Danone S.A.

Good day and thank you for standing by. Welcome to Danone first half 2025 results conference call and webcast. At this time, all participants are in a listen-only mode. After speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please note that today's conference is being recorded. I would now like to have the conference over to your speaker, Mathilde Rodier, Head of Investor Relations of Danone. Please go ahead.

Good morning, everyone. Mathilde Rodier speaking, Head of Investor Relations. Thank you for being with us this morning for Danone's 2025 H1 Result 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 37 of the presentation related to forward-looking statements and the definition of financial indicators that we'll refer to during the presentation. And with that, let me hand it over to Antoine.

Thank you, Mathilde. A warm welcome to you all, and thank you for joining Jürgen and I this morning for H125 results presentation. We're obviously pleased to share with you another set of strong and consistent results. These numbers are more than just numbers. Firstly, they reflect the hard work and the dedication of our Danoners, their passion for execution, their drive for innovation, and I want to thank all of them for that. Secondly, they mark the real start of the next chapter of Renew Danone, a chapter that builds on the foundations we have laid over the past three years and projects us firmly into the future. They are reflective of what we told you a year ago in Amsterdam. The food market is at a tipping point. Health through food, underpinned by science, what we do for a living has never been so relevant. And our categories are growth categories. In a world which has never been so volatile and uncertain, we keep performing while transforming. So let's go into the details and go straight to slide number three. As highlighted in this morning press release, we've started the year with a strong performance, demonstrating consistency in our driving quality growth and reflecting the strengths and the resilience of our portfolio. We've carried the momentum and resilience from Q1 into Q2, and this is reflected clearly across all our key metrics. In H1, we delivered like-for-like sales growth of plus 4.2%, a strong result given the challenging external environment. Importantly, this growth is well-balanced, with volume mix contributing plus 2.6%, and price plus 1.7%. This quality growth combined with discipline execution and operational productivity drove a plus 49 basis point improvement in recurring operating margin year on year, reaching 13.2%. With underlying profit increasing and a fading impact from portfolio disposal in quarter two, We are now seeing this translate into recurring earnings per share, which is up plus 5.8% versus the same period in 24. And obviously, we continue to maintain a solid financial position, generating 1.2 billion euros in free cash flow for the first third half. This performance is reflective of the strengths and the resilience of our business model, but also, as I was mentioning earlier, of the relevance of our health-focused and science-based strategy in a fast-changing world. Let's now turn to slide four to discuss some of these growth drivers. The relevance of our strategy and the resilience of our categories and of our portfolio is translated in the numbers. Consistent growth aligned with our mid-term guidance and, importantly, quality growth with a sound volume mix component and multiple growth engine, many of which grew at high single or double digit rates in H1. Take, for example, high protein. This is a category benefiting from growing consumer awareness of the health benefit it brings from our proactive health, like fitness and performance, to reactive health like weight management and wellness. Our fast-growing range, with a focus on strong product superiority and unique functional benefits, is helping to further drive penetration, especially across the Americas, Europe, and Japan. We also continue to roll out our innovation to new geographies, and with still relatively low penetration, there remains much room to grow. In medical nutrition, we are seeing a rapid growth in adult oral nutrition. Awareness of its role in patient recovery continues to rise, and we are especially encouraged by the performance of our plant-based medical nutrition drinks. These products not only expand choice and variety for patients, but also enhance tolerance and adherence, both essential to unlocking the full benefits of nutritional support. In Europe, Alpro continues to set the pace in the plant-based category. As the number one brand, we are driving category growth through innovation, from barista drinks to value-added functional yogurts focused on high protein and gut health benefits. We are transforming alfro from an ingredient-led alternative to dairy to a benefit-led plant-powered nutritional complement to dairy. On Aptamil, our strategy of premiumization keeps delivering with strong growth in Latin America, China, North Asian Oceania, and IMEA, and growth as well in volume in Europe. We have renovated our core range and now rolling out superior innovation platforms that meet specific nutritional needs and improve the health and development of children. Aptamil is a clear example of our science-based, consumer-centric approach, creating value through differentiation. So a number of things are encouraging, but let's also be clear, not everything is quite where we want it to be. There is more to do and things that need fixing. This is why, as I told a number of you, we have the guidance which we have. It enables us to deliver consistently while doing the right thing for the long term, fixing what needs to be fixed and investing where we need to invest. Speaking of places where there is still more to be done, let's turn to slide five. In dairy, we are back in the game, but we are still not leading the game everywhere. We are steadily transforming the portfolio to strengthen our position in functional segments. We are making solid progress in renovating and simplifying Activia. Recent launches, including kefir and fiber variants in Europe, proactive with pre- and probiotics in North America, all built on its trusted benefits. In Japan, and following clinical trials, we are able to claim that Activia has probiotics 100 times more effective than regular yogurts. So good progress, but not back yet where we want to be. And the same applies to a number of the other brands. Across our portfolio, we have engaged in a very systematic approach to drive science-based, consumer-relevant innovation and superiority, and to progressively move from competing to shaping our category. In plant-based, as mentioned earlier, we've reignited growth in Europe through a combination of innovation and great execution. We are spotlighting the functional benefits of plant-based nutrition with refreshed packaging and communication that highlights the five essential nutrients, enhancing the unique nutritional profile of our drinks and yogurts. Alpro is back in full swing. In North America, while we are seeing early signs of recovery, the job is far from finished. We are encouraged by the launch of our Kids Ranch, the strong performance of our premium So Delicious coconut offering, and ongoing efforts to optimize shelf presence, making it easier for consumers to shop the fixture. That said, there is more to do, both to unlock the full potential of the category and to strengthen silk's performance. And Alpro offers now a proven blueprint. In operation, we have made significant progress. We've learned to operate with our greater agility and speed. And we are proud now to be ranked number 10 in Gartner top 25 supply chain, up from 20 seconds last year. It is encouraging and shows how much progress we have made. But we are not yet where we should be. We have faced this year our share of challenges. We are learning from them. further investing into capacity, capabilities, and quality with a clear ambition. Be best in class at serving customers and unlocking the full potential of chapter two of Renew. This chapter has obviously started. Moving now to slide six. When a year ago we shared with you chapter two of Renew Danone, we told you a few things. We told you we had become a different company, health-focused, science-based, execution-driven. We told you the food markets were at a tipping point, and we thought they were coming our way. We told you we would double down on the fundamentals of renew while further transforming the business, having the ambition to become a value compounder. This transformation, pivoting, broadening, and expanding is starting to take shape. We are starting to unlock new growth space with breakthrough innovation. You may have seen the soft launch of our new shelf-stable protein shake in the US. It's obviously early days, but the feedback, both from consumers and the trade, has been very encouraging. It shows the strengths of the all-coast brand as high quality and trusted protein experts. and is also a good indication of our intent to leverage science and capabilities to enter new spaces. In the same spirit, just a few weeks ago, based on proven research, we launched a new Danone Bio-Yogurt drink in Japan, which has a unique blend, combining a probiotic strain with a natural sweetener to improve metabolism. We know that metabolism and digestive health are top priorities for many people in Japan, so our team has put a lot of care in developing a product that supports both and tastes great, obviously. We told you about our intent to further broaden our channel footprint. There is no better example of this than what we do in medical nutrition, be it in China, being able to support patients not only in hospital but in the communities where they live, be it in home service where we now provide enteral nutrition in more and more countries. We are reaching more people in more places at different stages of their life. This strengthens the resilience of our model as we continue to grow in strategic channels and reduce our reliance on mass retail. We also told you about further expanding our geographic footprint where it makes sense. In specialized nutrition, we are rolling out our infant formula platforms to new markets, such as Vietnam, parts of Southeast Asia, and North Africa. Whether it is our core formula, or more tailored solutions for microbial recovery after C-section or for iron deficiency. We are bringing the benefits of superior science to more families around the world to improve health through food. Moving now to slide seven. As part of the next chapter, we also said that we intended to move to the front foot on acquisition. Recently, you've seen us just do that, always guided by clear strategic intent and disciplined governance. Firstly, we are pleased to have completed the acquisition of Kate Farms. And we warmly welcome their really great team into the Dallon family. A fast-growing medical nutrition business, Kate Farms is the number one doctor-recommended plant-based brand in the U.S., offering a wide range of organic plant-based nutrition products for both medical and everyday needs. This is a highly complementary addition to our North American medical portfolio, which starts to give us real scale. It strengthens our ability to serve more patient, consumer, and healthcare professionals with a broader, high-quality offering tailored to diverse health needs. And as I said, Kate Farms comes with an amazing team. We also announced a smaller but very strategically significant acquisition, the Ackermansia Company. Two decades of pioneering science in biotics provided the company with a specific biotic strain, which has been clinically demonstrated to reinforce the gut barrier to reduce inflammation and counteract metabolic disorder. Their unique delivery technology enhances the efficacy of this breakthrough strain, maximizing the positive impact it has on the gut. As you heard Isabelle and I say before, the science of the microbiome and the fields of gut health are not only a historical strength of the research, it is also a field which offers immense opportunity ranging from consumer goods to obviously medical nutrition. These acquisitions are a good example of what we want to do. Drive health through food, anchored into science. They will contribute to enforce our long-term value creation model while we continue to deliver the consistent and resilient performance that you see today. And with that, I hand over to Jurgen. Jurgen, over to you.