Danone S.A.

Thank you for standing by and bugged down in first quarter 2026, so cold. At this time, all participants are in 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 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. Our speaker today will be Juergen Esser, Chief Financial Officer. And now I'd like to hand the conference over to Mathilde Rodi, Danone's Head of Investor Relations. Please go ahead.

Good morning, everyone. Mathilde Rodi speaking, Head of Investor Relations. Thank you for being with us this morning for Danone's 2026 Q1 Periscope. I'm here with your 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 20 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 Jürgen.

Thank you, Mathilde, and good morning to all of you. Welcome to our Q1 2026 sales presentation. Thank you for taking the time to be with us. I suggest we go straight into it. It is a busy day for all of you. Let's go to slide number two. As you have seen from our press release this morning, we reported a solid set of numbers for the first quarter, a quarter which was far from business as usual. Firstly, the conflict in the Middle East. Most important is that all our colleagues who live and work in this region are safe and well. A big thank you for their commitment during these challenging times. As you all know, this conflict is having consequences on logistics and distribution flows in the region, a region that is representing around 2% to 3% of the sales of our companies. Our start of the year was also impacted by the infant milk recalls that affected the industry in the EMEA zone. It has created shelf disruptions and out-of-stock situations across the region, with a particular challenge for the stock replenishment in the Middle East due to the before-mentioned conflict situation. Amid this challenging context, we are pleased that the numbers we published today demonstrate the resilience of our portfolio, the strength of our categories, and of our brands. And our objective is more than ever to come out of this environment stronger than before. Based on this confidence, we are accelerating on our strategic portfolio management with the signing of two important transactions during the first quarter. I suggest we move to the next page, page number three, so I can give you more color on it. Both transactions that we sign during the quarter will further strengthen our unique health-driven portfolio and contribute to our industry-leading value creation ambitions. First, the acquisition of the Huel company. Huel is the leader in complete and nutritionally balanced meals with sizable business in Europe and in the U.S. The contemplated transaction will enhance our presence in the premium functional nutrition category. This offering us new capabilities, especially in direct-to-consumer channel management, combined with state-of-the-art digital marketing skills. The Yule company is a perfect strategic fit with a highly complementary mission. In parallel, we announced for our Argentinian dairy business an exciting new chapter. Together with our partner Acor, we are creating a joint venture, combining our respective portfolios to unlock the full potential of the dairy market in this region. Whilst the transaction will technically deconsolidate our Argentinian dairy business, we expect the synergistic effects to this joint venture to be EPS-equative over time. Both transactions, which we expect to close in the second semester, are fully aligned with our Renew Done on Agenda and our capital allocation priorities and discipline. Let me now move on to slide number four. Amid the described complex condition in this Q1, we delivered a solid like-for-like sales performance of plus 2.7%, with volume mix-up plus 1.5%. Our growth was balanced across all categories. EDP delivered again solid growth of plus 3.4%, driven by the ongoing rollout of our functional innovations, particularly those rooted in protein and gut health. Specialized nutrition posted plus 1.9%, the underlying growth dynamics across the globe remained strong, which more than compensated for the IMF recall impacts. And finally, water, that grew plus 2.3%. The water category saw a resilient start to the season, with solid growth in many markets. We will talk about the regional performance in the coming minutes, so I will not enter here into the details by geography. Let me instead suggest moving on to slide number five. and to double-click on some of the underlying dynamics. The consumer preference for healthy food and hydration is rising everywhere around the world, and we are continuing to address this opportunity with several platforms contributing strongly to our growth. In dairy, high-protein yogurts continue to be the key contributor in all regions, from North America to Europe and Asia. In addition, our more recent innovations, such as skia and kefir, are flying off the shelves and we are expanding them fast within and beyond Europe. We continue to innovate in many segments and regions and are particularly excited about new product launches under the ALP program in Europe, including the Meal-to-Go meal replacement solution, which you can see here in the picture. Meal-to-Go was launched in Germany recently and is currently being rolled out to other European markets. And finally, in medical nutrition, we continue to see strong dynamics supported by favorable demographic trends and rising diagnosis rates. This is benefiting our diet medical as well as our pediatric nutrition business across all regions, both of them going from strength to strength. All these platforms are responding to structural consumer and patient needs and increasingly contribute to the quality of our growth as they scale up. Having said that, these successes should not take our attention away from key challenges that we are addressing. We mentioned the conflict in the Middle East, which is posing supply chain and cost inflation pressures. We have some short-term hedging protection in place, which is moderating the immediate impact on our P&A. To address the volatile context, we have accelerated the run rate of ongoing productivity projects and are monitoring the situation closely. On the infant formula situation in EMEA, Whilst the supply chain in Europe is mostly back to normal, the Middle East situation is not yet stable due to long lead times of stock replenishment. Our priority is on rebuilding the credibility of the categories, and we are refocusing our investments to make this happen. We expect the situation to progressively normalize as we go through the year. And finally, in the US, we talked previously about not being happy with our competitiveness. We have seen an improvement in Q1, an encouraging sign. We will have more capacity coming online during 2026 that will help us to double down on our execution on the dairy shelf. Creamers are lapping as we speak the supply issues of Q1 2025. All of this will support our recovery for the coming quarters. Overall, the opportunity moving forward lies in accelerating our winning platforms, including the ones on the left side of this slide, as much as in correcting the things which do not yet deliver to our expectations. The formula which has proven successful all these last years. With that said, let's turn to the sales bridge on slide number 6. Reported sales reached 6.7 billion euros in the first quarter. In addition to the plus 2.7% like-for-like growth previously discussed, the experienced adverse currency effects of minus 5.6%, residing from the appreciation of the euro against most currencies. And lastly to mention, for the third consecutive quarter, we are reporting a positive scope effect, predominantly from the Kate Farms integration of plus 0.5%. Now let's look at the performance by region, moving to slide number seven. And let me pause briefly here because this is an important point. You will remember that as of this year, we have moved from five to three rather classical macro regions. EMEA on the left side of the chart, Americas in the middle, and APAC on the right. This change reflects how we manage the business operationally and strategically. Moving to this leaner setup further enhances our company's agility and improves clarity and accountability. To ease the reading of our performance, we will make the switch in reporting progressive, and for now, we will continue to provide for additional information, also like for like numbers for previous zones of Europe, North America, and CNRO. Let me now start the zone review with EMEA on the next slide, on slide number eight. EMEA delivered plus 0.6% like-for-like growth in Q1, led by a price of plus 2%. Within EMEA, Europe delivered plus 0.4% like-for-like. We saw sustained momentum in EDP, driven by many of our function-led innovations across dairy and plant-based. In particular, we saw good growth in our winning platforms, including in high-protein, skia and kefir, as well as in Alpro. Activia also delivered another quarter of growth, confirming the green shoots observed in Europe in Q4. As expected, specialized nutrition was impacted by the IMF recall in Europe and the Middle East, as we already discussed. Our key focus is now on rebuilding trust into the category and in our brands. In waters, we posted solid growth ahead of the season, particularly in Evian, and supported by the rollout of Volvic functional water innovations across more markets in Europe. So overall, a robust underlying performance in EMEA amid the temporary headwinds. Turning to the Americas on slide number nine. The Americas region delivered plus 3.4% like-for-like growth, led by volume mix of plus 2.5% and price of plus 0.9%. Within those numbers, NORAM, North America, delivered plus 1.5% like-for-like growth. In the U.S., our priority is to regain momentum and competitiveness outside of protein, and Q1 showed some improvement versus the low point in Q4. This was driven by additional capacity on yogurt, starting to kick in, and an improving dynamic on creamers, helped by easier base of comps since the month of March. On top of that, our Stoke brand continued to deliver strong W-digit growth. Specialized nutrition saw high single-digit growth in the quarter, led by Aptamil in Latin America and Neocate in the U.S. Overall, an improved situation in the Americas, with a lot of things to do in the U.S., Quality of execution remains the focus area, particularly in dairy, and this is where the teams are fully mobilized. Turning to slide number 10. APAC delivered plus 6% like-for-like growth entirely driven by volume mix within APAC. CNRO delivered plus 10.3% growth like-for-like growth. In EDP, Japan again demonstrated strong momentum, continuing to gain share in a very competitive dairy market, thanks to strong functional claim execution. Specialized nutrition continued to deliver solid growth in China across both IMF and medical nutrition. In Q1, we saw particularly strong demand for our allergy range within pediatrics, for adult oral solutions in adult medical nutrition, as well as for essences within the IMF categories. The medical nutrition category remains vibrant, while the infant milk category continues to normalize as expected. And in waters, we saw contrasting dynamics across our two main brands in the region, solid growth for myzone as we are preparing for the season, while severe flooding impacted the category in Indonesia. Overall, APAC remains a growth region for us with opportunities across countries and categories. And with that, let me conclude with slide number 11. As we have been discussing this morning, we delivered a solid performance in this first quarter amid a challenging context. We are applying with rigor our winning strategy, focus on our health-focused categories that benefit from attractive underlying demand and that continue to grow faster than the average of the food and beverage market. We are therefore confirming today our guidance for year 2026, consistent with our mid-term guidance of like-for-like sales growth between plus 3 and plus 5% and for recurring operating income to grow faster than sales. And with that, let me hand it back to Mathilde to start the Q&A session.