Danone S.A.

Thank you for standing by. Welcome to the Danone 2025 Annual Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. Our speakers today will be Antoine de Saint-Afrique, CEO, and Jürgen Esser, CFO. I would now like to hand the conference over to your speaker today, Mathilde Rodier, Head of Investor Relations. Please go ahead. Thank you.

Good morning, everyone. Mathilde Rodier speaking, Head of Investor Relations. Thank you for being with us this morning for Balance Full Year 2025 Results Course. I'm here with our CEO, Antoine de Saint-Afrique, and our CFO, Jurgen Ester, who will go through some prepared remarks before taking your questions. And before we start, I draw your attention to the disclaimer on slide 44 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. Good morning, everyone, and a warm welcome to you all. Thanks for joining Jürgen and me today for our full year results, 25. Moving to slide three, before we focus on what is a very good set of results, I thought it was important to talk about the recent developments regarding infant milk formula. It is obviously top of mind for everyone, and to start with, and most importantly, for all the families that rely on us daily. I know how much the current events are disturbing and worrying for them. This is the last thing you want to live through when you are feeding the most precious person in your life. We obviously take this extremely seriously, and there, let me be clear, food safety and quality are, have been, and will always remain our top priority at Danone. We are confident in the safety and quality of our products, which are supported by extensive scientific evidence and the video testing. In the light of recent events, we went back to review the level of consumer complaints over the period in question, and we didn't find any cause for concern. However, in the context of the ongoing evolution of authorities requirements, We are working closely with those national food safety authorities and are taking action to comply with their new requirements. We have been recalling from relevant markets, essentially in Europe and now in the Middle East, batches of infant formula products. While doing this, our focus is on supporting parents and healthcare professionals, providing clean information, and helping to restore trust as their trust makes all the difference. Let me now get into the results on slide four. We are pleased to share with you another set of strong and good quality results. The numbers you see on these charts are more than figures on a page. They reflect the hard work, the commitment, the passion of the donors, and I really want to thank each and every one of them for that. 25 marked the first year of Chapter 2, our Renew strategy, and we delivered a strong plus 4.5 life-for-life sales growth. Importantly, this performance was consistently underpinned by positive volume mix throughout the year, contributing plus 2.7% in 25. This quality growth, combined with disciplined execution and continued productivity gains, resulted in a plus 44 basis point improvement in our recurring operating margin, reaching 13.4%, all while continuing to invest beyond our capabilities, our brands, our science, and our innovation. Our solid operational performance and strong financial discipline also translated into recurring earnings per share, growing plus 4.6% in 2025, reaching 3.80 euros, close to all time high, and a robust financial position, with 2.8 billion in free cash flow generation. Last, but certainly not least, and fully aligned with ambition to create sustainable value, we further improved our ROIC in 25. It is now firmly anchored into double digit territory, with a 62 basis point increase versus last year. And what is important as well, we achieved all of this while driving sustainability in a way that is focused and impactful, because we firmly believed it is essential to the long-term resilience of our business. This year, we were again recognized on the CDP AAA list, reflecting our leadership in transparency and performance on climate, water stewardship, and forest preservation. We also achieve worldwide B Corp certification. These milestones marks the culmination of a decade long journey and highlights our longstanding commitment to combining strong business performance with positive social and environmental impact. Taken together, The 25th performance you can see on this chart reflects the strengths and the resilience of our unique health-focused portfolio. And this performance is deeply connected to the structural trends that are reshaping the food industry. Moving now to slide five. As I've shared with you before, I believe that the food industry is at a tipping point. Around the world, people are increasingly aware that what they eat and their health are more intertwined than ever. With every new insight into the power of nutrition, consumers are raising their expectations and they are seeking better choices for themselves and for their families. Health through foods has never been more relevant. This is exactly where Danone is uniquely positioned to lead. A health-focused approach supported by science and a strong focus on delivering high-quality offerings position us uniquely to provide nutritional solutions that support people at every stage of life. It is not just what we do. It is what consistently guides our strategy and execution. And we see the results. Our categories continue to outperform the broader food and beverage industry, fueled by powerful and converging trends, all pointing in the same direction. Consumers everywhere are choosing with health in mind. Protein, for instance, is essential for good health at every stage of life, and demand continues to rise, particularly among people using GLP-1 who are actively seeking ways to preserve strength. But consumers today are looking for more than just higher protein. They increasingly seek nutrient-dense, high-quality protein supported by the right dietary complements. This is where fibers play a critical role. Most population worldwide consume 20 to 30% less fiber than recommended. This finds very strong evidence linking low fiber intake to a high risk of major non-communicable disease. Fibers are also fundamental to gut, immune, and metabolic health. and they help body to absorb and use protein more effectively. Protein and fibers represent a major long-term growth opportunity, and we are strengthening our leadership accordingly, building on our capabilities in the field of biotics. Finally, medical nutrition continues to demonstrate its positive impact on the life of patients. As we highlighted at our CME in June 24, the right medical nutrition, helps patients stay on their treatment all the time, recover more effectively, especially after surgery, and return home sooner. Faster recovery not only improves patient's life, it also delivers clear health economic benefits for the healthcare system. Taken together, these trends point to a clear reality. People everywhere now expect their food to actively support their health, and this is where Danone is uniquely positioned to lead. With close to 90% of our portfolio scoring three and a half stars or more under the health targeting system, we deliver everyday nutrition that is high in protein, rich in fiber, and grounded in biotics, alongside our medical nutrition that makes a meaningful difference in people's lives, and it's nutrition that tastes good. These long-lasting trends are underpinning our performance, as we can see on slide six. Our four and a half percent like-for-like sales growth in 25 has been powered by our fast-growing platforms, notably high protein, gut health, infant formula, and medical nutrition. Starting with high protein, Our rapidly expanding range, built on the strong product superiority and differentiated functional benefits, continues to drive penetration across geographies, supported by ongoing rollouts of innovations. In the U.S., Ocospo exceeded €1 billion revenue in 2025, a clear demonstration of the scale and relevance of this platform. The broader shift toward value-added dairy is also supporting the growth of our Danone brands. With a strengthened portfolio, including 300, the brand also surpassed the 1 billion revenue mark in 25, delivering high single-digit growth for the year. Gut Health and Fiber are also strong growth drivers, particularly for Activia, where we have started to reclaim our leadership territory in Gut Health. With innovations in Kefir, and fiber-enriched products, Activia returned to growth in Europe in 2025. Also in Europe, Alpro is another key growth engine. As the leading plant-based brand and a billion-euro platform, we are driving category momentum through innovation. We continue to evolve Alpro beyond an ingredient-led dairy alternative into a benefit-led plant-powered nutritional complement to dairy, something that you can see in our latest packaging. And we are expanding our product range, especially in yogurts, to meet this growing demand for flexitarian diets. In infant milk formula, our premiumization strategy around our family continued to deliver strong results in 2025. Aptamil achieved double-digit growth, enabled by the renovation of our car range and the rollout of superior innovation, addressing specific nutritional needs, supporting the healthy growth and development of children. We also continue to expand our reach across markets, building our strong momentum in China and delivering remarkable performance in India and across Southeast Asia, where, for instance, The Aptamil business doubled in Vietnam in just one year. In medical nutrition, we are seeing strong growth across both adult oral nutrition and tube feeding. Our flagship brands, Fortimer and Nutrition, together now represent a rapidly growing billion-euro platform. We continue to expand our portfolio. including hybrid protein solutions designed to improve tolerance and adherence, helping more patients access the nutrition support they need. So, as you see, our growth engines are firing, and the momentum is clear. But delivering today is only part of the story. Moving to slide seven. At our last CME, we set out the ambition for Renew Chapter 2, doubling down on the fundamentals, while further transforming the business. This is what we started doing in 25, launching science-based innovation, staying true to our health-focused approach, while pivoting the way we look at our categories to unlock significant new opportunities. As I mentioned earlier, fibers play a crucial role in health, and at the end of last year, we launched all-cause fusion, a high-protein product enriched with prebiotic fibers to support digestive health. It is particularly well-suited to consumers looking to manage their weight, including those using GLP-1 medication. In the same spirit, Alpro recently launched its new Meal-to-Go drinks, nutritionally balanced plant-based meal replacements designed for busy lifestyle, offering 20 grams of protein and 26 essential vitamin and minerals. We are making the healthy choice the easy choice. We're also reclaiming our leadership where it matters most, beginning with gut health. We are re-establishing Activia as the global reference in gut health. In markets such as Japan and Australia, where we're winning, we leverage the fact that our Activia products contain probiotics up to 100 times stronger than regular yoga supported by scientific evidence and studies. And this is only the beginning. Finally, we committed to further broaden our channel footprint to further reinforce the resilience of our model. And this is happening in 25 channels outside mass retail grew significantly faster than mass retail. Our specialized channel, the pharmacies, hospital, home care, deliver double-digit growth. We are reaching more people in more places at all stages of their lives. Let's move to slide eight. We keep focusing on execution and competitiveness, strengthening some of our key capabilities. In operations, we have made significant progress over the past years. We are operating with greater agility and speed, And we are proud now to rank 10th in the Gartner top 25 supply chains, the highest ranking for an FMCG company. In 25, we continue to deliver strong productivity gains, supported by the growing digitalization of our operations from the shop floor to the shelf. We are accelerating our transformations. Through our industry 5.0 approach, we are equipping our teams and factories with advanced digital and AI-enabled capabilities from automated quality system to predictive maintenance and real-time performance visualization. Our industry 5.0 academy is upskilling 20,000 employees globally, while a network of 10 pioneering factories is piloting our digital factory of the future. Beyond manufacturing, we're also strengthening digital execution across our end-to-end value chain. AI-enabled planning hubs, increasingly automated shared service centers, and new in-store visualization tools are improving accuracy, speed, and efficiency with which we serve our customers and our shoppers. When we are making progress on a number of fronts, not everything is working as it should, and there is still much more to do to address underperforming areas. It is clear that in the U.S., our performance in 25 didn't meet our expectations. We are not where we should be, and we know we need to step up our game. Winning in this market means going further than protein or specialized nutrition. It means elevating the rest of our portfolios. from creamers to non-protein yogurt to plant-based, and showing up there with the same strengths and relevance that we do today in high-protein OSM. As you certainly have noted, we appointed a new America's own president, Henri Roussel, and made broader organizational changes to rebuild the culture of winning, one anchored in execution excellence, and the right operational intensity. We've made significant leadership change and we are starting deploying at space innovation proven in other geographies and aligned with consumer shifts. Alongside addressing underperformance, we are also broadening our reach by investing to capture new growth tools. We are expanding capacity where it matters most in high protein, skier, kefir, and medical nutrition across Europe, China, the U.S., and Japan. These investments will progressively allow us to capture growth opportunities to their full extent, support very strong demand in high protein, and enable us to better serve emerging trends across the rest of the categories. Moving to slide nine. To sustain long-term performance and be durable competitive advantage, we are strengthening the capabilities that truly differentiate Danone. We believe the future of dairy lies in empowering farmers to build more resilient and sustainable supply chains. That is why we launched the Danone Meat Academy, the first of its kind multi-year global platform, bringing together academia, technical partners, and Danone expertise to provide farmers with practical knowledge science, and digital tools. With an approach tailored to different regions and to farm size, the milk academy will strengthen the dairy supply chain and accelerate the long-term transformation of dairy farming. The same spirit underpins our partner for growth initiative. More than a program, it is a catalyst for shared value, moving us from transactional relationship to deep partnership with our suppliers. Since its launch over two years ago, it has allowed us to boost efficiency, unlock capacity, and advance our sustainability goals. We are deliberately building a resilient, multi-sourced supplier ecosystem, combining the right diversity and the right quality, and partnering with suppliers who share a long-term collaborative mindset. Importantly, This approach also strengthens our innovation capabilities and enhances the robustness of our supply chain. Speaking of innovation, we keep investing in cutting-edge research to build lasting differentiation. We recently inaugurated our One Biome Laboratory in Saclay, accelerating research in the gut microbiome by leveraging proprietary scientific data, clinical studies, and deep consumer understanding. We also acquired, as you know, the Ackermann company, bringing a clinical proven biotic strain with the potential to reinforce the gut barrier, a capability that will increasingly drive further differentiation across our products. Finally, we continue to invest in skills and leadership. Through initiatives such as DanSkills, we are equipping our teams with the critical capabilities of tomorrow, driving for continuous, functional, and leadership upgrade. We also pursue the cultural transformation initiated four years ago, one made of focus on execution, passion for consumer, and one where performing and transforming go together. Let's move to slide 10. As part of Renew Chapter 2, we also made it clear we would move to the front foot on acquisitions. In 25, we started executing on that ambition with a strong focus on strategic fit and disciplined governance. Following the acquisition of Kate Farm, we now have a $500 million medical nutrition platform in the U.S., making it the first time we have achieved meaningful scale enrich into the healthcare system and hospital infrastructure in the country. Importantly, this platform is built on a product portfolio that is truly differentiated, addressing patient needs for more complete and healthier nutrition. The integration with our existing medical nutrition business is progressing extremely well, with Kedfarm delivering strong growth. Our ambition is clear, to build a powerful growth engine in North America, and in doing so, further rebalance our category mix in the U.S. We're also pleased to have acquired last week an additional one-person stake in our Australian dairy joint venture with Saputo, following the exercise of our call option. Concretely, this brings our ownership to 51%, resulting in the financial consolidation of the business. We operate in dairy across Australia and New Zealand through three strong brands, YoPro, Activia, and Ultimate, which together generate over 100 million in revenue We are a leading position in both high-protein and gut health. And interestingly, this is where our high-protein journey began as early as 2016 with the initial launch of Europro. So taken together, these moves illustrate how we are actively shaping our portfolio to support sustainable long-term growth. And with this, let me hand it over to Juergen. Juergen, over to you.