIP Number: 23636T100 > Exchange: OTC QX ( > Ratio (ADR: ord): 5:1 > Depositary Bank: J.P. Morgan > ADR Depositary Bank contact: Dale McComb /DRX_depo@jpmorgan.com I 66 I

67 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 pre-acquisition forms thus no longer reflects their real performance. This being the case, Danone has decided to monitor and then report its performance by integrating the contribution of WhiteWave as a whole to its organic growth from the time of the acquisition by using an additional indicator - like-for-like New Danone changes. This indicator is a variation on the like-for-like changes indicator used by Danone which integrates WhiteWave s performance starting at the date of acquisition: for periods in previous years compared, and based on WhiteWave reported data after restatement to allow comparison with Danone data. This indicator is used starting with the second quarter of 2017 and running through the end of Danone does not publish like-for-like New Danone changes for prior periods given the way they are computed. Finally, Danone does not monitor internally nor publish like-for-like changes and will not do so until year-end Indeed like-for-like changes would not reflect accurately the Company s real performance, which is reflected in like-for-like New Danone changes and, by extension, the difference between like-for-like changes and like-for-like New Danone changes would not accurately reflect the contribution to this real performance of WhiteWave and its companies. These indicators are calculated as follows: Like-for-like changes in sales and recurring operating margin reflect Danone's organic performance and essentially exclude the impact of: changes in consolidation scope, with indicators related to a given fiscal year calculated on the basis of previous-year scope; changes in applicable accounting principles; changes in exchange rates with both previous-year and current-year indicators calculated using the same exchange rates (the exchange rate used is a projected annual rate determined by Danone for the current year and applied to both previous and current year). I 67 I

68 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 changes for Danone and WhiteWave combined, considering the activity of WhiteWave as a whole by integrating its companies during the fiscal years prior to and following their acquisition in April 2017: from April 1 to December 31 for periods compared until 2017 included; from January 1 to December 31 for periods compared in WhiteWave base effect corresponds primarily to the contribution of WhiteWave over the period from April 1 to December 31, 2016 and to adjustments for the impact of using different reference periods for FY 2017 reported data and for FY 2017 like-for-like New Danone data. The contribution of WhiteWave and its companies for the period from April 1-12, 2017 must be deducted as it is effectively included in the like-for-like New Danone changes and excluded from reported data. 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 of the French CNC (format of consolidated financial statements for companies reporting under international reporting standards), and comprises significant items that, because of their exceptional nature, cannot be viewed as inherent to its recurring activities. These mainly include capital gains and losses on disposals of fully consolidated companies, impairment charges on goodwill, significant costs related to strategic restructuring and major external growth transactions, and costs related to major crisis and major litigations. Furthermore, in connection with of IFRS 3 (Revised) and IAS 27 (Revised) relating to business combinations, the Company also classifies in Other operating income and expenses (i) acquisition costs related to business combinations, (ii) revaluation profit or loss accounted for following a loss of control, (iii) changes in earn-outs relating to business combinations and subsequent to acquisition date. Recurring operating margin is defined as Recurring operating income over Sales ratio. Other non-recurring financial income and expense corresponds to capital gains or losses on disposal and impairment of non-consolidated interests as well as significant financial income and expense items that, in view of their exceptional nature, cannot be considered as inherent to Danone s recurring financial management. I 68 I

69 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 of the French ANC (format of consolidated financial statements for companies reporting under international reporting standards), and comprises significant items that, because of their exceptional nature, cannot be viewed as inherent to its recurring activities. These mainly include capital gains and losses on disposals of fully consolidated companies, impairment charges on goodwill, significant costs related to strategic restructuring and major external growth transactions, and costs related to major crisis and major litigations. Furthermore, in connection with IFRS 3 (Revised) and IAS 27 (Revised) relating to business combinations, the Company also classifies in Other operating income and expenses (i) acquisition costs related to business combinations, (ii) revaluation profit or loss accounted for following a loss of control, (iii) changes in earn-outs relating to business combinations and subsequent to acquisition date. Recurring operating margin is defined as Recurring operating income over Sales ratio. Non-recurring results from associates include significant items that, because of their exceptional nature, cannot be viewed as inherent to the recurring activity of those companies and distort the reading of their performance. They include primarily (i) capital gains and losses on disposal and impairment of Investments in associates, and (ii) when material, non-recurring items as defined by Danone included in the net income from associates. Recurring net income (or Recurring net income Group Share) corresponds to the Group share in the consolidated recurring net income. The recurring net income measures Danone s recurring performance and excludes significant items that, because of their exceptional nature, cannot be viewed as inherent to its recurring performance. Such non-recurring income and expenses mainly include other income and expenses, non-recurring results from associates, capital gains and losses on disposals and impairments of Other non-fully-consolidated entities and tax income and expenses related to non-recurring income and expenses. Such income and expenses excluded from Net income are defined as Non-recurring net income and expenses. Recurring income tax rate measures the income tax rate related to Danone s recurring performance and corresponds to the ratio Tax income and expenses related to recurring income and expenses over Total Recurring net income. Recurring EPS (or Recurring net income Group Share, per share after dilution) is defined as Recurring net income over Diluted number of shares ratio. I 69 I

70 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 computed as the difference between Danone s interest in Yakult after the transaction and 21.29% applied, prorata temporis, to 2017 profit from Yakult as estimated by Danone for its 2017 consolidated financial statements. Free cash-flow represents cash-flows provided or used by operating activities less capital expenditure net of disposals and, in connection with IFRS 3 (Revised), relating to business combinations, excluding (i) acquisition costs related to business combinations, and (ii) earn-outs related to business combinations and paid subsequently to acquisition date. Free cash-flow excluding exceptional items represents free cash-flow before cash-flows related to initiatives deployed within the framework of the plan to generate savings and adapt Danone s organization in Europe. Net financial debt represents the net debt portion bearing interest. It corresponds to current and non-current financial debt (i) excluding Liabilities related to put options granted to non-controlling interests and (ii) net of Cash and cash equivalents, Short term investments and Derivatives assets managing net debt. I 70 I