Danone : 2016 Third-Quarter Sales

Press release - Paris, October 18, 2016

• Like-for-like sales growth: +3.2%

• Reported sales growth: -2.6% reflecting a negative currency impact of -6.3%

  2016 Third-Quarter:

• Like-for-like sales growth: +2.1%

• Reported sales growth: -1.8% reflecting a negative currency impact of -4.1%

All references in this document (including Q3 2016 and FY 2016 targets sections above) to like-for-like changes, trading operating income, trading operating margin, recurring net income, recurring income tax rate, recurring EPS, free cash-flow, free cash-flow excluding exceptional items, and net financial debt, correspond to financial indicators not defined by IFRS that are used by Danone. Their definitions, as well as their reconciliation with financial statements, are listed on pages 5 and 6.

CEO EMMANUEL FABER'S COMMENTS

"Within a volatile context, in Q3 we continued to prioritize the transformation of our business model towards sustainable profitable growth, and to increase its resilience, through disciplined resource allocation. We remained focused on strategic growth opportunities, avoiding tactical allocations of resources, and working on increased efficiencies and cost optimization.

We continue to balance the short, mid and long-term agenda of our transformation. While China is transitioning, creating short-term volatility and negatively impacting our sales growth in Q3, we have continued to build a solid growth agenda, leveraging the fundamentals of our unique business portfolio, and the growth potential of our brands in each of our categories.

I would like to take this opportunity to warmly thank all our teams for their full engagement and commitment in executing this agenda and supporting our company's mission."

The presentation to analysts and investors, chaired by CFO Cécile Cabanis, will be broadcast live today from

9.00 a.m. (Paris time) on Danone's website (www.danone.com).

Related slides will also be available on the website, in the Investors section.

2016 THIRD-QUARTER SALES

€ million

except for % Q3 2015 Q3 2016

Reported Like-for-like change

Volume Growth

Total 5,641 5,537 -1.8% +2.1% -0.7%

Consolidated sales stood at € 5,537 million, up +2.1% like-for-like. Growth reflects a slight -0.7% decline in volume and a +2.8% rise in value.

Reported sales were down -1.8%, including changes in exchange rates (-4.1%) and in the scope of consolidation (+0.2%).

The exchange-rate effect reflects negative trends in currencies including the Argentine peso, the British pound, the Mexican peso and the Chinese renminbi.

Changes in the scope of consolidation result primarily from full consolidation of Fan Milk Group companies since December 2015.

The Fresh Dairy Products division reported sales up +2.2% like-for-like, including a -2.3% decline in volume still driven by the CIS and the Latam region, and a +4.5% rise in value.

In Europe, Danone continued to progress in its transformation. After the relaunch of its Danonino and Actimel brands in the second quarter, the Company has continued its major renovation plan with a new identity, positioning and packaging for the Activia brand in mid-September. This is a key step to reach the objective of a stabilization of sales.

In the CIS & North America1 region, Danone generated solid growth. In the United States, despite a more competitive environment, total market share continued to rise, reaching a record high of 35.8%. In Russia, where the business environment remains difficult, Danone offset a decline in volume by enhancing its brand portfolio with an improved product mix.

1 North America = USA and Canada

2 ALMA = Asia Pacific / Latin America / Middle East / Africa

The Waters division reported sales down -0.1% like-for-like, including flat volume and a -0.1% decline in value. This is mostly due to an unfavorable sales trend in China. China excluded, the division's overall performance is at mid-single digits supported by strong category dynamics and a constant focus on brand innovation and activation.

In Europe, sales were positive despite a high basis of comparison and poor weather in July.

The ALMA1 region (excluding China) reported a strong increase, supported by robust growth from Hayat in Turkey, Aqua in Indonesia and Bonafont in Mexico.

In China, in a transitioning NABs2 category, Mizone third quarter sales were impacted by the continued high basis of comparison and by floods that created some disruptions in the sector. In this weakening consumer environment, the transition will last and it is important that Danone remain focused on protecting Mizone's market share and stay disciplined in fueling growth initiatives at the right pace for Mizone.

The Early Life Nutrition division reported a +1.7% like-for-like rise in sales, resulting from a -0.4% decline in volume and a +2.1% improvement in price-mix. It mostly reflected a decline in so-called 'indirect' sales to China. When these are excluded, division growth comes in at a mid-single digit.

In China, the transition of the 'indirect' channel, induced by a fast-changing regulatory environment, is creating short-term volatility via active destocking by traders. In a category marked by rapid distribution channel shifts and stock adjustments, the impact of the 'indirect' channel's transition will continue until the new regulations are fully enforced.

In such a context, Danone is making significant progress in building a sustainable growth model in China, increasing its direct distribution through specialized stores and direct e-commerce offerings. Consequently, growth in local sales picked up sharply in Q3.

The Medical Nutrition division reported sales growth of +9.7% like-for-like-achieved through volume growth of

+6.0% and a price-mix impact of +3.7%.

Growth was generated across all geographical areas, with a strong rise in Europe and rapid growth in emerging markets such as China and Brazil. All product categories helped fuel this overall performance, with a stronger contribution from pediatric nutrition and adult enteral nutrition brands like Neocate and Nutrison.

2016 OUTLOOK

(From press release issued June 14, 2016)

After delivering profitable growth in 2015, Danone set clear priorities for 2016 and is pursuing its journey to meet its ambition for 2020, which calls for strong, profitable and sustainable growth.

Danone still assumes that economic conditions will remain volatile and uncertain 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, China and Brazil.

In this context, Danone continues to strengthen its balanced growth model and anchor profitable growth in a sustainable manner. To do so, it is relying more than ever on disciplined resource allocation, favoring solid execution of its growth plan and appropriate and efficient funding of short-, mid- and long-term initiatives.

Last June, with fast evolving dynamics in some emerging markets, notably China, Danone adjusted the pace of topline refueling for 2016 in these specific geographies.

As a result, the company has raised its 2016 recurring operating margin1 target from "solid improvement2" to a range of +50bps to +60bps2, while confirming its sales growth2 guidance within a range of +3% to +5%.

Danone will also focus on increasing free cash-flow, without setting a short-term target.

MAJOR FINANCIAL TRANSACTIONS AND DEVELOPMENTS SINCE JULY 7, 2016

The acquisition process of The WhiteWave Foods Company (NYSE: WWAV) ("WhiteWave"), announced on July 7, 2016, is on track as foreseen.

• On October 4, 2016, WhiteWave announced that, during a special stockholder meeting, the stockholders of the company approved the merger agreement under which Danone will acquire all of the outstanding shares of WhiteWave.

• The closing of the transaction remains subject to the satisfaction of customary conditions, including the receipt of required regulatory approvals from antitrust authorities in the United States and in the European Union. Both WhiteWave and Danone have been working with the United States Department of Justice ("DOJ") and the European Commission in order to obtain such regulatory approvals, including by providing information requested in the DOJ's "second request".

• WhiteWave and Danone continue to target closing the transaction by the end of 2016; however, there can be no assurance regarding timing of receipt of regulatory approvals, which would delay timing of the closing.

o o O o o