DANONE: 2020, a year marked by the health crisis; Reinventing
Danone to reconnect with our profitable growth ambition
2020 Full-Year
ResultsPress release – Paris, February 19, 2021
2020, a year marked by the health
crisisReinventing Danone to reconnect with our
profitable growth ambition
2020 FY landing in line with reinstated guidance
- 14% recurring operating margin and
€2.1bn free cash flow; net debt/EBITDA ratio maintained at
2.8x
- Contrasted top line performance leading to
2020 net sales of €23,620m, down -1.5% like-for-like (LFL) and
-6.6% on a reported basis
- EDP back to solid growth, up +3.4% LFL,
highest rate since 2012
- Specialized Nutrition and Waters impacted by
COVID-related channel disruptions, Specialized Nutrition
sequentially improving in all geographies in the fourth
quarter
- Reported EPS up +1% at €2.99,
recurring EPS down -13% at €3.34
- Carbon emissions down 1m tons of CO2 eq. vs
2019 on a like-for-like basis, of which 50% thanks to
regenerative agriculture initiatives ; cost of carbon per share
decreasing by -4.1%
2021 outlook
- Tough Q1 driven by base of comparison and continued
channel-related headwinds
- Back to growth as of Q2, return to profitable growth in H2
- FY recurring operating margin expected to be broadly in line
with 2020
Leading a bold reinvention to reconnect with mid-term
profitable growth ambition
- Investing in portfolio superiority and differentiation,
optimizing execution, reshaping the organization and reviewing the
portfolio
- €1bn savings plan fueling reinvestments in innovation and brand
support
- Strengthening governance to reinforce oversight of Management’s
delivery of the plan
|
2020 Key Figures |
in millions of euros except if stated otherwise |
2019 |
2020 |
Reported Change |
Like-for-like(LFL) |
Sales |
25,287 |
23,620 |
-6.6% |
-1.5% |
Recurring operating income |
3,846 |
3,317 |
-13.8% |
-10.9% |
Recurring operating margin |
15.2% |
14.0% |
-117 bps |
-150 bps |
Non-recurring operating income and expenses |
(609) |
(519) |
+89 |
|
Operating
income |
3,237 |
2,798 |
-13.6% |
|
Operating margin |
12.8% |
11.8% |
-96 bps |
|
Recurring net income – Group share |
2,516 |
2,189 |
-13.0% |
|
Non-recurring net income – Group share |
(586) |
(233) |
+353 |
|
Net income – Group share |
1,929 |
1,956 |
+1.4% |
|
Recurring EPS (€) |
3.85 |
3.34 |
-13.2% |
|
EPS (€) |
2.95 |
2.99 |
+1.2% |
|
Free cash flow |
2,510 |
2,052 |
-18.3% |
|
Cash flow from operating activities |
3,444 |
2,967 |
-13.9% |
|
All references in this document to Like-for-like
(LFL) changes, Recurring operating income and margin, Recurring net
income, Recurring income tax rate, Recurring EPS, Free cash-flow,
net financial debt, correspond to financial indicators not defined
in IFRS. Their definitions, as well as their reconciliation with
financial statements, are listed on pages 8 to 10. The calculation
of Net Debt/EBITDA is detailed in the half-year interim
financial report and the universal registration document.
Emmanuel
Faber: Chairman and Chief Executive Officer statement
“I can’t start this comment on our FY 2020
results without paying a tribute to our 100,000 colleagues at
Danone who made it possible for our brands to continue to serve our
customers consumers patients, around the world. On behalf of our
board of directors, I want to express my gratitude to them for
their commitment, want to recognize the challenges they faced,
including in their personal life, to adapt to this situation.
Beyond the brighter, more efficient and empowering organizational
model of Local First, I want to also acknowledge the additional
uncertainty created for those whose role might be affected by the
transformation. We are committed to as quickly as possible clarify
the future for everyone.
On the business front, as COVID became a
pandemic throughout 2020, we faced material specific short-term
challenges in a number of our key categories and geographies but
also clearly uncovered significant long-term opportunities, whose
existence directly lies in the strategic framework and choice of
category portfolio that we made over the last several years. our
one planet one health framework of action has never been as
relevant as today for the future, and we continue to be ahead of
competition in implementing this vision.
Building on the highly successful integration of
whitewave which sales grew 11% (like for like) last year,
contributing to 160 bps to our growth, I am thrilled to announce
the acquisition of follow your heart, a California based pioneer
company, leading the cheese and mayonnaise plant based
alternatives, opening for Danone a strong foothold into the
promising flexitarian trend in the US cheese market, in both retail
and foodservice.
This is building further on our global
leadership on plant-based, now representing 10% of our sales.
After making 2020 a year of both delivery and
progress under serious challenging conditions, we know Q1 2021 is
going to be heading tough comparables in particular in our SN
Chinese operations and that governmental health strategies around
the world will continue to create uncertainties on the speed of
recovery of mobility in indexes that will weigh a bit longer on our
water business performance.
2021 is therefore going to be a year of
recovery. we are focused on preparing our return to sales growth as
soon as Q2, and are fully confident that we are building the right
conditions and momentum to reconnect with our profitable growth
agenda as soon as H2.
In this context, we fully recognize that our
share price is not where we would like it to be and we are pleased
that this FY announcement resumes our ability to dialogue openly
with our shareholders, in preparation of our important CME On March
25, when we will share more on the growth platforms underlying our
categories and countries, as well as our progress on our
transformation plans, which will provide the necessary support to
our full ability to unlock our short and mid term profitable growth
opportunities.”
I. FOURTH
QUARTER AND FULL-YEAR RESULTS
Fourth quarter and full-year
sales
In 2020, consolidated sales
stood at €23.6 bn, down -1.5% on a like-for-like basis, with stable
volumes (-0.1%) and a -1.5% decrease in value reflecting negative
category and country mix, especially in Waters and Specialized
Nutrition. On a reported basis, sales were down -6.6%, mainly
driven by the negative impact of exchange rates (-5.0%) that
resulted from currencies devaluation against the Euro in the United
States, Latin America, Indonesia and Russia. Reported sales were
also impacted by a negative scope effect (-0.4%), resulting from
the deconsolidation from April 1st, 2019 of Earthbound Farm, and by
a +0.3% organic contribution of Argentina to growth.
In the fourth quarter, sales
declined -1.4% on a like-for-like basis, showing a sequential
improvement from the two previous quarters, with flat volumes.
Reported sales were down -9.8%, mainly driven by a continued strong
negative effect of -8.8% from exchange rates.
€ millionexcept % |
Q42019 |
Q4 2020 |
Reported change |
LFL Sales Growth |
Volume Growth |
FY2019 |
FY2020 |
Reported change |
LFL Sales Growth |
Volume Growth |
BY REPORTING ENTITY |
|
|
|
|
|
|
|
|
|
|
EDP |
3,335 |
3,131 |
-6.1% |
+3.6% |
+3.7% |
13,163 |
12,823 |
-2.6% |
+3.4% |
+3.0% |
Specialized Nutrition |
1,943 |
1,753 |
-9.8% |
-3.1% |
-1.7% |
7,556 |
7,192 |
-4.8% |
-0.9% |
-0.8% |
Waters |
962 |
743 |
-22.8% |
-15.6% |
-9.3% |
4,568 |
3,605 |
-21.1% |
-16.8% |
-7.7% |
BY GEOGRAPHICAL AREA |
|
|
|
|
|
|
|
|
|
|
Europe & Noram1 |
3,408 |
3,252 |
-4.6% |
-1.0% |
+1.0% |
13,710 |
13,408 |
-2.2% |
-0.3% |
+1.6% |
Rest of the World |
2,833 |
2,376 |
-16.1% |
-1.9% |
-1.0% |
11,577 |
10,212 |
-11.8% |
-3.1% |
-1.6% |
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
6,241 |
5,628 |
-9.8% |
-1.4% |
+0.0% |
25,287 |
23,620 |
-6.6% |
-1.5% |
-0.1% |
1North America (Noram): United States and
Canada
Q4 was still marked by a contrasted
performance across channels After a sequential improvement
in Q3, out-of-home channels sales declined by approximately -25% in
Q4, penalized by new waves of restrictions and lockdown measures
related to COVID-19, especially in Europe. Infant Formula sales in
China from cross-border channels continued to contract sharply (c.
-45%) given the ongoing Hong-Kong border closure and travel
limitations with mainland China, but showed a sequential
improvement compared to the previous quarter. On the other hand,
Domestic sales of Infant Formula in China were back to growth in
the quarter, at low-single-digit rate. The eCommerce channel
continued to grow significantly, at approximately +45% in the
quarter, with all categories contributing to growth.
In terms of regional dynamics,
sequential improvement vs. Q3 was led by Rest of the
WorldLike-for-like sales growth in Europe and North
America was broadly in line with the previous quarter, moving from
-1.1% to -1.0% in Q4. In Europe, good EDP performance and
Specialized Nutrition sequential improvement offset the
deterioration in Waters, while North America continued to see solid
momentum. Like-for-like sales growth in the Rest of the World
improved in Q4 from -4.1% to -1.9%, notably led by a better
performance in China and another quarter of growth in CIS.
Recurring Operating Margin
Danone’s recurring operating income reached
€3.3bn in 2020. Recurring operating margin stood at
14.0%, down -117 basis points (bps) on a reported
basis and -150bps on a like-for-like basis. This includes a
negative -62 bps effect from €150m incremental costs directly
related to COVID-19 incurred during the year to keep employees safe
and ensure business continuity. It also includes around -100bps of
negative mix, mostly driven by negative category mix, with lower
sales from Specialized Nutrition, Danone’s most profitable
business, and negative country mix, reflecting the slowdown of
China. To mitigate these headwinds, Danone stepped-up its efforts
on efficiency and cost discipline, especially in the second half of
the year, allowing the company to deliver over 280bps of
productivity in 2020 and unlock close to €850m of savings. In 2020,
the Protein program delivered more than €300 million of incremental
savings, bringing its total savings to €1.3 billion since 2017.
Reported margin also reflects a positive effect from change in
scope (+7bps) and currencies (+38bps), and a negative effect of
-11bps reflecting Argentina’s impact on margin.
Recurring operating profit
(€m) and margin (%) |
FY 2019 |
FY 2020 |
Change |
€m |
Margin (%) |
€m |
Margin (%) |
Reported |
Like-for-like |
BY REPORTING ENTITY |
|
|
|
|
|
|
EDP |
1,345 |
10.2% |
1,303 |
10.2% |
-6
bps |
-36 bps |
Specialized Nutrition |
1,908 |
25.3% |
1,763 |
24.5% |
-74
bps |
-126 bps |
Waters |
593 |
13.0% |
251 |
7.0% |
-601 bps |
-574 bps |
BY GEOGRAPHICAL AREA |
|
|
|
|
|
|
Europe & Noram2 |
1,999 |
14.6% |
1,823 |
13.6% |
-98
bps |
-117 bps |
Rest of the World |
1,847 |
16.0% |
1,494 |
14.6% |
-132 bps |
-189 bps |
|
|
|
|
|
|
|
Total |
3,846 |
15.2% |
3,317 |
14.0% |
-117 bps |
-150 bps |
2North America (Noram): United States and Canada
Performance by reporting entity
§ ESSENTIAL DAIRY AND PLANT-BASED
(EDP)
Essential Dairy &
Plant-based posted net sales growth of +3.4% in 2020 on a
like-for-like basis, sustained by both Essential Dairy, up
low-single digit, and Plant-based that grew at +15% and reached
€2.2bn of sales in 2020, up from €1.9bn in 2019. Recurring
operating margin remained broadly stable above 10%, despite
COVID-related costs.In the fourth quarter, net
sales were up +3.6% on a like-for-like basis, reflecting a +3.7%
increase in volume and -0.1 % in value. This growth was led by
Europe and North America, that
sustained their mid-single-digit performance. In North America
growth was supported by Premium Dairy and Plant-based continued
momentum. Yogurt and Coffee Creamers both grew in Retail channels,
low-single digit and double-digit respectively, but continued to be
penalized by their exposure to away-from-home channels. In Europe,
Essential Dairy was back to low-single-digit growth in the quarter
(+2%), with a broad-based contribution from all key brands, and
Plant-based registered high-teens growth, with all geographies
contributing. In the Rest of the World, CIS
delivered another quarter of positive growth, with a balanced
contribution from traditional and modern dairy brands, while Latin
America and Africa continued to experience pressure from
COVID-related restrictions.
§ SPECIALIZED NUTRITION
Specialized Nutrition posted net sales growth
of -0.9% in 2020 on a like-for-like basis and recurring operating
margin decreased by -74bps to 24.5%, notably reflecting the
negative country mix from Infant Nutrition in China, as well as
COVID-related costs incurred this year.
In the fourth quarter, sales
declined -3.1% on a like-for-like basis, with a decrease of -1.7%
in volume and -1.3% in value, sequentially improving from the third
quarter (-5.7%) thanks to better trends across geographies.
In China, sales declined at mid-teens rate, after
decreasing double-digit in Q3. While cross-border channels
sequentially improved from last quarter, they were still severely
penalized by ongoing Hong-Kong border closure and travel
limitations with mainland China, declining by -45% in the fourth
quarter compared to last year. On the other hand, Domestic channels
were back to growth in the quarter, driven by the excellent
performance of Aptamil that gained market shares and ranked leading
brand of 11:11 during the quarter. In Europe,
infant milk and first diet performance slowly recovered but
remained negative, penalized by continued soft category dynamics,
while adult nutrition accelerated, notably driven by the first
signs of normalization in hospital and prescription activity.
Other regions delivered strong growth, sustained
by market share gains in South East Asia and Latin America.
§ WATERS
Waters sales declined by -16.8%
in 2020 on a like-for-like basis and recurring operating margin
decreased to 7.0%. The performance of Waters was severely impacted
by COVID-related restrictions to mobility that disrupted Danone’s
ability to serve consumers in out-of-home and impulse channels and
ultimately translated in negative volume, product and format
mix.In the fourth quarter, net sales were down
-15.6% on a like-for-like basis, with a decrease in volume of -9.3%
and -6.3% in value. The period was very volatile, marked by stop
and go in restrictions across geographies. After a sequential
improvement in the third quarter, Europe
performance was penalized by new waves of lockdowns and
restrictions to mobility, notably in France, Germany and the UK.
These channel-related headwinds were partially offset by market
shares gains in these countries. In the Rest of the
World, while Latin America and Indonesia kept declining at
steep double-digit rate, in China, Mizone posted positive growth in
the fourth quarter, an encouraging performance given mobility
indices in China are still below pre-COVID levels.
Net income and Earnings per
share
Other operating income and
expense stood at -€519 million from -€609 million in the
prior year, which included an exceptional loss from the sale of
Earthbound Farm. They mostly include expenses related to some
reorganization costs in the Essential Dairy and Plant-Based and
Specialized Nutrition businesses. As a result, the reported
operating margin was down -96 bps from 12.8% to 11.8%.
Net financial costs were down
by €60 million to -€310 million, notably given the successful bond
issues realized in the first semester at attractive rates and
favorable currency effects. Recurring income tax
rate remained at 27.5%, in line with the prior year.
Recurring net income from associates decreased
from €98 million to €85 million, reflecting the deteriorated
performance of Mengniu and Yashili in China, especially in the
first semester. Recurring minority interests were
down by €28 million, reflecting a deterioration of performance
across minorities.
As a result, Recurring
EPS was €3.34, down -13% vs. last year, but Reported EPS
increased by 1.2% to €2.99.
|
FY 2019 |
FY 2020 |
|
in millions of
euros except if stated otherwise |
Recurring |
Non-recurring |
Total |
|
Recurring |
Non-recurring |
Total |
|
Recurring operating income |
3,846 |
|
3,846 |
|
3,317 |
|
3,317 |
|
Other
operating income and expense |
|
(609) |
(609) |
|
|
(519) |
(519) |
|
Operating income |
3,846 |
(609) |
3,237 |
|
3,317 |
(519) |
2,798 |
|
Cost of net
debt |
(220) |
|
(220) |
|
(207) |
|
(207) |
|
Other financial income and expense |
(150) |
(0) |
(151) |
|
(103) |
0 |
(103) |
|
Income
before taxes |
3,477 |
(609) |
2,867 |
|
3,007 |
(519) |
2,488 |
|
Income
tax |
(956) |
163 |
(793) |
|
(828) |
66 |
(762) |
|
Effective tax rate |
27.5% |
|
27.7% |
|
27.5% |
|
30.6% |
|
Net
income from fully consolidated companies |
2,521 |
(446) |
2,075 |
|
2,179 |
(453) |
1,726 |
|
Net income
from associates |
98 |
(144) |
(46) |
|
85 |
219 |
304 |
|
Net
income |
2,618 |
(590) |
2,028 |
|
2,264 |
(234) |
2,030 |
|
• Group
share |
2,516 |
(586) |
1,929 |
|
2,189 |
(233) |
1,956 |
|
• Non-controlling interests |
103 |
(4) |
99 |
|
75 |
(1) |
74 |
|
EPS (€) |
3.85 |
|
2.95 |
|
3.34 |
|
2.99 |
|
Cash flow and Debt
Free cash flow reached €2,052
million in 2020, down from €2,510 million in 2019, implying a cash
conversion rate of 8.7%. The decrease from last year has been
driven by a deterioration of working capital due to negative
channel mix as Danone’s exposure to traditional channels in
emerging markets is highly cash generative. Capex stood at €962
million in 2020, broadly stable compared to last year (€951 million
in 2019).
As of December 31th 2020, Danone’s net
debt stood at €11.9bn, down €0.9bn. Net debt/EBITDA ratio
remained stable at 2.8x.
Dividend
At the Annual General Meeting on April 29, 2021,
Danone’s Board of Directors will propose a dividend of
€1.94 per share, in cash, in respect of the 2020
fiscal year. In line with the Company’s continued measured and
balanced dividend policy, the dividend is down 8% from last year.
This reflects on the one hand the impact of the deteriorated
environment on 2020 results, and demonstrates on the other Danone’s
confidence in rapidly reconnecting with profitable growth, as
reflected by the increased pay-out ratio to 58%. Assuming this
proposal is approved, the ex-dividend data will be May 10, 2021 and
the dividends will be payable on May 12, 2021.
II.
2020 SUSTAINABILITY FOOTPRINT
Environmental footprint
As part of its pledge towards carbon neutrality
on its full value chain by 2050, Danone set intermediate greenhouse
gas (GHG) reduction targets for 2030 which were officially approved
by the Science-Based Targets initiative in 2017.
On December 8th 2020, for the second time in a
row, Danone is one of the only 10 companies and the only food
company out of the 5,800+ companies scored in 2020 that achieved a
place on the A List for the three environmental areas covered by
CDP of climate change, forests preservation and water security. The
Company confirms that the peak of its carbon emissions on its full
scope was reached in 2019, with 2020 GHG emissions totaling 26.1
million tons CO2 eq., down 1mT CO2 eq. as compared to 2019. Half of
carbon reduction is linked to the implementation of regenerative
agriculture initiatives within Danone supply-chain. The company
also increased its share of electricity sourced from renewable
sources, reaching 54.3% of total electricity purchased, above
Danone’s commitment of 50% at the end of 2020. Overall, Danone has
reduced on a like-for-like basis its GHG emission intensity1 by
24.5%2 on its full scope since 2015.
Since last year, Danone has disclosed a
‘carbon-adjusted’ recurring EPS evolution that takes into account
an estimated financial cost for the absolute GHG emissions on its
entire value chain3. Given the business context and despite the
emissions reduction achieved that contributed to the -4.1% decrease
of the cost of carbon per share, the ‘carbon-adjusted’ recurring
EPS decreased in 2020 by -19%, penalized by the decrease of -13% in
recurring EPS.
Danone signed the “Business Ambition for 1.5°C”
pledge in 2019 and is now partnering with the Science-Based Targets
initiative to define pathways for the food & beverages
sector.
Inclusive diversity and B Corp
performance
- Inclusive Diversity: Danone is committed to
promote greater diversity, with the following objectives that were
to be reached by the end of 2020: to have 42% of female directors
and 30% of female executives and to have 50% of our directors and
30% of our executives from under-represented nationalities4. These
objectives have been achieved at the end of 2020 and even exceeded
for one of them, as 32% of our executives are from
under-represented nationalities. For the third time in a row,
Danone has been recognized as one of the 380 companies included in
the 2021 Bloomberg Gender-Equality Index which distinguishes
companies committed to transparency in gender reporting and
advancing women’s equality.
- B Corp: In July 2020, Danone advanced its
global ambition to be certified as a B CorpTM to 2025. As of
December 31st 2020, 32 Danone’s entities are certified B CorpTM,
and approximately 50% of Danone’s consolidated sales are covered by
B CorpTM certification.
III.
ACQUISITION OF FOLLOW YOUR HEART
Danone announces it has entered into an
agreement to acquire 100% of the shares of Follow Your Heart, a
pioneering leader in plant-based foods. Founded to meet the growing
demand for plant-based products, Follow Your Heart holds leading
positions in the plant-based cheese and mayonnaise categories, in
addition to several other delicious plant-based products.
As part of the Danone family, Follow Your Heart
will be able to accelerate growth nationally and internationally
alongside some of Danone’s best-known plant-based brands, including
Alpro, Silk and So Delicious Dairy Free. This partnership will
enable Danone to enhance and expand its plant-based offering,
including cheese, while contributing to its goal of increasing
plant-based sales worldwide from more than €2 billion in 2020 to €5
billion by 2025.
IV. 2021
OUTLOOK AND GUIDANCE
Danone expects a tough Q1
driven by the tough base of comparison of Q1 last year and
continued channel-related headwinds.
The Company anticipates to be back to
growth in Q2, and to return to profitable growth in
H2.
FY recurring operating margin is
expected to be broadly in line with 2020.
V. ADAPTATION
PLAN UPDATE
With its Q3 sales in October, Danone announced a
new plan to restore shareholder value creation. This included a
focus on investing for portfolio superiority and differentiation,
as well as optimizing value across the value chain. The company
also announced a move to reshape its organization onto a geographic
structure which will create efficiencies, whilst adopting a “Local
First” approach which should provide a lever for growth
acceleration. The company is also conducting a full strategic
review of the portfolio of SKUs, brands and assets, starting with a
review of its strategic options for Argentina and its Vega
brand.
On November 23, 2020, Danone
hosted an Investor update focused on providing additional details
on how shifting to a local-first organization would unlock future
growth and drive margin expansion in a post-COVID world. While
reconfirming its mid-term ambition of achieving 3% to 5% profitable
like-for-like revenue growth, Danone updated its mid-term recurring
operating margin target to mid-to-high teen levels, with the first
milestone to be above 15% in 2022, taking into account a new €1bn
cost savings plan.
A second investor update is planned for 25 March
2021. This event will focus on how Danone will accelerate
profitable sales growth towards its mid-term objectives.
VI. GOVERNANCE
AND FINANCIAL STATEMENTS
- On december 14, 2020, Danone announced several decisions
related to Board’s composition and organization to reinforce the
governance of the company, including:
- create a new Strategy and Transformation Committee of the
Board, starting under the chairmanship of Benoît Potier;
- appoint Cécile Cabanis as Vice-Chair of the Board; and
- propose new independent members to the Board: Gilles Schnepp,
Ariane Gorin and Susan Roberts.
This Board refreshment will increase its
independence rate (70%), its diversity (gender parity) and its
expertise.
§ At its meeting on February 18, 2021, the
Board of Directors closed statutory and consolidated financial
statements for the 2020 fiscal year. Regarding the audit process,
the statutory auditors have substantially completed their
examination of financial statements as of today.
VII. IFRS
STANDARDS AND FINANCIAL INDICATORS NOT DEFINED IN IFRS
IAS29 applied on Argentina:
impact on reported data
Danone has been applying IAS 29 in Argentina
from July 1st, 2018. Adoption of IAS 29 in this hyperinflationary
country requires its non-monetary assets and liabilities and its
income statement to be restated to reflect the changes in the
general pricing power of its functional currency, leading to a gain
or loss on the net monetary position included in the net income.
Moreover, its financial statements are converted into euros using
the closing exchange rate of the relevant period.
IAS29 applied on Argentina: impact on reported
data € million except % |
Q4 2020 |
|
FY 2020 |
|
Sales |
(5) |
|
(36) |
|
Sales growth (%) |
(0.09%) |
|
(0.2)% |
|
Recurring Operating Income |
|
|
(23) |
|
Recurring Net Income – Group share |
|
|
(27) |
|
Breakdown by quarter of FY 2020 sales after
application of IAS 29FY 2020 sales correspond to the addition
of:
- Q4 2020 reported sales;
- Q1, Q2 and Q3 2020 sales resulting from the application of
IAS29 until December 31, 2020 to sales of Argentinian entities
(application of the inflation rate until December 31, 2020 and
translation into euros using December 31, 2020 closing rate) and
provided in the table below for information (unaudited data).
€ million |
Q1 2020(1) |
Q2 2020(2) |
Q3 2020(3) |
Q4 2020 |
FY 2020 |
EDP |
3,354 |
3,232 |
3,106 |
3,131 |
12,823 |
Specialized Nutrition |
1,946 |
1,789 |
1,703 |
1,753 |
7,192 |
Waters |
924 |
924 |
1,014 |
743 |
3,605 |
|
|
|
|
5 |
|
Total |
6,223 |
5,946 |
5,823 |
5,628 |
23,620 |
(1)Results from the application of IAS29 until
December 31, 2020 to Q1 sales of Argentinian entities. (2)Results
from the application of IAS29 until December 31, 2020 to Q2 sales
of Argentinian entities.(3)Results from the application of IAS29
until December 31, 2020 to Q3 sales of Argentinian entities.
Financial
indicators not defined in IFRS
Due to rounding, the sum of values presented may
differ from totals as reported. Such differences are not
material.
Like-for-like changes in sales, recurring
operating income 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
and, since January 1st, 2019, previous-year and current-year scope
excluding Argentinian entities;
- 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 years).
Bridge from reported data to
like-for-like data
(€ million except %) |
FY 2019 |
Impact of changesin scope of
consolidation |
Impact of changes in exchange rates and others, including
IAS29 |
Argentina organic contribution |
Like-for-like growth |
FY 2020 |
|
|
|
|
|
|
|
Sales |
25,287 |
-0.4% |
-5.0% |
+0.3% |
-1.5% |
23,620 |
Recurring operating margin |
15.2% |
+7 bps |
+38 bps |
-11 bps |
-150 bps |
14.0% |
Danone clarified the definition of its recurring
performance indicators, without modifying neither their content nor
their calculation which are detailed hereafter.
Recurring operating income is
defined as Danone’s operating income excluding Other operating
income and expenses. Other operating income and expenses comprise
items that, because of their significant or unusual nature, cannot
be viewed as inherent to Danone’s recurring activity and have
limited predictive value, thus distorting the assessment of its
recurring operating performance and its evolution. These mainly
include:
- capital gains and losses on disposals of fully consolidated
companies;
- impairment charges on intangible assets with indefinite useful
lives;
- costs related to strategic restructuring or transformation
plans;
- costs related to major external growth transactions;
- costs related to major crisis and major litigations;
- in connection with of IFRS 3 (Revised) and IAS 27 (Revised)
relating to business combinations, (i) acquisition costs related to
business combinations, (ii) revaluation profit or loss accounted
for following a loss of control, and (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 financial income and expense items
that, in view of their significant or unusual nature, cannot be
considered as inherent to Danone’s recurring financial management.
These mainly include changes in value of non-consolidated
interests.
Non-recurring income
tax corresponds to income tax on non-recurring
items as well as tax income and expense items that, in view of
their significant or unusual nature, cannot be considered as
inherent to Danone’s recurring performance.
Recurring effective tax rate
measures the effective tax rate of Danone’s recurring performance
and is computed as the ratio income tax related to recurring items
over recurring net income before tax.
Non-recurring results from
associates include items that, because of their
significant or unusual nature, cannot be viewed as inherent to the
recurring activity of those companies and thus distort the
assessment of their recurring performance and its evolution. These
mainly include (i) capital gains and losses on disposal and
impairment of Investments in associates, and (ii) 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
of the consolidated Recurring net income. The Recurring net income
excludes items that, because of their significant or unusual
nature, cannot be viewed as inherent to Danone’s recurring activity
and have limited predictive value, thus distorting the assessment
of its recurring performance and its evolution. Such non-recurring
income and expenses correspond to Other operating income and
expenses, Other non-recurring financial income and expenses,
Non-recurring income tax, and Non-recurring income from associates.
Such income and expenses, excluded from Net income, represent
Non-recurring net income.
Recurring EPS (or Recurring net
income – Group Share, per share after dilution) is defined as the
ratio of Recurring net income adjusted for hybrid financing over
Diluted number of shares. In compliance with IFRS, income used to
calculate EPS is adjusted for the coupon related to the hybrid
financing accrued for the period and presented net of tax.
|
FY 2019 |
|
FY 2020 |
|
Recurring |
|
Total |
|
Recurring |
|
Total |
|
Net income-Group share (€ million) |
2,516 |
|
1,929 |
|
2,189 |
|
1,956 |
|
Coupon related to hybrid financing net of tax (€ million) |
(14) |
|
(14) |
|
(15) |
|
(15) |
|
Number of shares |
|
|
|
|
|
|
|
|
• Before dilution |
648,250,543 |
|
648,250,543 |
|
649,331,592 |
|
649,331,592 |
|
• After dilution |
649,106,039 |
|
649,106,039 |
|
649,968,844 |
|
649,968,844 |
|
EPS (€) |
|
|
|
|
|
|
|
|
• Before dilution |
3.86 |
|
2.95 |
|
3.35 |
|
2.99 |
|
• After dilution |
3.85 |
|
2.95 |
|
3.34 |
|
2.99 |
|
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.
(€ million) |
FY 2019 |
FY 2020 |
Cash-flow from operating activities |
3,444 |
2,967 |
Capital expenditure |
(951) |
(962) |
Disposal of tangible assets & transaction fees related to
business combinations1 |
17 |
47 |
Free cash-flow |
2,510 |
2,052 |
1 Represents acquisition costs related to business combinations
paid during the period.
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.
(€ million) |
December 31, 2019 |
December 31, 2020 |
Non-current financial debt1 |
12,906 |
12,343 |
Current financial debt1 |
4,474 |
4,157 |
Short-term investments |
(3,631) |
(3,680) |
Cash and cash equivalents |
(644) |
(593) |
Derivatives — non-current assets2 |
(271) |
(259) |
Derivatives — current-assets2 |
(16) |
(27) |
Net debt |
12,819 |
11,941 |
·Liabilities related to put options granted to non-controlling
interests — non-current |
(13) |
(7) |
·Liabilities related to put options granted to non-controlling
interests — current |
(469) |
(355) |
Net financial debt |
12,337 |
11,579 |
1 Including derivatives-liabilities. As from
January 1st 2019, also include debt related to leases in compliance
with IFRS 16 2 Managing net debt only
o o O o o
FORWARD-LOOKING STATEMENTS
This press release contains certain
forward-looking statements concerning Danone. In some cases, you
can identify these forward-looking statements by forward-looking
words, such as “estimate”, “expect”, “anticipate”, “project”,
“plan”, “intend”, “objective”, “believe”, “forecast”, “guidance”,
“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, predictions of future activities,
operations, direction, performance and results of 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 materially from those anticipated in these
forward-looking statements. For a detailed description of these
risks and uncertainties, please refer to the “Risk Factor” section
of Danone’s Universal Registration Document (the current version of
which is available on www.danone.com).
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.
The
presentation to analysts and investors, held by Chairman and CEO
Emmanuel Faber, and CFO Juergen Esser, will be broadcast live today
from 9:00 a.m. (Paris time) on Danone’s website (www.danone.com).
Related slides will also be available on the website in the
Investors section.
APPENDIX – Sales by reporting entity and by geographical
area (in € million)
|
First quarter |
Second quarter |
Third quarter |
Fourth quarter |
Full Year |
|
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
BY REPORTING ENTITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
3,308 |
3,364 |
3,283 |
3,238 |
3,240 |
3,108 |
3,335 |
3,131 |
13,163 |
12,823 |
Specialized Nutrition |
1,828 |
1,949 |
1,866 |
1,792 |
1,920 |
1,698 |
1,943 |
1,753 |
7,556 |
7,192 |
Waters |
1,002 |
928 |
1,346 |
925 |
1,258 |
1,015 |
962 |
743 |
4,568 |
3,605 |
BY GEOGRAPHICAL AREA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe & Noram1 |
3,381 |
3,469 |
3,471 |
3,352 |
3,451 |
3,334 |
3,408 |
3,252 |
13,710 |
13,408 |
Rest of the World |
2,757 |
2,772 |
3,025 |
2,602 |
2,966 |
2,486 |
2,833 |
2,376 |
11,577 |
10,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
6,138 |
6,242 |
6,496 |
5,954 |
6,418 |
5,821 |
6,241 |
5,628 |
25,287 |
23,620 |
|
First quarter 2020 |
Second quarter 2020 |
Third quarter 2020 |
Fourth quarter 2020 |
Full Year 2020 |
|
|
Reported change |
Like-for-like change |
Reported change |
Like-for-like change |
Reported change |
Like-for-like change |
Reported change |
Like-for-like change |
Reported change |
Like-for-like change |
|
BY REPORTING ENTITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
+1.7% |
+4.6% |
-1.4% |
+1.6% |
-4.1% |
+3.7% |
-6.1% |
+3.6% |
-2.6% |
+3.4% |
Specialized Nutrition |
+6.6% |
+7.9% |
-4.0% |
-2.2% |
-11.6% |
-5.7% |
-9.8% |
-3.1% |
-4.8% |
-0.9% |
Waters |
-7.4% |
-6.8% |
-31.3% |
-28.0% |
-19.3% |
-13.5% |
-22.8% |
-15.6% |
-21.1% |
-16.8% |
BY GEOGRAPHICAL AREA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe & Noram1 |
+2.6% |
+4.7% |
-3.4% |
-3.5% |
-3.4% |
-1.1% |
-4.6% |
-1.0% |
-2.2% |
-0.3% |
Rest of the World |
+0.5% |
+2.6% |
-14.0% |
-8.2% |
-16.2% |
-4.1% |
-16.1% |
-1.9% |
-11.8% |
-3.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
+1.7% |
+3.7% |
-8.3% |
-5.7% |
-9.3% |
-2.5% |
-9.8% |
-1.4% |
-6.6% |
-1.5% |
1North America (Noram): United States and
Canada
1Grams of CO2 equivalent per kilo of products sold
2The data is based on a constant consolidation
scope and a constant methodology. The GreenHouse Gas protocol
defines three scopes for carbon footprint assessment: Scope 1
covers direct emissions from equipment that is company-owned or
under the operational control of Danone, scope 2 refers to indirect
energy emissions related to the generation of electricity, steam,
heat or cold purchased and consumed by Danone and scope 3 covers
all indirect emissions due to Danone's activities, including
emissions from raw materials used, the transport and distribution
of products, the use and the end-of-life of products.Please refer
to Danone 2020 Universal Registration Document (chapter 5 – Social,
Societal and Environmental Responsibility) for more information on
Danone’s GHG emissions across its entire value chain, its targets,
its measures and its calculation methodology.
3 Carbon-adjusted recurring EPS is equal to the
recurring EPS less an estimate financial cost for carbon / number
of shares after dilution. The estimated financial cost for carbon
is based on Danone’s full scope (1, 2 and 3) carbon emissions of
26.1 mT for 2020 (27.2 mT for 2019) x a constant carbon cost
estimate of 35€/ton, aligned with CDP disclosure.
4Under-represented nationalities are nationalities within the
Africa, Americas, Asia, Eastern Europe and Oceania regions
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