Danone announces it plans to transfer the effective control of its EDP business in Russia

Rhea-AI Summary

Danone announced plans to transfer control of its Essential Dairy and Plant-based (EDP) business in Russia to ensure long-term local business continuity. This decision follows that the EDP Russia business had contributed approximately 5% to Danone's net sales in the first nine months of 2022, alongside impacting like-for-like sales growth and recurring operating margin negatively. The transaction could entail a write-off of up to €1 billion and will require regulatory approvals, resulting in the deconsolidation of the EDP Russia business.

Positive

• Transfer of EDP business in Russia may ensure local business continuity.
• Focus on responsible actions towards employees, consumers, and partners.

Negative

• EDP Russia contributed only 5% of net sales and was dilutive to like-for-like sales growth and recurring operating margin.
• Potential write-off of up to €1 billion could adversely affect financials.

Press release – Paris, October 14, 2022

Danone announces it plans to transfer
the effective control of its EDP business in Russia

Danone announces today it has decided to initiate a process to transfer the effective control of its Essential Dairy and Plant-based (EDP) business in Russia.

Danone considers that this is the best option to ensure long-term local business continuity, for its employees, consumers and partners.

Over the first 9 months of 2022, the EDP Russia business represented around 5% of Danone net sales and had a dilutive contribution to Danone’s like-for-like sales growth and recurring operating margin. The transaction could result in a write-off of up to €1 billion¹.

Once closed, the transaction, which will be subject to regulatory approvals, will result in the deconsolidation of Danone’s EDP Russia business.

Danone’s priority remains to act responsibly and respectfully to its local employees, consumers, and partners throughout the process.

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FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements concerning Danone. In some cases, you can identify these forward-looking statements by forward-looking words, such as “estimate”, “expect”, “anticipate”, “project”, “plan”, “intend”, “objective”, “believe”, “forecast”, “guidance”, “foresee”, “likely”, “may”, “should”, “goal”, “target”, “might”, “will”, “could”, “predict”, “continue”, “convinced” and “confident,” the negative or plural of these words and other comparable terminology. Forward looking statements in this document include, but are not limited to, predictions of future activities, operations, direction, performance and results of Danone.

Although Danone believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those anticipated in these forward-looking statements. For a detailed description of these risks and uncertainties, please refer to the “Risk Factor” section of Danone’s Universal Registration Document (the current version of which is available at www.danone.com).

Subject to regulatory requirements, Danone does not undertake to publicly update or revise any of these forward-looking statements. This document does not constitute an offer to sell, or a solicitation of an offer to buy Danone securities.

About Danone (www.danone.com)

Danone is a leading global food and beverage company operating in three health-focused, fast-growing and on-trend categories: Essential Dairy & Plant-Based products, Waters and Specialized Nutrition. With a long-standing mission of bringing health through food to as many people as possible, Danone aims to inspire healthier and more sustainable eating and drinking practices while committing to achieve measurable nutritional, social, societal and environment impact. Danone has defined its Renew strategy to restore growth, competitiveness, and value creation for the long-term. With 100,000 employees, and products sold in over 120 markets, Danone generated €24.2 billion in sales in 2021. Danone’s portfolio includes leading international brands (Actimel, Activia, Alpro, Aptamil, Danette, Danio, Danonino, evian, Nutricia, Nutrilon, Volvic, among others) as well as strong local and regional brands (including Aqua, Blédina, Bonafont, Cow & Gate, Mizone, Oikos and Silk). Listed on Euronext Paris and present on the OTCQX market via an ADR (American Depositary Receipt) program, Danone is a component stock of leading sustainability indexes including the ones managed by Vigeo Eiris and Sustainalytics, as well as the Ethibel Sustainability Index, the MSCI ESG Indexes, the FTSE4Good Index Series, Bloomberg Gender Equality Index, and the Access to Nutrition Index. By 2025, Danone aims to become one of the first multinational companies to obtain global B Corp™ certification.

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¹ Based on the accounts and foreign exchange rates as of June 30th, 2022

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FAQ

What is Danone's plan regarding its EDP business in Russia?

Danone plans to transfer control of its Essential Dairy and Plant-based (EDP) business in Russia to ensure long-term local business continuity.

How much did Danone's EDP Russia business contribute to net sales in 2022?

In the first nine months of 2022, the EDP Russia business represented around 5% of Danone's net sales.

What are the potential financial impacts of the EDP business transfer for Danone?

The transaction could result in a write-off of up to €1 billion.

How does the EDP business transfer affect Danone's operational strategy?

The transfer is part of Danone's strategy to act responsibly towards local stakeholders while improving business continuity.

What will happen after the transfer of Danone's EDP business in Russia?

Once closed, the transaction will lead to the deconsolidation of Danone's EDP Russia business, subject to regulatory approvals.