Solid organic growth with third-quarter sales up +4.6%[1]
Full-year 2015 targets confirmed,
· Q3 sales[2] up +4.6% like-for-like[3] and up +4.2% as reported
· Solid figures reflect positive contributions from all Danone businesses, despite variations within emerging countries
- Europe: +5.1%[1]
- CIS & North America[4]: +3.2%[1]
- ALMA[5]: +4.7%[1]
· Continued progress on building a profitable and sustainable growth model
· 2015 targets confirmed: organic sales growth[2] of between +4% and +5%[1], and a slight
rise in trading operating margin[1]
[1] Like-for-like, see pages 6 and 7 for details on calculation of financial indicators not defined in IFRS
[2] Net sales
[3] See pages 6 and 7 for details on calculation of financial indicators not defined in IFRS
[4] North America = USA and Canada
[5] ALMA = Asia-Pacific / Latin America / Middle East / Africa

Emmanuel Faber: CEO’s comment
“Solid third-quarter organic sales growth of 4.6% confirms our progress towards sustainably anchoring a balanced profitable growth model for Danone. In Europe, while the Fresh Dairy Products division continues its adaptation, with sustained improvements in the performance of key brands such as Actimel, Activia and Danette, other divisions continue to show solid trends, noting particular strength of Waters with evian and Volvic. In North America, we gradually return to growth in Dairy. In the CIS, we continue to adapt our model, delivering positive results. Finally, in ALMA, the environment remains unstable and performance varies from one country to another. We are actively transitioning our Mizone brand in China towards a lower pattern of category growth.
I am fully confident that we have long built unique positions in the best long-term potential food and beverage categories. As we expect to navigate in a persistently volatile world, the priority of the
Executive Committee and of all Danone teams will remain to deliver profitable growth while strengthening the resilience of our business model."

Sales by business line and geographical area in Q3 and in the first nine months of 2015
€ million
except for percentages Q3 14 Q3 15 Change like-for-like[1]
Volume growth like-for-like[1] 9M 14 9M 15 Change like-for-like[1]
Volume growth like-for-like [1]
BY BUSINESS LINE
Fresh Dairy Products 2,796 2,711 +0.6% -3.3% 8,436 8,376 -0.1% -3.7%
Waters 1,169 1,312 +6.8% +5.7% 3,243 3,815 +8.5% +5.9%
Early Life Nutrition 1,084 1,217 +10.9% +3.7% 3,155 3,662 +11.2% +5.1%
Medical Nutrition 366 400 +6.9% +5.8% 1,048 1,180 +7.7% +4.8%
BY GEOGRAPHICAL AREA
Europe 2,156 2,286 +5.1% +3.1% 6,417 6,733 +3.2% +0.7%
CIS & North America[2] 1,153 1,102 +3.2% -3.7% 3,483 3,407 +2.1% -4.3%
ALMA[3] 2,107 2,252 +4.7% +1.2% 5,983 6,894 +7.3% +2.9%
Total 5,416 5,641 +4.6% +0.8% 15,833 17,033 +4.6% +0.7%
[1] See pages 6 and 7 for details on calculation of financial indicators not defined in IFRS
[2] North America = USA and Canada
[3] ALMA = Asia-Pacific / Latin America / Middle East / Africa

Overview of sales performance—Q3 2015
Consolidated sales rose by +4.2% as reported, totaling €5,641 million. Excluding the impact of changes in the basis for comparison, which includes exchange rates and scope of consolidation, sales were up +4.6%. This organic growth reflects a +0.8% rise in sales volume and a +3.8% rise in value.
The -0.2% exchange-rate effect results from unfavorable trends in currencies, including the Russian ruble and the Brazilian real, as anticipated.
Changes in the scope of consolidation had a limited impact (-0.2%) and result in large part from the sale of Fresh Dairy Product operations in Indonesia in December 2014.
Fresh Dairy Products
Fresh Dairy Product division sales were up +0.6% like-for-like in the third quarter, reflecting a
-3.3% fall in volumes and a +3.9% price/mix effect. There was thus a gradual improvement despite variations from one market to another:
- in Europe, sales trends are confirming a recovery, as seen in the sequential improvement in sales volumes and in positive results for the Actimel brand across Europe and for Activia and Danette in Spain;
- in Russia, sales are holding up despite the persistently unstable environment. As part of its portfolio enhancement drive, the division once again carefully managed sales trends in its various product ranges and reaped the benefits of price increases and a very positive product mix;
- in the United States the category is progressing and Danone continues to move on its agenda to reignite growth. Danone is consolidating its portfolio and continuing to leverage channel dynamics. Recent new products—Oikos Triple Zero in the Greek yogurt segment and Light & Fit Shake—are living up to promising launches. Global performance is
gradually improving and consolidating its already strong position as market leader;
- the ALMA[1] zone is continuing to grow despite volatility in some emerging markets. A solid
performance in Mexico offset the less favorable trend in Brazil, where the economy is
dampening consumption.
[1] ALMA = Asia-Pacific / Latin America / Middle East / Africa

Waters
The Waters division reported a rise in sales of +6.8% like-for-like—a solid performance driven by a strong +5.7% increase in volumes.
These figures reflect both general momentum in European markets, buoyed by favorable weather, and the strong performance of plain water in all regions.
In China’s more complex business environment, the non-alcoholic beverage sector has, as anticipated, entered a period of more moderate growth. Danone has thus been transitioning the Mizone brand towards this lower pattern of growth and begun a process of inventory adjustment with distributors. This should continue over the next few quarters without compromising the category’s growth potential, especially for Mizone.
At the same time, other emerging countries, including Indonesia and Mexico, continue to report above-average growth and remain major growth vectors.

Early Life Nutrition
The Early Life Nutrition division saw sales rise +10.9% like-for-like, in line with previous quarters.
This performance reflects +3.7% growth in volume and a +7.2% value increase.
The division turned in solid performances in all of its geographical markets:
- in Europe, double-digit growth was driven by the success of international brands exported to China, including Aptamil and Nutrilon. Fueled specifically by this demand in China, the trend got off to a strong start in the closing quarter of 2014; it is thus expected to weaken as of Q4, as the basis for comparison shifts;
- in China, Dumex sales are down, hit by changes in distribution strategy made in the second quarter. At the same time, Danone is continuing to lay the foundations of its local model based on developing sales through specialized stores and gradually creating a structure for its local internet offering;
- sales in the rest of the world remain buoyant, with double-digit growth in Latin America, the Middle East and North America.

Medical Nutrition
The Medical Nutrition division reported like-for-like growth of +6.9%, with volumes up +5.8% and a price/mix effect of +1.1%. Overall performance is in line with trends observed in the second quarter, underpinned by double-digit growth in Turkey, China and Brazil. More broadly, this strong showing reflects the success of Danone’s pediatric and metabolic product ranges in all regions.

2015 outlook (from press release issued on February 20, 2015)
Danone assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets, in particular the CIS.
In 2015, Danone also anticipates marked but varied trends in the cost of major strategic raw materials, particularly milk:
- lower prices in Europe and the United States in the first half, with a rebound likely in the second half of the year, and
- gradual price increases in emerging countries all year long.
Altogether, Danone anticipates a moderate rise in the cost of main raw materials and packaging in 2015.
Against this backdrop, Danone will focus on developing its product categories and winning market share. In Europe, the company will continue to strengthen its competitive edge. In growth markets, it will focus on developing its product categories, in particular through strong local brands in the most attractive geographical markets.
After delivering profitable growth in the second half of 2014, Danone will seek to make this equation sustainable, generating organic growth in sales and in operating margin in 2015, while making the investments necessary to ensure this performance is lasting.
As a result, Danone’s 2015 targets include:
· organic growth in sales[1] of between +4% and +5%[2]
· slight growth in trading operating margin[2]
Lastly, Danone will continue to work towards lasting gains in free cash-flow without setting a shortterm target.
[1] Net sales
[2] See pages 6 to 7 for details on calculation of financial indicators not defined in IFRS

see more on
http://media.corporate-ir.net/media_files/IROL/95/95168/press/10192015_Q3_Press_Release.pdf

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