Danone S.A.

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Mathilde Rodier, Head of Investor Relations. Please go ahead. Thank you, and good morning, everyone. Mathilde Rodier speaking. Thank you for being with us this morning for Danone's 2024 full-year results call. I'm here with our CEO, Antoine de Saint-Afrique, and our CFO, Jürgen Esser, who will go through some prepared remarks before taking your questions. And before we start, I draw your attention to the disclaimer on slide 42 of the presentation related to forward-looking statements and the definition of financial indicators that we will refer to during the presentation. And with that, let me hand it over to Antoine.

Thank you, Mathilde, and good morning, everyone. A very warm welcome to our 24 full year results presentation. Juergen and I are delighted to be with you today to share what is another strong set of results. These results have a particular meaning to all of us as they mark the successful close of the first chapter of Renew Danone, a chapter we opened three years ago. The strategy which we initiated then is starting to bear fruit and gives us a solid base as we enter the next chapter of Renew. We are progressively becoming a different company, truly science-based and consumer and patient-focused, a company which stands for health through food, a company which is rediscovering the power of execution and consistency. And for all of this, and before I do anything else, I'd like to express my gratitude to all the owners. They are making this happen day in, day out. So big thanks to you guys. Let's move to the results on slide number three. As you will have seen in the press release, and Jurgen will cover in more details later, we delivered a strong like-for-like sales growth of plus 4.7% in quarter four, leading to a plus 4.3% growth for the full year 24. Importantly, and as we intended in our Renewed Announce Strategy, we have kept improving the quality of our growth, transitioning over the past three years from a negative to a consistently positive volume mix, delivering a plus 3% contribution in 24. With a volume mix back to our factories, we are benefiting from operating leverage, and this enhanced by another year of record productivity is allowing us to further invest behind our brands and capabilities and to proactively drive our categories while expanding our profitability. In 24, we increased our operating margin by 39 basis points versus 23, bringing it to 13%. It is the way we intended the Renew business model to work. The strong financial discipline we apply to the business starts showing on many levels. At EPS level, with a plus 2.5% increase, when it comes to free cash flow, with an impressive $3 billion delivery, helped by strong working capital management. And last, but certainly not least, it is an important one to us, we are back in double-digit ROIC territory, a 110 basis point increase in just two years. So on our purely financial side as well, we start seeing the power of Renew Danone. And importantly, we do all of this while driving sustainability in a focused but impactful way, as we are convinced it is critical for the long-term resilience of our business. We move to the first place of the AT&I index from number four in 23. So we are delivering on the Renewal Strategy, trying to be very consistent and systematic, addressing what needs to be addressed, but also facing to what still needs improvement. Let me now move into a bit more details on slide four. As I said earlier, we have been, over the last three years, working at rebalancing our growth model between price and volume mix. And there, we have made consistent progress. Quarter four marks the sixth consecutive quarter of volume mix improvements. Our categories are showing good growth, and the resilience of our portfolio is improving step by step. Our winning platforms are again growing double digit in 24, including high protein, coffee creation, and medical nutrition. We are making progress on our core, as shown by our positive volumics in EDP Europe for five consecutive quarters after 10 years of decline. But there, the journey is not over, and there is still plenty to do. from sharpening silk in the US to continuously strengthening Activia, to quote two of our large brands. We have also proven that with proper focus and discipline, we can turn around underperformers. MyZone is a good example of this. It has again grown double digit in 24, on the back of stronger fundamentals, combined with relevant innovation. Our electrolyte products, which many of you tasted in June, are showing encouraging results. Now moving to slide five. As you may recall from our June CME, we are convinced that the food industry is at a tipping point and that we feel equipped and relevant for the world to come. we start seeing some tangible signs of it. Firstly, the categories in which we are playing keep growing faster than the average of foods. Gut health, the microbiome, proteins, healthy hydration, immunity are more relevant than ever. Secondly, our portfolio is about health through food and recognized as such. We were extremely proud to have been ranked number one by AT&E this year, as I mentioned earlier. What is even more important is that our products deliver not only on taste, but also on health. Close to 90% of our portfolios cost three and a half stars or more in the health star rating system. We do not only play in healthy and growing categories, we also play in healthy and growing channels. In 24, more than 50% of our sales were outside mass retail, and we are growing in these channels, such as away from home, hospital, pharmacy, and home care, two to three times faster than in mass retail. We reach more people in different places at different moments in their life. This contributes as well to the resilience of our model. Now moving to slide six. To remain relevant and competitive in the long run, we are focused and we will keep focusing on what makes the difference. We keep investing into brands and capabilities. We keep focusing on operational excellence, but also on differentiating science. We also work at improving the quality of our spending. We test more. We have a better balance of working to non-working media. There are some good progress, but still some way to go. On average, over the last three years, we have invested additionally around 100 BPS per year behind our brands and capabilities. And we didn't only increase the amounts while we invested in future growth drivers. We have been also focusing on executional excellence and operational efficiencies. And it shows in the numbers, be it with above industry average productivity or high levels of customer service. And there, too, we are investing for the future. In 2024, we open new integrated planning centers with a focus on leveraging AI to provide a further drive of future operational efficiencies. We told you in Saclay almost two years ago and in Utrecht last June that science was back at the heart of what we are doing. It is starting to show very concretely. We are accelerating the number of scientific papers we publish and the number of patents we file, directing our scientific and technological resources towards key areas taking into account emerging trends and insights into many aspects of nutrition. We're also successfully deploying digital health technology as key value levers for balance brands, collecting millions of health data points, and submitting digital health tech patents. So I'm moving to slide seven. The name of the game for us is not only to invest in future-looking science, but obviously to turn this science into a relevant consumer and patient-centric innovation, and in doing so, to drive the growth of our categories. We see this happening, for example, in North America in many different ways. For instance, with our initiative addressing diabetes, In recent digital campaigns, we noted direct increase in our yogurt consumption, with consumers looking for reduced sugar options. We are also providing valuable nutritional support dedicated to individuals on a weight loss journey. We see a broader trend around consumers living a more active lifestyle, knowing that both these journeys drive a need for protein and for better gut health. And it shows. Our low-cost high-protein proposition in the US has now hit retail sales value of over $1 billion. What is true for yogurt is even more relevant for infant formula, where science-driven innovation plays a critical role. Nurturis, our pioneering innovation based on advanced breast milk research, was launched softly in Hong Kong only a few months ago and shows encouraging early sign. It comes on the back of Essensys, another ultra-premium format launched in China in late 23, which is now meaningfully adding to our growth in China. Across our portfolio, we have engaged in a very systematic approach to drive consumer-relevant superiority. Superiority in taste and experience, as food is about pleasure. Superiority when it comes to benefits, as food is about health and nutrition. We are progressing step by step. As you can see, for instance, in Activia, where we start reclaiming the gut health territory. or on protein with benefits such as muscle recovery. But this is only the start of our journey, and there remains lots to be done, more opportunities to be addressed. Moving to slide eight. All of this is enabled by a deep cultural change, which we initiated when we started Renew, and which we will keep embedding in the coming years. A culture where we play to win rather than play not to lose. A culture where things move on a different rhythm. Our 90-day reviews keep going with an intensity to push the limits and achieve even more. And importantly, a culture much more focused and open to the world, working in partnership to learn, to benchmark and to set the bar higher. There, too, the journey is far from over and keeps going on. And with this, let me hand over to Jürgen. Jürgen, over to you.