H1 2007 RESULTS July 30 th, 2007 1
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements that reflect Danone's current views and estimates. These statements are based on many factors and assumptions. Changes in such factors or assumptions could produce significantly different results. 2
AGENDA Update on Recent Strategic Moves (AGE) Update on Wahaha (EF) H1 2007 Results (AGE) 3
A STRATEGIC REINFORCEMENT Over the past few months, Danone has initiated a significant repositioning centered on its core strategic mission: To become the fastest growing food company with a dominant health positioning Sale of Biscuits activity Friendly offer to acquire Numico This intensive M&A activity did not distract us from delivering superior performance Top-line growth well above guidance Strong margin improvement in spite of negative headwinds Continuous EPS growth 4
BABY FOOD UPDATE In recent months we have identified Numico as a unique strategic fit for Danone We have reached a friendly deal with the Numico board Subject to regulatory approvals we expect to close the deal around end of Q3 Organization of Numico as a new division of Danone has been prepared 5
SALE OF BISCUITS ACTIVITY TO KRAFT Scope: All Danone Biscuits activities, excluding Britannia and Arcor JV Price: 5.3bnE at 13.7x 2006A EBITDA Conditions: consultation with employee representatives and regulatory approvals Closing: expected by 2007 year-end Process on track and with a solid business performance in H1 2007 6
DANONE READY FOR 2008 CHALLENGES Danone will be in its new configuration as of January 1st, 2008 Priorities for H2 2007: Continue to apply the same level of focus on operational execution and performance At current scope (ie: including Biscuits, excluding the Numico transactio) we confirm our current guidance for 2007 (top-line and margin) The 2008 and mid-term targets will be announced after Numico is acquired (Q4 2007) 7
UPDATE ON WAHAHA 8
RESULTS H1 2007 9
H1 2007 RESULTS The disposal of the biscuits activities will most probably take place at 2007 year-end The activity will remain consolidated in the Groupe Danone accounts until the closing of the transaction. Specifically: Under IFRS, the sold activities will be accounted for as «discontinued operations» as of January 1 st, 2007. ie: no sales and no EBIT in the Group reported figures (see annexes). However, for the purpose of this presentation, the entire Biscuits activities are fully consolidated in the 2007 figures. 10
H1 2007 KEY FIGURES Net Sales 7,553 M +8.6% like-for for-like +4.7% reported 1,055 M Trading operating income +8.6% Trading operating margin Underlying net income from continuing activities Underlying EPS (fully diluted) from continuing activities 13.97 % 663 M 1.38 + 47 bp like-for for-like + 51 bp reported Vs 614 M H1 06 +8.1% Vs 1.25 H1 06 + 10.1% Free Cash Flow (1) (1) 631 M Vs 732 M H1 06-13.8% For purposes of this presentation, all figures reflect a scope of consolidation which INCLUDES the biscuits activities (1): Free Cash Flow: Cash flow from operations less capital expenditure (net of disposals) and change in working capital 11
H1 2007: A Very Strong Performance Despite Headwinds Sales growth (like-for-like) above our guidance (+8.6%), despite Wahaha Strong margin improvement (+47bp) despite negative input cost headwinds Continued growth of EPS (+10%), after a very strong H1 06 (+25%) FCF affected by Wahaha working capital deterioration and higher CAPEX 12
Q2 07 top-line growth in our targeted range +8.0% 9% 8.9% 9.5% 11.5% 10.1% 7.3% +6.0% Like-for-like sales growth Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Without Wahaha +7.8% +7.1% +7.5% +8.8% +10.3% +9.9% 13
Impact of currency and scope Q1 2007 Q2 2007 H1 2007 Reported Net Sales +3.9% +5.4% +4.7% Currency -3.9% -0.8% -2.2% Scope of consolidation -2.3% -1.1% -1.7% Like-for-like Net Sales +10.1% +7.3% +8.6% 14
Analysis of H1 2007 Net Sales Growth +8.6% Like-for-like + HOD MEXICO (01/07) + Danone Japan (04/07) + DJURJURA (07/06) - BRITANNIA (07/06) - GRIFFINS (05/06) - DWOC (06/06) VOLUME +2.1% VALUE +4.7% -2.2% +6.5% 7,553 M 7,217 M CURRENCY -1.7% SCOPE OF CONSO H1 2006 H1 2007 15
FRESH DAIRY PRODUCTS FRESH DAIRY PRODUCTS 9.5% 8.5% 9.2% 9.6% 12% 11.2% Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Outstanding growth in all major geographies, built on very strong 06 comparatives Solid growth trend in mature home markets confirmed Top line growth continues to be driven by Eastern Europe (>+20%) and Latin America (+18%) Blockbusters show strong positive trends at mid-double digits Continuous high single-digit at Bledina 16
Q2 LAUNCHES UPDATE Essensis Ireland Dobro Mama Drink Czech Republic Danaten Spain Danito Brazil Danio Delight Belgique Danette Duett Bar Romania 17
BEVERAGES 21,7% 11.8% 12.4% 14.9% 9.1% 0.9% Without Wahaha Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 +6.8% +5.8% +8.2% +10.5% +9.7% +9.0% Quarter heavily impacted by Wahaha performance at -19% Sustained superior growth excluding Wahaha Europe growing mid single-digits with poor weather, offset by strong Poland Sustained momentum in LATAM with growth exceeding +20% 18
Q2 LAUNCHES UPDATE Villa del Sur FIZ Argentina Volvic Aro Sport caps Germany Volvic Revive UK Silouhette Fiz Canada Volvic Fruit Kiss Japan 19
BISCUITS & CEREAL PRODUCTS 3.5% 4.4% 3.8% 4.3% 6.3% 0.3% Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 A very good quarter driven by double-digit growth in Spain and continued superior growth in France Eastern Europe growing slightly, with very good performance in Poland offsetting weaker sales in Russia Asia growing double-digits, with China leading the trend 20
Q2 LAUNCHES UPDATE Cake tout choco France Mikado Multipack Lait France Rollitos Italy 21
Strong performance in Europe offsets decline in Asia EUROPE 8% 4.3% 4.7% 5.3% 6.2% 7.7% ASIA Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 30.4% 17.9% 17.7% 20.1% 8.4% -5.6% Without Wahaha Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 +13.5% +7.3% +7.3% +7.9% +8.9% +9.2% REST OF WORLD 16.5% 15.6% 14.9% 17.2% 17.2% 16.6% Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 22
Trading operating income and margin million H1 2006 H1 2007 Trading operating income 972 1,055 +8.6% Other operating items 16 1 Operating income 988 1,056 Trading operating margin 13.46% 13.97% 23
A healthy like-for-like margin progression in H1: + 47 bp Scope of consolidation +3bp Translation FX rates +1bp Country mix -3bp +47 bp Like-for-like Operational performance 13.97% 13.46% +144 bp - 94bp Input costs H1 2006 H1 2007 24
Trading operating margin by business line & geographical area H1 06 * Reported H1 07 Like-for for-like progression Fresh Dairy Products 13.6% Beverages 13.7% Biscuits & Cereal Products Europe 14.7% Asia 11.7% Rest of World 11.5% GROUP *Central costs & adjustments fully allocated to business units 12.8% 13.5% 14.1% 13.8% 13.9% 15.3% 11.6% 12.1% 14.0% + 85bp + 13bp - 41bp + 64bp - 89bp + 106bp + 47bp 25
From Operating income to Net income million Operating income 988 Cost of net debt Other financial items Income tax Net income (loss) of affiliates Net income of discontinued activities Net Income Attributable to the parent Attributable to minority interests H1 2006 H1 2007 (18) (11) (245) (64) 157 807 704 103 1056 (33) 3 (314) Net income of consolidated companies 714 712 35 0 747 656 91 For purposes of this presentation, all figures reflect a scope of consolidation which INCLUDES the biscuits activities 26
Underlying net income from continuing operations million H1 2006 H1 2007 Underlying net income from continuing operations 614 663 +8.1% Non current net income from continuing operations (67) (7) Net income from discontinued operations (sauces) 157 - Net income attributable to the parent 704 656 For purposes of this presentation, all figures reflect a scope of consolidation which INCLUDES the biscuits activities as «continuing operations» 27
Underlying Earnings Per Share from continuing activities H1 2006 H1 2007 Underlying net income fully dluted from continuing activities Million 614 663 Shares Fully diluted Millions of Shares 491 482 Underlying EPS fully diluted from continuing activities 1.25 1.38 +10.1% 28
Free Cash Flow from Operations million H1 2006 H1 2007 Cash flow from operations Change in working capital Capital expenditure 952 8 (246) 954 (53) (302) Assets Sales 18 32 Free Cash Flow from Operations 732 631 29
Cash flow statement million H1 2006 H1 2007 Free Cash Flow from Operations 732 631 Investments in sub. & affiliates Disposals & repayment of vendors loans Dividends paid Share buyback Increase in capital (325) 583 (590) (325) 48 (366) 206 (617) (467) 59 Others (40) 6 Change in Net Financial Debt 83 (548) 30
Financing million 2006 June 30 2006 Dec 31 2007 June 30 Net Debt 3,411 2,902 3,365 Of which Put options granted to minority interests 2,548 2,504 2,418 Equity Incl. minorities 5,455 6,069 5,937 31
IFRS ACCOUNTS (BISCUITS AS DISCONTINUED OPERATIONS) 32
Analysis of H1 2007 Net Sales Growth (IFRS) + HOD MEXICO (01/07) + Danone Japan (04/07) + DJURJURA (07/06) - BRITANNIA (07/06) - GRIFFINS (05/06) - DWOC (06/06) VOLUME +9.2% Like-for-like +2.3% VALUE +4.8% -2.6% +6.9% 6,508 M 6,208 M CURRENCY -1.8% SCOPE OF CONSO H1 2006 H1 2007 33
Impact of currency and scope (IFRS) Q1 2007 Q2 2007 H1 2007 Reported Net Sales +4.2% +5.5% +4.8% Currency -4.2% -1.0% -2.6% Scope of consolidation -2.6% -1.0% -1.8% Like-for-like Net Sales +11% +7.5% +9.2% 34
H1 2007 like-for-like sales growth Breakdown volume/value (IFRS) Like-for-like Volume Value Total Fresh Dairy Products +8.7% +2.9% Beverages +3.5% +1.2% +11.6% +4.7% Europe +6.4% +2.5% Asia +1.2% -1.2% Rest of World +12.3% +4.2% +8.9% 0.0% +16.5% GROUP +6.9% +2.3% +9.2% 35
H1 2007 Net Sales by business & geographical area (IFRS) million H1 2006 H1 2007 Like-for for- like growth Fresh Dairy Products 3,966 4,369 +11.6% Beverages 2,045 2,139 +4.7% Britannia, Griffins 197 0 N/A Europe 3,430 3,757 +8.9% Asia 1,246 1,049 +0.0% Rest of World 1,532 1,702 +16.5% GROUP 6,208 6,508 +9,2% 36
Top line growth by business line & geographical area (IFRS) Like-for-like Q1 2007 Q2 2007 H1 2007 Fresh Dairy Products +12.0% +11.2% +11.6% Beverages +9.1% +0.9% +4.7% Europe +9.3% +8.4% +8.9% Asia +8.3% -7.3% +0.0% Rest of World +16.9% +16.2% +16.5% GROUP +11% +7.5% +9.2% 37
Analysis of Q2 2007 Net Sales Growth (IFRS) + HOD MEXICO (01/07) + Danone Japan (04/07) + DJURJURA (07/06) - BRITANNIA (07/06) - GRIFFINS (06/06) - DWOC (05/06) +7.5% Like-for-like VOLUME VALUE +1.3% +5.5% +6.2% 3,341 M 3,167 M -1.0% CURRENCY -1.0% SCOPE OF CONSO Q2 2006 Q2 2007 38
Q2 2007 like-for-like sales growth Breakdown volume/value (IFRS) Like-for-like Volume Value Total Fresh Dairy Products +7.8% +3.4% Beverages +3.3% -2.4% +11.2% +0.9% Europe +5.9% +2.6% Asia +0.1% -7.4% Rest of World +11.2% +5.0% +8.5% -7.3% +16.2% GROUP +6.2% +1.3% +7.5% 39
Trading operating income by business & geographical area (IFRS) million H1 2006 H1 2007 million Fresh Dairy Products Beverages Britannia, Griffins 518 270 12 601 289 0 Europe Asia Rest of World 496 135 169 575 114 201 GROUP 800 890 40
Trading operating margin by business line & geographical area (IFRS) Reported H1 06 * H1 07 Like-for for-like progression Fresh Dairy Products 13.1% Beverages 13.2% 13.7% 13.5% + 88bp + 15bp Europe 14.5% Asia 10.9% Rest of World 11.0% 15.3% 10.8% 11.8% + 90bp - 86bp + 109bp GROUP 12.9% 13.7% + 65bp *Central costs & adjustments fully allocated to business units 41
From Operating income to Net income (IFRS) million H1 2006 Operating income 816 H1 2007 891 Cost of net debt Other financial items Income tax (19) (10) (208) (33) 3 (260) Net income of consolidated companies 579 601 Net income (loss) of affiliates (70) 29 Net income of discontinued activities 298 117 Net Income 807 747 Attributable to the parent Attributable to minority interests 704 103 656 91 42
Underlying net income from continuing operations (IFRS) million H1 2006 H1 2007 Underlying net income from continuing operations 475 545 +14.8% Non current net income from continuing operations (67) (7) Net income from discontinued operations 296 118 Net income attributable to the parent 704 656 43
Back-ups 44
Major changes in exchange rates 49% of sales denominated in % total Q2 07sales Q1 07 vs Q2 07 vs Q1 06 (avg) Q2 06 (avg) Chinese Yuan 9% US Dollar 7% Mexican Peso Argentinian Peso Russian Rouble Polish Zloty 3% Sterling Pound Canadian Dollar Brazilian Real South African Rand 6% 3% 4% 3% 2% 2% 1% - 5% - 9% - 12% - 9% - 2% - 1% - 8% - 10% - 5% - 22% - 2% - 6% - 2% - 6% - 1% + 4% + 2% - 3% + 6% Indonesian Roupie 2% - 14% - 5% - 12% 45
Q2 2007 Net Sales by business & geographical area million Q2 2006 Reported Q2 2007 Fresh Dairy Products 1,977 2,214 Beverages 1,098 1,127 Biscuits & Cereal Products 608 539 Like-for for- like growth +11.2% +0.9% +6.3% Europe 2,243 2,433 Asia 678 571 Rest of World 762 876 GROUP 3,683 3,880 +7.7% -5.6% +16.6% +7.3% 46
Q2 2007 like-for-like sales growth Breakdown volume/value Like-for-like Volume Value Total Fresh Dairy Products +7.7% +3.5% Beverages +3.3% -2.4% Biscuits & Cereal Products +5.4% +0.9% Europe +5.6% +2.1% Asia +0.7% -6.3% Rest of World +11.6% +5% +11.2% +0.9% +6.3% +7.7% -5.6% +16.6% GROUP +6.0% +1.3% +7.3% 47
H1 2007 like-for-like sales growth Breakdown volume/value Like-for-like Volume Value Total Fresh Dairy Products +8.7% +2.9% Beverages +3.5% +1.2% Biscuits & Cereal Products +4.4% 0.9% Europe +5.7% +2.1% Asia +1.9% +-0.8% Rest of World +12.6% +4.3% +11.6% +4.7% +5.3% +7.8% +1.1% +16.9% GROUP +6.5% +2.1% +8.6% 48
Q2 & H1 Top line growth Like-for-like Q1 2007 Q2 2007 H1 2007 Fresh Dairy Products +12.0% +11.2% +11.6% Beverages +9.1% +0.9% +4.7% Biscuits & Cereal Products +4. 3% +6.3% +5.3% Europe +8.0% +7.7% +7.8% Asia +8.4% -5.6% +1.1% Rest of World +17.2% +16.6% +16.9% GROUP +10.1% +7.3% +8.6% 49
H1 2007 Net Sales by business & geographical area million H1 2006 H1 2007 Like-for for- like growth Fresh Dairy Products 3,967 4,369 +11.6% Beverages 2,045 2,139 +4.7% Biscuits & Cereal Products 1,205 1,045 +5.3% Europe 4,322 4,671 +7.8% Asia 1,356 1,167 +1.1% Rest of World 1,539 1,715 +16.9% GROUP 7,217 7,553 +8.6% 50
Trading operating income by business & geographical area million Fresh Dairy Products Beverages Biscuits & Cereal Products H1 2006* 538 280 154 H1 2007 614 296 145 Europe Asia Rest of World 637 159 176 713 135 207 GROUP 972 1055 *Central costs & adjustments fully allocated to business units 51
Share buy-back program Q2 2007 Share buy-back back Treasury Stock as of 06/30/2007 48,258,320 shares Number of Shares in % of outstanding capital at 03/31/07 1.65% Investment 9.23% of the outstanding capital* 8,618,954 508 M *Outstanding capital as of 30 June 2007: 522,851,460 52