Danone 2013 Full-year results

Chairman’s comments

“Despite strong headwinds that took a toll on our business, 2013 was a year of solid growth and decisive progress in building Danone’s future.

Several factors affected our results, particularly in the second half: currencies were volatile in emerging countries, milk prices rose steeply around the world, taxes went up sharply, and a false food – safety alert triggered by one of our suppliers had a marked impact on our Early Life Nutrition activities.

Yet despite all that, we turned in a solid performance, with organic growth of nearly 5% driven by the success of many strategic projects. We consolidated our leadership in the US yogurt market, thanks to our Greek – style yogurt line. Our Russian platform — created by the successful merger of Danone and Unimilk — experienced vibrant, profitable growth. And our Waters division reported strong, ongoing growth, thanks in particular to demand for aquadrinks.

We also achieved major progress on initiatives that will make our group stronger starting in 2014: in Europe, we renovated our product portfolio and undertook ambitious cost – reduction and streamlining to boost our competitive edge; in Africa, we integrated Morocco’s Centrale Laitière and acquired an interest in Fan Milk, operating in Ghana and Nigeria. Together these moves will drive our future growth.

We are holding our course , focused on building a solid group and returning to sustainable, profitable growth in the course of 2014. This is the goal I have set our teams, and it is in this spirit that we are heading into the current year.”

Highlights

• Full-year 2013 sales¹ of €21,298 million, up +4.8% like-for-like² from 2012, and up +2.1% as reported 
• Strong underlying trends across all businesses in 2013, with a gradual stabilization of business in Europe, and sales up +10%² in the CIS & North America³ and ALMA⁴ zones
• Q4 performance nonetheless continued to reflect fall-out from the Fonterra affair and adverse exchange – rate effects, with sales up +2.9% like-for-like² and down -3.0% as reported
• Full-year trading operating margin⁵ stood at 13.19 % in 2013, down – 81 bps² from 2012 and in line with the revised target announced last October
• Underlying fully diluted EPS⁵ stood at € 2.78, down -2.2% like-for-like²
• Dividend unchanged from 2012 at €1.45, with the option of full payment in either cash or shares
• Free cash-flow⁵ for the year was €1,549 million excluding exceptional items³, in line with the revised target announced last October

1. Net sales
2. Like-for-like: see pages 1 1 to 13 for details on calculation of financial indicators not defined in IFRS
3. North America = United States and Canada
4. ALMA = Asia-Pacific / Latin America / Middle-East / Africa
5. See pages 11 to 13 for details on calculation of financial indicators not defined in IFRS

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