Danone Stock

Good day, and thank you for standing by. Welcome to Danone's Third Quarter 2026 Sales Call. [Operator Instructions] Please be advised that today's conference is being recorded. And now I'd like to hand the conference over to Mathilde Rodie, Danone's Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Mathilde Rodie speaking, Head of Investor Relations. Thank you for being with us this morning for Danone's 2026 Q3 sales call. I'm here with our CFO, Juergen 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 23 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 Juergen.

Thank you, Mathilde, and good morning, everyone. Thank you for joining us for our Q3 sales presentation. Given the busy day ahead, I suggest we go straight into it, starting with Slide #2. And here, let me start with the key messages of today's release. Most important, with a strong plus 4% like-for-like sales growth in Q3, we delivered another quarter of broad-based growth across categories and geographies, proving once again the relevance of our health-focused portfolio. Price contribution to our growth is obviously increasing to more than 3% in the quarter, reflecting the decisive pricing actions that we have taken during the quarter. This has been critical in the current inflationary context.

We're at the same moment, continuing to post positive volume mix growth, which means all ingredients are here to support our long-term value creation model. Having said that, these good numbers in Q3 are not taking away our attention from the areas that are not yet delivering to our expectations. This is particularly the case for EDP in North America, where focused actions have been taken to step up execution and restore performance with sense of urgency. All in all, our Q3 performance gives us lots of confidence to continue delivering on our guidance, which we confirm today.

Let's go to Slide #3 to dive deeper into each of those points. As I said, the solid like-for-like growth of plus 4% we delivered in Q3 was well balanced across our 3 regions and across our 3 categories, each of them performing within our target corridor of between 3% and 5%. While we will dive into regional details shortly, let us focus first on the category performance. And here, it's great to see that our Specialized Nutrition category is again leading the growth for our company, an important element for our profitable growth algorithm, as you know.

Equally important, the growth in each of the categories is driven by multiple business engines, which is probably best displayed on the next slide, which is Slide #4. And here, starting with EDP. Our dairy and plant-based business delivered another solid quarter of plus 3.6% like-for-like growth with our main European markets like France, Spain and the U.K. outperforming. This is a great achievement when you remember where we were only 2 to 3 years ago. In Spain, for instance, we have been transforming the whole portfolio in record time, retaking visible leadership and stepping up execution to market-leading levels.

Beyond Europe, we continue to see double-digit growth in Japan, where our business is becoming now a EUR 500 million platform as well as strong momentum in Mexico as well as in Brazil. Moving to Specialized Nutrition that delivered a very strong plus 4.7% like-for-like growth in the quarter. Our most important business in this category is, as you all know, in China, and we are pleased to see that our Chinese business is contributing over proportionally to the global category results. It's also great to have North America increasingly contributing as our Medical Nutrition business is delivering double-digit growth in Q3, amplified by the Kate Farms integration.

Beyond China and North America, we're also seeing very strong growth in emerging markets across many regions, including in Brazil, Indonesia and India as well as in the Middle East with massive headroom for growth in those geographies. And finally, the Waters category that posted solid growth of plus 3.6%. This performance was driven in particular by a strong season across our main European markets as well as double-digit growth in Indonesia, Mexico and North America. So as you can see, our growth stays broad-based with multiple engines outperforming within each of our 3 categories.

Let's now move on to Slide #5 and the underlying growth drivers over time. As you know, positive volume mix growth is fundamental to our strategy. In Q3, volume mix contributed plus 0.4% to our like-for-like sales growth. Important to note that this number was distorted in the quarter by around 1 point of negative impact from the volume decline of Mizone in China, something that I will get back later to. Excluding Mizone, volume mix for the group would therefore be broadly in line with the level we delivered in H1. Price contributed plus 3.6% in Q3.

In the inflationary environment we are operating in with oil prices and its related indexes staying elevated, we have taken proactive and deliberate pricing actions during the quarter. Building on the experience of the previous inflationary cycles, we have acted early and decisively rather than delaying action to avoid more significant price increases later on. We have implemented these actions selectively and with discipline category by category and market by market, always keeping consumers at the center of our decision-making. As demand stays our North Star, we continue to carefully balance affordability, competitiveness and sustainable value creation.

Let me now turn to a few zooms on some specific businesses, starting with one of the key satisfactions that I would like to highlight, EDP Europe on Slide #6. We are very pleased with the steady performance of our EDP business in Europe, which outperformed in Q3, the category at group level. Importantly, our Dairy portfolio is increasingly aligned with evolving consumer preferences with high protein, gut health and the most functional segments being today the fastest-growing product groups. At the same time, our more recent platforms such as Skyr and Kefir continue to gain traction with consumers, both growing strong double digit in Q3, and we continue to expand them across markets. Kefir, in particular, is now EUR 100 million platform on a full year basis, only 18 months after initial launch.

Together with our fiber enriched offering, it contributes to reposition the Activia brand as the gut health expert. And this is translating into renewed momentum for the brand with Activia delivering now the fourth consecutive quarter of growth in Europe. It's worth to mention here also the Danone brand that delivered double-digit growth in Q3, driven by strong consumer demand for our Skyr offering and the progressive rollout of our new Greek proposition. And finally, Alpro in plant-based that delivered also double-digit growth with innovation continuing to play a key role. Our protein enriched ranges performed particularly well, while we continue to progressively roll out recent launches across Europe, including Meal to Go, our Matcha Coconut ready-to-drink offering and our Greek Style plant-based yogurt.

Let's now move on to Slide #7 for a dedicated focus on our North American EDP business. We delivered low single-digit growth in Q3 in EDP North America. We are obviously not satisfied with this performance in light of a market which is growing faster. Let me provide some context on what is behind the numbers and more importantly, the decisive actions we have taken to restore stronger momentum in our Europe business. As we have discussed over the past few quarters, capacity has been a constraint to our growth.

Over the past 9 months, we have rolled out 8 capacity expansion projects across 4 of our 13 existing factories. These capacity installations focused on high-protein products are on track. While we keep adding new lines in the near future, capacity is at the end of Q3, no longer a limiting factor to our growth. What has prevented us from fully leveraging these new capacities in the short term is execution related. We did encounter issues in the third quarter in starting up those lines and resynchronizing the end-to-end planning and operations. This has led short term to service levels for our customers below our standards and hence, impacting our sales over the last weeks of the quarter.

We took strong actions that have started to improve our service level already visible in October. Teams are working hard to get back to a satisfactory level with high sense of urgency as this is a prerequisite to return with our usual levels of in-store activation and promotional activities. Beyond elevated focus on execution, we are very active in regaining innovation leadership. We will be entering into year 2027 with an unprecedented quality of innovation pipeline.

This includes the launch of Kefir products, the expansion into fiber-enriched products and our entry into the natural Greek segment. The latter one is important as we had so far focused our efforts on what we call the segment of high-protein Greek, and we will now attack the everyday Greek segment, a multibillion-dollar subsegment where we had so far not really been playing in. Net-net, capacity is not an issue anymore, all hands on deck to fix quality of execution to then leverage an exciting innovation pipeline. We will up our game to bring our business where it belongs. In that context, we have, among many other things, decided to change the leadership of our U.S. business with immediate effect as we now enter a more offensive phase.

Moving now to Slide 8 for a focus on our former CNAO region. Our performance in CNAO in the third quarter was very polarized. Our Specialized Nutrition business, which represents around 70% of sales in the region continued to deliver strong mid-single-digit growth in Q3 across both IMF and Medical Nutrition. In IMF, our Aptamil brand continued to perform well. We had a very strong sell-in for the Double 11 sales festival, a good indicator of underlying demand. The Essensis platform remains the single largest contributor to growth, and we see significant opportunities ahead of us.

In Medical Nutrition, demand remains strong, supported by favorable underlying trends. EDP delivered again double-digit growth, driven by Oikos and Activia with continued market share gains in the Japanese market, which bodes well for the coming quarters. In Waters, more precisely Mizone in China, the quarter has been difficult. Weather conditions remained very unfavorable throughout the summer, resulting in a poor season for the beverage market overall. This is especially relevant for Mizone given that the vast majority of its sales are generated through away-from-home channels. Against this backdrop, the competitive environment has been highly promotional, and we chose to remain disciplined. As we are approaching the end of the season, we have decided to bring inventory levels down to make sure we end the year in a healthy position.

As mentioned already, Mizone had a significant negative impact of 1 point of sales at company level. We are entering now the fourth quarter of the year, which is traditionally a very small quarter for Mizone. Hence, the impact will not replicate with such magnitude in Q4.

With that, let me now turn to Slide #9, our traditional sales bridge for the third quarter. Reported sales growth reached plus 5.2% in Q3, exceeding like-for-like growth again this quarter. Next to the already discussed like-for-like growth performance, we had minus 0.5% scope effect, reflecting the deconsolidation of our dairy business in Argentina since August, partly offset by the consolidation of the Huel company since September as well as the consolidation of our joint venture with Saputo Dairy Australia.

At the same time, currencies had a positive impact of plus 1.5%, reflecting the appreciation of several currencies against the euro, notably the Chinese renminbi, the Mexican peso and the U.S. dollar. Taking all these effects into account, reported sales reached EUR 7.2 billion in the third quarter. Let's now take a closer look at the performance of each region. I will probably be a little bit briefer than usual as we have already covered some of the key topics at subregion level.

Starting with Europe, Middle East and Africa on Slide #10. EMEA delivered plus 3.9% like-for-like growth in Q3 with volume mix at minus 0.4% and price at plus 4.3%. Volume mix was positive in EDP and in Waters, but negative in SN. I have already discussed the strong performance in EDP and Waters on the previous slides. So let me focus here on SN and give you a bit more context, notably on the performance of our IMF business in the region.

In the Middle East, our IMF business bounced back very quickly in Q2, and we are now back to strong, but more normal trends for the region. In Europe, as we have said earlier, the recovery is more progressive and the overall category dynamics remain soft. We are recovering well on Stage 1 formula, which confirms our scenario of normalization as new babies and parents enter the category. Our focus is very much on rebuilding trust in the category and our brands, and we are investing as we speak into a dedicated international marketing campaign for Aptamil.

Let's now move on to the Americas region on Slide #11. The Americas region delivered plus 4.4% like-for-like sales growth, stepping up its contribution quarter-by-quarter. On a comparable scope, the like-for-like growth of the region was negatively impacted by the deconsolidation of Dairy business in Argentina, which was not totally offset yet by the first time like-for-like contribution from Kate Farms. We discussed already the Noram EDP performance, so let me here only highlight the strong momentum in EDP Brazil as well as in Mexico, with both countries successfully expanding their high protein Greek Yogurt ranges.

Next to EDP, we saw the Specialized Nutrition category delivering an outstanding plus 12% like-for-like growth, driven by Aptamil in Latin America, Neocate across the region and Kate Farms in U.S. The Waters business also delivered a strong plus 11.1%, supported by a solid performance from Evian in North America and improved momentum for Bonafont in Mexico.

Turning now to our Asia Pacific region on Slide #12. APAC delivered plus 3.6% like-for-like growth with a balanced contribution from volume mix at plus 1.7% and price at plus 1.9%. Beyond what I have already covered on the previous slides regarding our performance in China and Japan, let me briefly touch here on 2 key contributors to the regional growth, Indonesia and India. In Indonesia, our business has been accelerating over the last quarters. The Aqua brand is performing strongly also in Q3, driven by increased velocities and distribution gains. We also delivered a very good quarter in our Early Life Nutrition business in Indonesia with good performances across our SGM, Bebelac and Aptamil brands.

In India, we are aiming to scale fast our Early Life Nutrition business as we are co-leading the premium segment, which is still relatively young, but very vibrant. We are pleased to report very strong growth also in the third quarter, supported by dynamic category and strong competitive demand for our Aptamil brand. As we are raising the game in this strategic country, our priority #1 remains to expand our distribution reach while further elevating the Aptamil superiority credentials. Those remarks conclude the regional review.

And I suggest we move now on to the last slide of today's presentation on Slide #13. Despite a challenging environment, we delivered a very solid performance in the first 9 months of the year, reflecting the strength of our portfolio and the resilience of our well-balanced geographical footprint. As you have seen throughout this presentation, we have many winning platforms delivering strong growth across all categories and all geographies. This is giving us lots of confidence as we enter the final part of the year. We confirm today our 2026 financial guidance with like-for-like sales between plus 3% and plus 5% and recurring operating income to grow faster than sales.

Thank you once again for listening. I look forward to your questions. And with that, Mathilde, back to you.

Thank you, Juergen. So we have our first question from Guillaume Delmas, UBS. Guil?

One housekeeping and one question, please. The housekeeping, it's on your cost of net debt. I know you don't guide on this line, Juergen. But given your recent acquisitions, I'm thinking Huel and MADE and also given the higher cost of your refinancing, I think it was around 4%. Would it be fair to assume a sequential step-up in your cost of net debt in the back half of this year and then a further step-up in '27. So any color on this would be great. And then my question, it's on your volume mix development in Europe and North America for EDP. Because when I look at both regions, I mean, it seems it slowed sequentially Q3 versus Q2. Now very different reasons for that.

But maybe if you can talk about potential higher price elasticity in Europe EDP or anything that would explain the sequential slowdown in volume mix? And then for North America, I mean, you mentioned some customer service improving. So would it be fair to say that Q3 was the trough, at least from a market share point of view in yogurt? And looking ahead, where would you expect to see the most rapid improvement? I mean, is it in high protein, traditional yogurt, standard Greek?

And again, just talking about market share development. And I don't think you touched on creamers, just was creamers also part of this customer service that was a bit subpar or it was not affected and creamers is performing in line with your expectations?

Guillaume, a long list of questions. So let me try to be sharp and brief on each of them. Starting first with the housekeeping one, cost of net debt. You are right that net debt is moving due to the acquisitions, which we have been doing and we are doing as we speak with what we are doing in Australia. At the same moment, we are generating lots of cash. So the absolute level of net debt is not significantly increasing. What is indeed a factor is the cost of the debt, as you said, and we just issued a triple bond a couple of weeks ago. And yes, this is increasing the cost of our net debt because we are replacing debt, which was issued at 0 or 1% coupons, and we are now issuing with 4% coupons.

So yes, cost of net debt is going to increase over the next quarters. When it comes to pricing and volume mix, I think we discussed in our Q2 and H1 call already that we were planning to implement selective and targeted pricing. Our intention to go for pricing was just reinforced in a way by what happened in the summer with the oil price, which stayed well above $100. And so we have taken proactive pricing, building on what I said before, building on the experience of previous cycles. And one of the learnings was that it's important to act early because it helps limiting sharper price increases later on.

So we increased prices selectively in U.S. We increased prices selectively in Europe. To date, we have not seen any significant price elasticities. So when you look at our performance over the last quarters in the U.S. or Europe, there is no significant impact from that. It's difficult to predict what's going to happen. But as of today, there is nothing there.

When it comes to North American performance and customer service levels, indeed, end of the quarter 3 was difficult in terms of customer service. Things are improving over the last weeks, and you saw that also on the chart. This was mainly about yogurt, but not only because in the end, the issue of ramping up the new capacity has disturbed a bit the whole end-to-end supply chain. But from now on, we are full on getting the things right so that we can go with the right service level in year 2027.

On coffee creamers, any... .

And on coffee creamers, yes, coffee creamers, what you see is that market shares on coffee creamers have been stabilizing, and we are going with a nice set of innovations actually into year 2027. So I think we are well set for good year in Creamers.

So the next question is from Jon Cox from Kepler Cheuvreux.

Two questions from my side. Just on Mizone, just maybe you could just repeat what you said. So in the Q4, you wouldn't anticipate that sort of 1 point negative impact on the group from Mizone. Just wondering what you may be doing to try and improve things. Mizone problems have been on and off for years and years, sometimes on, sometimes off.

Second question, just talking about North America. You're talking about leadership changes there. You seem to be saying actually, it was really about execution in Q3 retail and maybe not being on the stores rather than this is a reset, and it's going to be another 18 months because now we need to get new guys in, need to look at the whole thing, and it's going to be another 18 months before we can actually get North America going. I'm just wondering what is it? Is it really just like you weren't happy with the way this thing has gone. You've replaced leadership, but generally, it's moving in the right direction? Or is this a full reset? You've got a new management team coming in. It's going to be another 18 months before you get going in North America?

Look, let me start with your second question because that's probably the one which is the more important. It's going in the right direction. But we need to recognize that we need to work harder to improve our U.S. performance and regain momentum now that capacity is there, which requires stronger focus on execution and rebuilding our innovation leadership. And as part of this, we believe that it is important that we bring fresh eyes into that business to now lead in a very offensive and aggressive manner the business into year 2027.

We are appointing a Franco-American Danoner called Francois Lacombe, who has been turning around our Spanish business, who has been working in the U.S. and who comes with the right experience and the right mindset into the U.S. business to really make sure that 2027 looks very different than 2026. There are 2 elements which are important, execution. And as I said, that he will be sorting out quickly now the issue on customer service and then really playing to the max a very strong innovation pipeline for the U.S. for 2027, an innovation pipeline, which we have not seen for years, to be honest.

We are launching Kefir, which is the #1 growth driver in Europe today. We are going now big on fibers, which is working very well in Activia in Europe. And that's probably something which will be important. We are now entering what we call the everyday Greek subsegment in the U.S. We have so far with Oikos only been playing in what we call performance Greek, which is high protein, which is this very dark black label. And we are now entering into the more natural everyday Greek. It's a multibillion-dollar segment where we have not been really playing over the last years.

And this is super exciting. We will attack that segment with the Oikos brand and the Danone brand and with a very strong approach, which is absolutely no artificial anything in it. So we are actually quite excited about what we see ahead there. So all hands on deck and things are absolutely going in the right direction.

When it comes to Mizone in Q4, very important to keep in mind that this is an extremely seasonal business, Q2 and Q3 making up for 70%, 75% of sales. So we needed to correct stock levels in Q3. This is why you have this very heavy impact on group sales. That is not going to replicate in Q4 just because this is a very small quarter for Mizone, and we cleared most of the stock. So teams are getting basically from now on ready for next season, and we are hoping for better weather conditions in China because fundamentally, we believe that Mizone is well positioned to win in the functional beverage category in China.

So basically, volume mix should accelerate in Q4 for the group...

We will not have again such a negative impact from Mizone in -- from a volume mix standpoint in Q4 like in Q3.

Next question from David Roux from Morgan Stanley, David?

My first question is just on the China Specialized Nutrition business. You noted the strong mid-single-digit growth for the quarter. Is it fair to assume that both IMF and Medical Nutrition were growing around those levels? And also, could you give us a bit of color on how volumes developed for infant milk from the last quarter?

And then my second question is on costs, and I appreciate this is a trading update, but it has been mentioned in the context of pricing. But could you perhaps put some numbers on where COGS inflation is running for the 9 months to date and how you would expect this evolving into next year? Because arguably, I would assume that you do have visibility on milk contracts. And then just very lastly, a housekeeping question. Just for clarification, what was the impact on like-for-like from the deconsolidation of revenue for Argentina JV? I think we have penciled in around 30 to 40 bps.

Look, China, pretty solid quarter, as you said. And importantly, we have been reporting strong momentum across both IMF and Medical Nutrition, and this is important. On IMF, no real news, I would say, in a sense that the category is soft. We are overperforming in this category. Essensis is continuing to do a very, very good job. So a positive dynamic in volume mix net sales. And at the same moment, medical nutrition continue to grow on what is our heritage business in a way, which is our tube format in hospitals.

And as you know, we are investing significantly into creating a sizable business outside of hospitals, which is more oral nutrition, which is in pharmacies, which is nonprescribed and that's accelerating. It's not yet at scale, but it's quite exciting what we are seeing there. So SN China was a very good quarter. When it comes to the inflation, the last time we talked a couple of months ago, we were maybe still hoping that in one way or the other, the oil price would go back to a more normal level. We see today that the oil price stays very elevated.

What does that mean for the industry and for corporates like us, it means that we are less and less protected from the usual hedgings we are doing on commodity indexes. So in that sense, the inflationary pressure is increasing sequentially. In front of that, we have been doing pricing, as we said, we are pushing hard on productivity and efficiencies and driving our volume mix. So the combination of positive volume mix, pricing and productivity will be the key ingredients also for the rest of the year and going into year 2027 to drive our profit margins in the right direction. Last on like-for-like Argentina impact, it's around 40 bps.

Next question from Jeremy Fialko, HSBC.

Maybe the first one is, could you talk a bit more about what you think the kind of recovery trajectory in U.S. SN -- sorry, U.S. EDP might look like? And would you expect to see Q4 getting better than Q3 kind of progressive improvement over the quarters? Or do you feel that actually we need to wait a little bit longer before we see much of an improvement coming through in that business?

And then the second thing is when we look at Mizone, you mentioned you think that it's a well-positioned business to win. But I'm still interested to hear your thoughts on why you think it's a good fit for Danone's portfolio, given that it doesn't seem to be hugely synergistic with your other businesses. The markets are quite competitive, and there's a lot of volatility and if you could take still weather dependency within the business. So I would be interested to get your thoughts on that.

Jeremy, on North America, look, capacity, as I said, is no longer a limiting factor. We didn't do a particularly good job end of the quarter to get the capacity online very clearly. So customer service level touched the low point. Things are now improving. The team is doing only one thing now, which is to ramp up the capacity and get back with promotional activities. What is very important is that when you cannot serve consumer demand, you cannot do promotional activities. So number one, getting now the customer service right, reactivating promotional activities. That's now the job of Q4 and getting it then into 2027 with a focus, which will go into launching the innovation and getting -- making sure that we are getting all the distribution we had agreed with our retailers.

So I think we have a good program in front of us, which should make the performance of Noram 2027 very different than 2026. When it comes to Mizone in China, look, we have now been enjoying 4 very good years of Mizone with a very functional positioning in China, offering hydration and with a very strong focus on Away From Home. In that sense, Mizone for us is a blueprint for many things we are doing across the planet actually on more functional beverages, either in the Waters division or in the EDP division.

And so I think we are -- strategically, it makes all the sense. This has been a particularly difficult year. I mean, I think all the industry has been suffering. We have been extremely disciplined and not following some of the crazy promotions we have seen in that industry at the end of the summer. So we are now preparing for a good season 2027.

The next question from Celine Pannuti, JPMorgan?

My 2 questions. So first, I would like to talk about EDP. You raised prices and volume sequentially slowed. Could you give us a bit of a color of what the volume was in Europe, which I think you did quite well in EDP Europe and whether -- just to try to understand the sensitivity on elasticity versus the volume hit that you had in EDP North America? And how are you -- where are you in that pricing acceleration or pricing need in the EDP category?

And then my second question on SN Europe, I think the progress is quite slow. If you could as well give us a bit of color on what's happening in terms of share performance, category performance? And what is your expectation looking into '27?

First on EDP. Actually, we are happy at global level with our EDP performance. I mean, delivering 3.6% with a broad-based contribution from many countries, I think, is a good number. We are particularly happy, as you said, with what we are seeing in Europe. Having now countries like France or Spain leading the table, I think, is very reassuring because that has been the most heavy transformation we have done in the portfolio since we started with our strategy. But it's not only that we have France and Spain or the U.K. contributing, you saw that we have many countries, including Brazil, including Mexico, including Japan. When you look at the composition of this growth, price is an important contributor, but volume mix is also clearly positive.

So we are seeing continued still strong demand for our products. The job to do is now to turn EDP North America into positive as we go into year 2027 from a volume mix and net sales standpoint. When it comes to SN Europe, SN Europe, there's 2 elements here. Medical Nutrition, a very solid performance. There is still the aftermath of the recall of IMF. And as you know, it's very different between what we saw in the Middle East. So we had the recall. It bounced extremely quickly back in Q2, and now we are back to a normal level. While in Europe, it's way more progressive. And it's very different actually country by country.

The one thing which is very reassuring us is that things are performing pretty well on Stage 1 formula. So that's the formula, which is for babies between 0 and 6 years, which means for new babies entering the categories, for new parents entering categories. And here, we see the market shares well oriented, but not only the market shares, but also the underlying subcategory dynamics, which makes us confident that we will progressively return to growth also for IMF Europe and SN Europe, which has been a bit still the drag in the third quarter for this region.

Can I just ask, could you comment on EDP Europe, please, the volume and price split?

It has been a bit more price than volume mix, but very close to balance actually. So I think a very strong contribution. Pricing actually in Europe happened throughout the quarter of Q3. So we are pretty -- we are very happy with that. And volume mix, the positive volume mix, very much driven by what I mentioned previously, which is Kefir, Skyr and Alpro. Alpro growing double digit, the Danone brand growing double digit, Kefir growing double digits, Skyr growing double digit, and this is really volume mix growth.

And so the next and last question is from Charlie Higgs, Redburn.

I just want to follow on quickly on that last question. How did the conversations with retailers go with regard to pricing in Europe? And are you confident next year that you could take some more pricing if there is commodity inflation? And then my second question was on the disruption in France. There was some damage to some customers, but also a hack to some of the fridges. And I was just wondering if you could comment if that's had any impact on your EDP or other businesses after the quarter end?

Yes. Look, pricing -- doing a price increase in Europe is always a journey. Has never been easy, has not been easy in the third quarter. We succeeded. We put the prices -- the price increases which we wanted to put. What is definitely helping us here is the fact that we are performing in EDP in Europe. Velocity is increasing, as we said just before, volume mix increasing. So when you have strong velocities, you are able to price.

So in that sense, I think we are well positioned. When it comes to France, obviously, having fridges not working for a day or 2 is not a good thing. Having some social tension is not a good thing. Having said that, France is performing very well for us. We have a fantastic product portfolio. We have a great team. And so we are very confident to see continued good performance in our home country.

And we have 2 last questions coming in. So we will take first Olivier Nicolai from Goldman Sachs.

Just a very quick one on -- considering your very strong free cash flow generation. I've seen, obviously, you have announced a share buyback to offset the employee incentives. How you should think about share buyback going forward and just to make your balance sheet a bit more efficient in the lack of -- in the absence of large-scale M&A, of course.

Olivier, you know that free cash flow has been part of the focus areas of the company over the 4 years. So we are in a very disciplined manner working the different dimensions on free cash flow. The share buyback we announced today is, I would say, almost a traditional share buyback, as you say, eliminating the dilutive impact from employee incentive programs.

Share buyback is part of the toolbox moving forward. They've been very clear about that. I think we will do a more formal update as we go into the full year results next year about our capital allocation priorities. You know that we are just closing over the next weeks eventually the MADE acquisition, the MADE Group acquisition in Australia. So we have some cash outflow there. So we'll have, I think, the next discussion about capital allocation with the full year results.

And next question from Warren Ackerman, Barclays.

It's Warren here at Barclays. I've got 2. Back on U.S. CDP. Juergen, can you give a little bit more detail on what happened when these capacities came on? How many of the expansion projects had issues? I mean you mentioned 8 capacity expansions in 4 factories. Just want to understand a little bit more what actually happened. Because service levels 85% are obviously very bad. I mean, best-in-class players are like 98%, 99%, 85%. You don't really see it that low. And if your service levels are that low, have you suffered any sort of delistings or penalties with that service level? I'm just interested to understand what that's meant on the ground because what we can see is that trade weighted distribution does seem to be coming down.

So I'm just trying to understand like what's happening and how quickly you can get service levels back in the U.S.? And what's the sensitivity to that as you can improve service with your key accounts? I'd just like to know a bit more on what's actually happening.

And then secondly, we've talked a lot about China, but the other big region is SN emerging markets. Ex China, it's an area where you are investing a lot and is growing rapidly. Can you talk a little bit about what the growth was in the quarter, what you're seeing, where you're investing? Because I think you've said previously that, that region overall is almost as big as China in aggregate. So just interested to see what it did in the quarter and what the outlook is.

Look, capacity was installed, as I said, across a number of our factories in -- during the year 2023. Capacity is there. Our planning was to ramp up capacity very fast and deliver to our customers the additional capacity. We were slower than what we were expecting and this is disturbing the whole supply chain. So the service levels went down very abruptly. And this is causing some out-of-stock situation. Now it can move up also very quickly again. And that's the beauty of it. The team is full on making the capacity now heard. We saw over the last weeks good -- very good improvement.

Now as you say, the objective is to reach very, very fast again, satisfactory levels. And I'm confident we are there. We will be there. No delistings to report at that moment. But what is important for us is to have the service levels back because then we can go back to promotional activities. And this is very, very important, Warren, to get the promotional activities again activated. So extremely high sense of urgency. We see the numbers going up. Now it will continue going up over the next days and weeks.

When it comes to SN in emerging markets, very exciting. We see actually double-digit growth in most of the countries there. We see double-digit growth in Latin America. We see double-digit growth in Middle East, Africa. We see high single-digit growth in the rest of Asia Pacific. And to your point, there's a platform which is as big as China. It's a very profitable platform, and we see massive headroom ahead. We talk mostly about IMF. We talk mostly about Aptamil. And while the categories are growing there, we are winning also important share. So we are reallocating resources into that region because we believe that there is very important growth opportunities for many quarters in front of us.

And with that, I think we finish the call.

Thank you very much, everybody. I wish you a lovely day. Talk soon. Bye-bye.

Bye.

Thank you for your participation in today's call. This does conclude the program. You may now disconnect your lines.

Okay. Right. So we're going to move to our third session. I'm delighted to welcome Danone to the stage. Thank you, Antoine and Juergen for being here in Boston with us again this year. A lot to talk about. And I think we're going to do a bit of a duet today, so we're going to try and sort of mix and match the questions between Antoine and Juergen.

And so Antoine, maybe to kick it off and start a little bit high level. I think we're firmly into the second chapter of Renew Danone. Can you -- for some of the audience, maybe not quite as familiar with the story, can you explain the key elements of Chapter 2 what's working well, what is -- what still needs to be done? Maybe we can start there.

The mic working? Yes, finally it's working. So if you look at what Danone is doing, Danone is only doing one thing. We do health through food to as many people as possible. We do it one way which is anchored into science and science is playing a very important role for us and obviously obsessed with our consumer and our patients. What we've said with Chapter 2 of Renew Danone is obviously keep doing or maintaining the discipline that we had with Chapter 1. But also, we looked at the market, we looked at the market in which we are playing, and we are absolutely convinced that the market is at a tipping point and that both the demographics and the epidemiologics are coming our way.

At a tipping point, because basically people more and more realize that you are what you eat and what you eat has a major impact on your health, be it from a prevention standpoint, or be it to help and support you when you're in trouble. So what we said at the time is, listen, we're going to do 3 things. We're going to pivot the way we look at our categories. We are going to broaden our reach, and we're going to keep expanding. We have started pretty actively and pivoting, meaning looking at your growth not only at your growth, but fundamentally, as it being protein and protein has been one of our key growth driver.

I mean you look at Oikos Pro, it's EUR 1 billion plus going very, very fast. Looking at your growth being gut health, you look at Activia in Europe, it's back to growth. Moving from plant-based to our plant-powered, which we succeeded in Europe with our Alpro growing very fast. So that's about redefining at the light of where our categories are going. The way we look at our category, I'll talk obviously on medical nutrition, I'm sure, during the course of our discussion. Keeping broadening our footprint from a distribution standpoint. I mean, if you look a number of years ago, Danone was essentially in large mass retail. So we had about 60% of our business in large mass retail. Today, it's closer to 40% with a number of implications.

The main implication is it is a key driver of our resilience, and that's very exciting. And keeping expanding, what you've seen what we've done from an acquisition standpoint, very centered on our mission of health, very focused and bringing us to the next stage in a number of places. So we are making good -- I mean, we are making good progress. You've seen on the acquisition front. A lot -- I mean, a large part of our growth is coming from innovation and products that didn't exist 2 or 3 years ago, underpinned by our science.

We have more to do, yes. I mean, I'm sure we'll talk of it, but there are plenty of opportunities. So we are still at the beginning of the journey. There are places that are working very well, there are places that are working less well as is the case in the business. We're working on them to improve them. So we live in a world of constructive dissatisfaction.

Yes. And I guess, Juergen, I mean, if I take that point, I mean, you're back above 4% organic growth in Q2, which is nice. When you look at the sort of second half, there's lots of factors. You've got Kate Farms coming into organic. You hopefully have progressive recovery in EDP in the U.S. You've got SN in Rest of World doing well, it seems. Do you -- how should we think about like the algo? Is it set up for like an acceleration in organic in the second half given those positive things coming in?

Yes. When you look at the movie of the first half of this year, it has been very eventful in many dimensions, with what happened in the Middle East with the IMF recall. And yet despite this very eventful first semester. We have been delivering very solid results. And as you say, we left the Q2 with a strong growth momentum. And there's a lot of confidence into the future. And so sitting here a couple of weeks later, we are still sitting here with the same level of confidence. So what is the variables moving forward? And I think you name it very rightly, Kate Farms is coming into the like-for-like. That's great. It means we play first time at scale in the U.S. It will mechanically add to our growth momentum.

We will obviously see less and less negative impact from the Early Life Nutrition recall elements we had in the first semester. That will help. And so in a way, we see that in the portfolio we have, which is a very broad portfolio, we have things which will accelerate, including North America, which will progressively go better and better. And on the other side, we need to take care of those elements where we still have more opportunities. We talk Mizone, which was a drag in Q2, which probably will remain a drag in Q3 because the season is not good for no beverage company in China.

We know that Indonesia has been very strong in Q2, helped by weather conditions, exactly the opposite of what we are having in China. So we have a couple of variables. But net-net, I think, to take out of it is we are very confident to deliver within our guidance in the short, medium and long term because we have built a portfolio which is able to resist to external shocks. And I think this is very important.

Yes, I think the -- I mean, if I may add 2 things. If anything, the first half of the year is displaying the resilience that we have built over time. And this is linked to the diversity of our geography and the diversity of our portfolio. Obviously, we talk a lot of what doesn't go well. But the name of the game for us is resilience. It is due also to a business model that is to deliver consistently in a 3% to 5% band. And that 3% to 5% give us the flexibility to do the difficult trials rather than the easy one, which is why I keep telling you the guidance is 3% to 5%, 3% to 5%, 3% to 5%.

Okay. But in terms of where I want to focus today, I want to really dive into EDP a little bit and SN and some in China, but on U.S. EDP, there's obviously been quite a lot of investor frustration. The amount of inbounds I get on Nielsen Day is a lot. Can you maybe just sort of walk through where we are. You're talking about progressive improvements. We saw progressive in Q2. I think that the frustration maybe a little bit is the capacity just takes a long time to come on. Can you maybe reassure us that it's happening and that your -- the gap between you and the market is going to close because I think that some people are beginning to think that there's a structural element as well as kind of a capacity element. I know this is a big topic, but it's still there as a topic for investors.

So I'm sure we'll do a duet on that. I think correct me that EDP in North America is about what, 7% of our turnover. So we need also to frame the magnitude of the issue. I've seen or I have said that the improvement will be progressive. I know -- I mean, a number of people don't like the word progressive, but it will be progressive because we try to do things the right way so that our change is stickier. So progressively, our capacity is coming on stream. As per plan, that's a topic I'm sure we won't discuss in 5 to 6 months from now. We have 13 factories. We do it one line after the other in an orderly fashion. I think the second thing which to me is as important or more important than capacity or it's enabled by capacity is we are progressively back to playing a Danone game in the U.S.

And what is the Danone game, obviously, keeping driving protein, as I said Oikos Pro is doing very well. We will expand into new formats. We'll keep actually playing the game of protein. But the unique strength of Danone is the ability to play portfolio and to address some key fundamental trends in the market. So obviously, protein. The next big trend, by the way, not only in the U.S. is fibers, everything on pre and probiotic. You are starting to see in the market what we are doing with Activia. And with Activia, we are back to growth in Europe. We are doing very well in places like Japan and Australia. We are deploying the playbook and a lot of it is about fiber. You will see us entering Kefir in the U.S. in the coming months.

Kefir is a trend that is actually present in the U.S., very small but growing very fast is a very important driver of growth of the market also Activia in Europe, we will be a player in Kefir or in the Kefir space in the U.S. in the coming months. And we are going to revive the Danone brand. Dannon is the historical brand in the market, the one that has shaped the market, entering with a new approach to Greek into the market with Danone at the start of '27.

Maybe just 1 element to add. When you step back and you look at the H1 EDP, global 3.6% growth. Driven by Europe, which is now consistently delivering with, as Antoine said Kefir, Skyr high protein going through the roof. We see Asia and especially Japan growing at a very fast pace. We see Latin America growing very fast. And NORAM progressively improving just will help this number to grow further. And we have the MADE Group coming, the MADE Group in Australia, an acquisition we did or we are doing that was not yet closed, will help us to further build -- get an amplified trend in Asia. So the category of EDP is poised to grow at a very fast pace. Is the U.S. frustrating? Yes. Does it take 12 to 18 months to build capacity? Yes, but this will be over at some point and then we will get the full potential also in North America. So we are very bullish actually on the category.

That's interesting thing, right? People focus on the U.S., but it's the globalization of EDP that's changing the dynamic and you've got Japan growing, Australia coming in, Latin America. And so I suppose the way you're thinking about it is if those engines keep growing, Australia comes into organic and then you progressively improve the U.S. in theory, you should see mathematically an acceleration in EDP overall?

You see -- I mean, we are very -- and Juergen just said it, we are very, very positive on the EDP category in the long run. I mean protein is here to stay. Penetration of GLP-1 is still nowhere. Some markets -- consumption in some markets is still nowhere. I mean, in the U.S., it's 1/3 of what it is in Europe. Fibers, pre and probiotic are the next trend or naturalness is absolutely critical, and we see it with Skyr in Europe, which is a mix of all natural and protein. So I mean there, we are only at the start of the journey. And we are restarting to do what Danone is doing, which is shaping the category playing on different engines.

Yes. And maybe could you dive a little bit more on to the European EDP? What are you actually seeing in different countries and you've got Kefir, you've got the Skyr, how is it animating, how are you sort of rolling it out into Europe? Are you seeing Europe accelerating in aggregate in EDP?

So we see -- I mean -- and you've seen that in the last few quarters, we see good momentum in Europe. We are very, very happy with the revival of Activia and it is a long-haul journey, and we've said it now for a while, you are transforming a brand that had become a fruit yogurt back into a brand that takes care of your gut. It's back to growth. And it's back to growth, thanks to what we do around very hard claims inspired from what we do in Japan or Australia. Fibers and recentering the portfolio on our fibers, but also Kefir, which is going -- I mean, Kefir we just launched it's going to be EUR 100 million plus, growing very fast. You look at Danone, which is all about family, naturalness, et cetera, same story. On the core Danone, reminding people that your Danone is not a yogurt, it's a Danone of the ferments, because of naturalness because of what it does to your gut and things like Skyr which are the combination of the naturalness of Danone and all the goodness of protein.

I want to ask about plant-based because you've got a very different situation with Alpro in Europe accelerating, but Silk not really performing for a while. I know you're doing Protein Silk and it's working, but it's still quite small. So is it really the case that you can take learnings from Alpro in Europe, which is a different kind of market, I suppose, on plant-based to the U.S. and bring it across. Just trying to understand like how much patience do you have with that brand? And is that the right answer to the issue to look at the Alpro game plan and play in the U.S.

So first thing you said it. I mean, Alpro is going from strength to strength in Europe. And what we've done with Alpro is moving from plant-based to plant-powered just benefits -- being ubiquitous in terms of our presence, entering protein, driving yogurt, going into meal replacement. So being extremely active with Alpro. I am on -- having said that under the previous regime or the U.S., we're suffering from more inventory. And I was very clear a couple of months ago saying, well, we need to see movements in the coming 12 months. The local teams, Patricia and the team are doing a stellar job to progressively move Silk into a place that is similar to Alpro. It's not exactly the same because the market is different, but you started seeing what we do with protein.

You started seeing what -- I mean a renewed focus and a renewed activity on Silk growth. So step by step, we are moving in the right direction. Is it going to be exactly the same? No. Is it moving in the right direction? Yes. Is the journey over? No, by all means because we are starting from a different standpoint. But I was very clear also, which is to see -- we need to see progress in a relatively short period of time.

Good. Interested to move into SN. Now if that's okay. There's a lot of topics. One of the ones just to hit quickly is the cereulide issue from the beginning of the year. And in terms of the recovery that you're seeing, particularly in Europe, I know Middle East is coming back quite quickly. But in Europe, how do you feel about the recovery? Some of the data we still see is still a bit soft. How are you viewing it? And what are you doing to reinforce the Aptamil brand perception in Europe?

There is indeed very different context in the different regions. You said the Middle East, we lost a lot of sales in Q1. It bounced back very quickly in Q2, and we are back to where we used to be in a way in terms of distribution, sell out and market shares. That has been very visible actually in the second quarter performance. Europe is a mixed bag. And what we are seeing is that, one, the category is going a little bit slower. So there is still credibility to be rebuilt, especially by the leading brands in that sector. And we are confident that we can do that. Market share situation in each of the countries is different.

We have been winning in some countries. We have been losing in some countries depending on the competitive set. I think it will level out as we go through the next quarters. And so in the end, I think that as we go through the next quarters when I'm talking about Danone performance, this recall will not be anymore a major driver of the pluses or minuses, will not be any more key variable. What is very important is that we have been protecting our Chinese ELN business during that period. Obviously, the Chinese population through social media has been made aware of what happened in Europe, which led to a shift from international label to Chinese label. And here, the good news is that we are playing on both sides. We are playing on international labels. So products imported from Germany, products imported from the Netherlands, from the U.K. and they are playing on China label. But this has been a very clear shift because there has been more confidence and credibility built into the China label part.

And Juergen, while you're on that topic of China, you talked about normalization, right? I think the word you've used of the category makes sense given the year of the Dragon and the birth rate, but comps do get a lot tougher in the second half, we can see the numbers. What can you do to combat those comps and still e-count growth in the China IMF category or your business specifically in the second half? That's the first part. And then second piece is do you still think medium term in China, SN beyond the normalization period that this business can grow mid-single digit so shorter term H2 and then kind of maybe and...

So let me take the medium term, and Juergen will address the shorter term. If you look at where the category was a couple of years ago, 14 million babies, EUR 20 billion category. You look today between 7 million and 8 million babies, still a EUR 20 billion category. So what has been happening in China is a combination of 2 things. One is premiumization of the category on the base of science. The second thing is penetration as people move from country side to cities, which compensates the decline of the birth. So that is a first factor that will still keep going on because I think the journey both of premiumization, but also of penetration is not over.

The third thing, which is probably even more important when it comes to IMF is it's a nonconsolidated market. You take the top 3 players, they are around 50-ish percent of the market in most of the countries of the world. Top 3 players are closer to 80% of the market. So there is still a consolidation game to be played. So those 3 things are probably indicative that we can still grow in China, even in a market where the birth rates are what they are, they've normalized. And when the markets are flattish, whether they are slightly increasing or slightly decreasing, but -- so that's the name of the game on IMF, it will be a normalization versus what we've seen at the year of Dragon.

What is important as well is we play in medical nutrition in China. So if you think mid to long term, there will be also a different balance, both in terms of growth, but in the end in terms of total business between infant and medical. People over 60 years old were about 250 million in '23. There will be 300 million in 2030. There will be 350 million in 2040. So the need for medical nutrition, the need for support to frailty will keep growing in a very, very structural way, which will rebalance over time our portfolio and at margin profiles that are more or less the same.

When you look at it net-net, specialized distribution in China has been a mid-single-digit growth contributor to Danone for years. We had 12 months where it went up because of the year of the Dragon. When we talk about normalization of everything we see there, it means that, yes, the expectation is to go back to mid-single-digit contribution over the years to come. Thanks to medical nutrition growth and thanks to market share wins in Early Life Nutrition. And I think we have everything it takes to continue winning that market. Just a reminder, 4, 5 years ago, we started as a #4 or 5 in that market. Today, we are co-leading the Early Life Nutrition market. So consolidating as a co-leader of that market, I think we are in the right position.

I mean one of the interesting things is when you look at your -- we talking about it earlier Antoine before we started the kind of the premium gap between your portfolio in China versus the market, it's still significant. You're under trading in premium in China infant formula. Can you maybe outline how much there is still left with the Essensis, which has been the big driver of market share? And then when does Nuturis actually come into the market in a bigger way. I think you've always sort of said that when you've got -- you didn't want to cannibalize the Essensis, but it sounds to me like Essensis has got more growth in it so more distribution reach. Can you maybe sort of just frame a little bit around the timing of what you're doing with Essensis to maximize it and what conditions need to be in place for you to actually go bigger in Essensis in China beyond selective?

The first thing is Essensis is an incredible success. So it's growing extremely fast. On the base of science, on the base of differentiation. So it's a very good illustration by the way of Chapter 2 of what we are doing. It's only at the start of the -- it's only at the start of the journey. I mean, we are probably halfway where we should be from a distribution standpoint. So there is still plenty and plenty of runway with Essensis. Our logic or the way we go at it there, which, by the way, is not -- it's the same outside China is let's make sure we go to the end of something before starting something fundamentally new.

So priority #1 is to maximize the full potential of Essensis. In parallel of that, we have been testing Nuturis in Hong Kong, which actually has beaten our expectations in Hong Kong. We are launching progressively the first wave of Nuturis step by step in its international label version. And we will at some point with the China label version. But we are very, very clear that we need first to maximize Essensis before going full scale on something that is super exciting that is in the top 5% of the market where we are not playing. But you don't want to defocus on something that is a major growth engine for China and for the company.

I mean the other interesting thing is your emerging market infant formula business is actually in aggregate as big as China. And we -- I get very few questions on that. I'll get a lot of questions on China. Can you talk about that? How fast is that EM ex-China formula business growing at? And how are you thinking about allocating more resources to places like Vietnam, like Latin America, like Middle East, for your power brands like Aptamil because it seems like even if China is normalizing, you still have that very powerful engine.

Yes. You're absolutely right. When you look at our Early Life Nutrition business, it's 1/3 China, 1/3 Europe, 1/3 of the rest of the world. Talking rest of the world is always a bit more difficult because it's less tangible because we talk about Argentina, Brazil, to Vietnam, Philippines, the Middle East, Africa and so on. But this is growing very fast, high single digit to double digit in most quarters, very profitable, and it's 95% about Aptamil. So we're using the same platform, the same science, the same Essensis kind of way of marketing to parents and we are investing in a very intentional manner behind it. We are investing because we have been opening actually Vietnam, not so long time ago, after great success in Thailand, there's still a few Tiger states around where we believe that there is for us the ability to enter.

But we are also building now a sizable business in India. We don't talk a lot about India because we are coming from a very small base. The category is just at a very early stage in India. Today, we are co-leading that category, and we are investing in a very intentional manner into India. So it's about Latin America, it's about Middle East, it's about India and Southeast Asia, where you would see us allocating resources and then we say, allocating resources means, first and foremost, building the brand and building the credibility of Aptamil, but we have a lot of head room here.

I think what Juergen is saying on it's a 1/3 in Europe, 1/3 in China for the rest of the world is a good depiction. It applies obviously to this, it applies to other things of the fact that for the last number of years now, we have been very, very intentional in trying to build resilience in our model and trying to make sure that progressively we are not hostage to one category in one geography, but we built a model and the first half of this year has proven that can absorb exogenous shocks, sorry, difficult for a French man and keep doing the right thing. And that's, I think, probably a change from the past and something that is important.

I mean one of the things you've talked about you being quite outspoken about is the importance of India. I think the quote was that unless you become materially bigger in India within the next decade, you become eventually globally irrelevant. So picking up on Juergen's comment about investing in India, what is the vision longer term in India?

Well, I indeed said, listen, if you want -- I mean, if you look at where the population is, if you look at where the babies are, I mean, there are 23 million babies in India every year compared to 7 million to 8 million in China. If you want to be relevant in the long term, you need to have the right critical mass and presence there. We have been very, very systematic in our building business which is focused essentially on our infant nutrition, which is going actually very, very fast in a way that is profitable. I think the -- what we want to do in India is obviously get to a business that is relevant in terms of size compared to the size of India. But we want to do it in a way that is structurally profitable for the long term, I mean, having been very familiar with India from my past life, I've seen a number of people burning their wings because they wanted to go very fast, ignoring the rules of the market and ignoring that it is a very challenging market with very good competitors.

So what we are doing -- actually, what we are doing currently with infants in India is a good example of and we do the same in places like Vietnam, a good example of you build systematically business in a way that is very profitable, and this is snowballing. So you create a positive loop.

Yes, then moving to you. I want to talk a little bit about margins. Can you talk a little bit about your expectations on COGS in the second half? And then maybe if you can overlay that a little bit around kind of EDP margins because, I guess, EDP margins in the first half were kind of flattish. And I guess the feeling is there's more COGS inflation in H2. There is an issue in EDP margins. And then wrapping that together, I guess just taking a step back, the market wanted to see the operational gearing from EDP margins getting back to double digit, and we're still not there. We're still high single digit. So how do you sort of frame that need to protect the margin short term from input costs and pricing with the actual need to get the profitability into other place.

Yes. I think it's important to step back and look at what our strategy is. We have now for 4 years developing margin expansion at gross margin level and profit margin level. Thanks to more volumes in our factories. You know that we have a volume-driven business model. And this is not changing even in a world where the inflation is maybe not a short-term experience but may be lasting for longer. So volume and mix will remain our priority #1 because this is the best way to get leverage.

Now COGS inflation is a reality today. How high is high? I don't know because we know that the Middle East has been -- the Middle East conflict has certain consequences on the cost of packaging, on the cost of energy. How is that going in the next couple of months, it's very difficult to predict. And we are seeing, obviously, that the cost of protein is rising just because people want more protein. So I think we have all it takes in order to compensate for those cost inflations, which is a high level of productivity, pricing, and we've been talking about it, we are doing price increases as we speak in many, many markets. But and most important, volume and mix increase.

This is true for all of our categories. This is true for EDP. You're right, EDP margin in the first half is not where we wanted to be because we had inflation, we didn't have pricing. And so we will have pricing kicking in, in the second half. We will have North America coming back with better numbers. So we will have all the ingredients to get the EDP margins up over the next years. One element I want to make sure is well understood volume mix is important. And volume mix in EDP is not only about refrigerated products. You know that over the last 3 to 4 years, we have been pivoting from spoonable products into drinkable products. Now we are going from the fridge out of the fridge.

And this is very, very important. If you look at what we are doing with Huel, for example, the acquisition yet, you see what we are doing with Alpro Meal To Go you are seeing what we are doing with high protein yogurts, going into ambient protein shakes. We are opening a new very profitable universe for us. So I'm absolutely not concerned about EDP margins on the long run because I think we have a portfolio which is more and more skewed towards premium and therefore, profitability.

We're running short of time, but I want to try and get into a few questions about the acquisitions that you've done. So maybe a bit of a quick fire. First one on Kate Farms coming into organic growth. I saw an article saying that Kate Farms can grow double digit for a very long period of time, and there's a beneficiary of the Make America Healthy Again. Can you maybe just unpack why you're so excited about Kate Farms?

I think we've been very consistent about the excitement over the last 12 to 24 months. It's now part of the family since 1 year. It's growing very fast. And it's the first time that we can play at scale in North America with a product which is fully superior. And this is important. It's important that health care professionals are very clear that we are having here something which is better than the industry standard, easier to digest for patients. This is why we are getting very good reception to all the health care professionals we talk to, and we are unleashing the power of Kate Farms with the power of Danone. So we are bringing science from our centers, R&D centers in Europe and China into the Kate Farms portfolio, and we are using the route to market of Kate Farms to more than 1,500 hospitals. And so super exciting journey in front of us.

And maybe on Huel, again, I'm trying to get through this quickly. I could spend more time with you. Huel, I think Antoine, some were surprised by that deal. Can you talk a little bit about your plans for the brand and maybe discuss some of the synergies with brands like Alpro where we're now sort of seeing the rollout of the complete meals. It seems like it's like a bit of a club.

I mean it's -- well, first, we are very exciting excited. It's very complementary. I mean it's about health and convenience. It's about lifestyle. So it is actually -- I was talking about Alpro Meal To Go, and I may have one here. It's coming from a very different angle. This is coming from plant-based, this is coming from health and performance with a take on the market that is very different with our capabilities when it comes to connecting to a community, to gathering a community which are one of a kind.

I mean the way Huel has been building this community of Hueligans, as they call it, it is just incredible. So the synergies are both ways. I mean obviously, we can bring as for Kate Farms, science, knowledge, but also distribution muscle in the countries where Huel is not. Huel Is bringing incredible knowledge in direct-to-consumer, in animation of community in the way they are communicating. I mean they develop between 300 and 400 advertising per month. They are talking or using and leveraging influencers in a way we don't know how to do today. So it's full complementarity.

And then a final one, I guess, on the deals, Australia, you're making quite a big bet. You're buying out your partner, you've got the MADE Group. It seems like it's always been a functional market. It's not like it's not new. Why is now the right time to increase the investments in Australia?

So we -- I mean, as you've seen, we increased our presence in Australia and New Zealand and parts of Southeast Asia, by about EUR 400 million if and when they are -- obviously, we get the approval of the authorities. MADE Group is, in some ways, a mini Danone, health focused. You have plant-based with coconut base, you have protein based, you have products for the gut. Very good -- very strong brands, very good quality products, very strong marketing and a very impressive growth trajectory in places like Australia and New Zealand, but also in places like Thailand. So strengthened our position in what is the core category for us. In geographies where we were underrepresented with brands that are relevant. So strategically, it's absolutely obvious.

And final question, Antoine. You mentioned at a previous conference that when you think about acquisitions, you didn't want to saddle Danone with liabilities. So I guess if those liabilities were to be settled, would that change anything?

I mean what I said on one particular target in this country is for the part that is in this country, I'm not interested. And it was a mix of legal liabilities, liabilities on the factories and the fact that the -- I mean, the business has been probably not fully, fully under focus for a large number of years, plus a business model that is very different from our business model. So it does a lot -- and I wouldn't spend more -- I mean if I was to spend money on this, it wouldn't make sense from a shareholder standpoint. So I've been very clear in another conference and I hope I'm equally clear in this conference.

Thank you for clarifying. And thank you, Danone, for your time today. Thank you.

Thank you very much.

Good day, and thank you for standing by. Welcome to the Danone H1 2026 Results Webcast and Conference Call. [Operator Instructions] Please be advised that this conference is being recorded.

I would now like to hand the conference over to your speaker today, Paul Avis, Investor Relations Director. Please go ahead.

Good morning, everyone. Paul speaking. Thank you for being with us this morning for Danone's H1 2026 results call. I am here with our CEO, Antoine de Saint-Affrique, and our CFO, Juergen Esser, who will go through some prepared remarks before taking your questions. Before we start, I draw your attention to the disclaimer on slide 32 of the presentation related to forward-looking statements and the definition of financial indicators that we will refer to during the presentation.

With that, let me hand over to you, Antoine.

Thank you, Paul. Good morning, everyone, and a warm welcome to you all. Thank you for joining Juergen and me for our H1 '26 results presentation. As you will have seen in the headline of our press release this morning, we are pleased to share with you another set of solid high-quality results.

Let's start with Slide 3 and our like-for-like sales growth in the second quarter. As you can see on the chart, we delivered strong growth in quarter 2 with like-for-like sales up plus 4.2% at group level. Juergen will come back to the details later, but this performance was broad-based across both categories and geographies. These strong results are delivered in what remains, obviously, a challenging and volatile external environment. It once again demonstrates the relevance of our health-focused portfolio, and the strength of our multi-engine growth model.

It also reflects the hard work, the commitment and the passion of the Danoners around the world. Their focus on serving consumers, driving execution excellence and continuously improving our business remains at the heart of our performance. And I would really like to take this opportunity to thank them for their contribution. With the strong quarter 2 performance, we closed a solid first half once again delivering on our business model.

Let's move now to Slide 4. Looking at the first half as a whole, we delivered like-for-like sales growth of plus 3.5%, despite a first quarter, which was far from business as usual. Growth was well balanced in H1 with volume mix contributing plus 1.7%. Disciplined execution across the organization and strong productivity gains drove a 12 basis point improvement in the recurring operating margin year-on-year, reaching 13.3%. Importantly, this was achieved while continuing to invest behind our capabilities, behind our brands, behind our science and our innovation.

Our solid operational performance and strong financial discipline also translated into recurring earnings per share of EUR 1.92, up 0.9% versus last year, while free cash flow generation reached EUR 0.9 billion. The quality of our H1 performance further demonstrates the resilience of our business model and reflects our ability to capitalize on the favorable structural trends that continue to reshape the food industry.

Moving to Slide 5. As I have said before, the food industry is at a tipping point, and health through food has never been more relevant. Danone is uniquely positioned at the intersection of attractive, health-focused categories, supported by powerful long-term demand trends. Around the world, consumers are placing greater emphasis on health, nutrition and healthy hydration. And we continue to see strong demand across our winning platforms. Our science-based approach combined with a relentless focus on product superiority and innovation allows us to offer nutritional solutions that support people at every stage of life. Our science is now concretely translating into powerful innovation.

In dairy, high-protein products remain a key growth driver across all regions, from North America to Europe, Latin America and Asia Pacific, growing double digits everywhere. Our more recent platforms such as Skyr and Kefir are also gaining strong traction with consumers, growing double digits in Europe in H1. We continue to expand them both within and beyond Europe.

In plant-based, Alpro continued to deliver high single-digit growth in Europe in H1, with innovation remaining a key growth driver. Our high protein and Greek-style plant-based yogurt tranches continue to perform very well, while we are progressively rolling out newer proposition, such as meal-to-go across Europe following its successful launch in Germany. The product addresses growing demand for convenience and nutritious meal solutions. We also recently launched a new matcha coconut, our ready-to-drink offering, which has seen very positive consumer response so far. If you haven't tried, I only can encourage you to do so.

Another area where we continue to see strong momentum in H1 across the region is Medical Nutrition. Favorable demographic trends and increasing diagnosis rates continue to support both our adult and our pediatric businesses. This is reflected in the strong performance of our flagship brands, Nutrison, Fortimel and Neocate, which delivered a high single to double-digit growth in H1. As these platforms continue to scale, they make an increasingly meaningful contribution to both the quality and the strength of our growth profile.

Importantly, they also drive our exposure to attractive channels that continue to outgrow traditional retail. Across strategic channels, such as away-from-home, hospitals, pharmacies and home care, we continue to grow 2 to 3x faster than in mass retail. While the structural growth driver keep boosting our winning platforms, we remain equally focused on the areas where further progress is needed.

In North America, we have previously discussed our dissatisfaction with the competitiveness of parts of our EDP portfolio. We saw some improvements in performance during Q2, which is encouraging. With that said, we are only at the beginning of the journey, and we remain focused on sequentially executing the initiatives that are needed to deliver a sustained improvement in performance over time. In our yogurt, as we have already shared, additional production lines are coming online throughout '26, enabling us to further strengthen our own shelf execution and better self demand, while progressively reactivating segments beyond high protein and obviously, leveraging the breadth of our portfolio.

Looking ahead, we have a comprehensive innovation roadmap planned across H2 '26 and into '27. This includes reactivating Activia by leveraging successful learnings from Japan on functional claims and from Europe on fiber-based innovation, while expanding our presence in formats and segments such as nourishing everyday Greek yogurt and tubs with Oikos, and therefore addressing the gaps in our portfolio. There is more to come, including additional initiatives and that leveraging the strong heritage and equity of the Danone brand, and there you will have to stay tuned.

In our creamers, we will continue to support the ongoing improvement of International Delight through innovation and renovation in 2027, including upgraded core recipes and new products designed to capture the fast-growing clean label trend. In plant-based, as part of our efforts to reposition our Silk from a plant-based brand to a plant-powered nutritional complement to dairy, we have recently expanded our protein range with the launch of Silk protein yogurt and Silk protein shakes. As said, all of these initiatives will be rolled out progressively to support a gradual improvement in our North America EDP performance over the coming quarters.

In our EMEA, in the IMF category, we are now back to a normal situation in terms of presence on shelf. Our focus has now shifted from restoring supply to rebuilding trust in the category. Our sales teams are engaging closely with maternity hospital and healthcare professional. We are giving parents greater visibility into how our products are made to reinforce confidence in our brand, virtually opening our factories, showcasing our quality processes, and highlighting the extensive testing behind our products.

In quarter 3, we will launch a new campaign to support these efforts and remind consumers of the quality, nutrition, and expertise that comes with our 50 years of early life nutrition research. Although the disruption affecting IMF market continued into quarter 2, we expect the market to progressively normalize throughout the remainder of the year.

Let's now move to slide six. Our business model is predicated on quality organic growth, and this remains our top priority. At the same time, as part of Renew Danone Chapter two, we have also made clear our ambition to be more active on M&A. Our approach remains highly disciplined and is guided by three clear filters. First, strong strategic fit, focusing on opportunities within our core categories or adjacencies. Second, strict financial discipline with value creation at the core and maintaining structurally double-digit ROIC as a key priority. And third, but equally important, execution capabilities, ensuring we have the capabilities and the teams required to successfully leverage acquisitions.

The transactions signed during the first half are strong illustrations of this approach. They further enhance our health-focused portfolio and support our value creation ambition. As Juergen discussed in quarter 1, the contemplated acquisition of Huel would extend our presence in the premium complete nutrition space. Huel is a well-established player in a nutritionally balanced meal with a sizable business in Europe and the U.S., positioned in a highly complementary segment to our portfolio.

Beyond the category opportunity, they bring extensive capabilities in direct-to-consumer channels, digital marketing and community engagement, while operating at the intersection of health and convenience. In parallel, we announced a new chapter for Argentinian dairy business. Together with our longtime partner, Arcor, we are creating a joint venture that combines our portfolio to unlock the full potential of dairy markets in the region. While the transaction will technically deconsolidate our Argentinian dairy business, we expect the synergies generated by the joint venture to be EPS accretive over time.

Finally, in June, we signed the acquisition of Made Group, expanding our presence in the fast-growing healthy nutrition space in Asia Pacific. Made brings a well-established portfolio of brands spanning high protein ready-to-drink products, gut health yogurts and coconut-based products aligned with our health-focused strategy. The transaction would strengthen our presence across Australia, New Zealand and Southeast Asia.

Together with the acquisition of the remaining stake of our Australian fresh dairy joint venture, it would double the size of our EDP business in APAC, adding more than EUR 400 million of sales. Made will be accretive to both operating margin and EPS from year 1. We expect to close all these transactions in the second half of the year. As you see, we keep moving at pace organically and inorganically.

And with that, I'll hand over to Juergen. Juergen?

Thank you, Antoine, and good morning to all of you. Let me start our financial review with our Q2 sales performance on Slide #8. As you heard from Antoine, we have seen a return to strong quality growth in the second quarter with like-for-like sales up plus 4.2%. Growth was actually well-balanced across our three regions and across all our categories. While we will dive into regional details shortly, let me comment briefly on our categories.

Our EDP business delivered solid like-for-like growth of plus 3.8% in the quarter. While our protein and other functional yogurt platforms continue to be the primary growth driver, we have also seen increasing contribution from core brands such as Danone and Activia, with promising results of our recently introduced fiber and kefir innovations.

In specialized nutrition, like-for-like sales grew plus 4.5% in the period. Growth was supported by the continued strength of our medical nutrition business across all regions. At the same moment, we can report a progressive recovery of our infant milk formula in Europe and the Middle East that started mid-second quarter and that we see progressing since. Finally, our waters business had delivered plus 4.7% like-for-like growth, notably driven by a strong start to the season in Europe, and here, especially for the Volvic brand as well as driven by an accelerated momentum of the Aqua brand in Indonesia.

Let me now turn to our traditional sales bridge for the second quarter on Slide #9. Within the plus 4.2% like-for-like growth, that I just described, volume mix played once again a key role contributing plus 1.9%. Importantly, volume mix was positive in all regions and in all categories, reflecting the relevance of our portfolio.

For the first time in several quarters, reported sales growth exceeded like-for-like growth in Q2. Scope contributed plus 0.8%, reflecting the acquisition of Kate Farms last year and the consolidation of our dairy joint venture in Australia. At the same time, the currency impact moderated to minus 1% in the quarter. As a result of those movements, reported sales reached EUR 7.2 billion, up plus 4.4% versus last year.

Let's now take a closer look at the performance of each region, starting with Europe, Middle East, Africa on Slide #10. Momentum in the EMEA region improved in Q2 as our infant milk formula business progressively recovers and as our EDP and waters businesses continue to deliver solid growth. All together, like-for-like sales were up plus 3.6%, driven by 2.2% volume mix.

Let me start with specialized nutrition that is back to growth with around plus 3% in the second quarter. A few comments first on our IMF business. In the Middle East, we saw actually a fast catch-up in Q2 following a Q1 that was impacted by both the recall and the onset of the conflict. In Europe, while our on-shelf availability returned to normal in the month of June, the first part of the quarter was still impacted by disruptions. The category in Europe was still somewhat soft, although trends have improved sequentially throughout the quarter.

Our teams are mobilized to rebuild trust amongst healthcare professionals and consumers, and we are confident that the category will gradually return to normal. In EDP, we continued to deliver strong performance across the region. In dairy, high protein, Skyr and kefir all posted double-digit growth. Activia extended its positive momentum, posting growth for the third consecutive quarter in Europe. And our Alpro plant-based brand also continued to perform very well, consistently delivering competitive growth and driving the category through innovation.

Finally, our waters business has delivered a solid start to the season, notably driven by our Volvic and Evian brands, with both plain water and recent aquadrinks innovations under the Volvic brand growing very fast. For the first semester, the EMEA region grew sales plus 2.1% on a like-for-like basis and saw its recurring operating margin stable at 10.4%, a solid achievement in the context of the IMF recall.

Let's now move to the Americas region on Slide #11. The Americas region delivered plus 4.3% like-for-like sales growth, accelerating versus previous quarters. Within that performance, North America also improved with plus 2.6% growth in the second quarter. Within North America, the performance of our EDP business continues to improve. In Q2, we saw again strong growth in high protein under the Oikos brand, with an acceleration in our drinkable product formats. We have, at the same moment, seen a stabilization of our Creamers business under the International Delight brands.

As Antoine mentioned earlier, we are confident in our ability to further restore competitiveness in those categories, supported by a strong pipeline of innovation for the quarters ahead. Beyond EDP, specialized nutrition performed well across the region. The infant milk formula business in Latin America was particularly strong, growing double digits driven by the Aptamil brand. In North America, our medical nutrition business further accelerated in Q2, and those numbers do not yet include Kate Farms, which continues to perform strongly and which will enter the like-for-like perimeter from Q3 onwards. Overall, for the first half, the Americas region delivered plus 3.9% like-for-like growth and plus 31 basis points of recurring operating margin expansion.

Turning now to our Asia Pacific region on Slide #12. The region delivered plus 5.2% like-for-like sales growth in Q2, again, largely driven by volume mix. We see solid momentum in specialized nutrition, which accounts for two-thirds of the region's sales. In IMF China, we delivered competitive growth in a category that has been normalizing and against high level of comps of last year. The teams are focused on executing our premiumization strategy with a continued strong momentum of our extensive range.

In the rest of Asia, our IMF business is performing strongly, and let me highlight especially the business sales in India as well as in Vietnam. In medical nutrition, we saw continued strong demand for both adult medical nutrition as well as baby medical nutrition. While it's still is relatively small, we are particularly pleased by the momentum of our oral solutions business, which is gaining scale rapidly across both China and Australia, New Zealand.

In Japan, our EDP business is delivering another quarter of double-digit growth. Both Oikos and Activia performed strongly, supported by effective activation and execution. The full consolidation of our dairy joint venture in Australia represents a meaningful addition to the EDP category in the region and will start contributing to like-for-like performance from next year onwards.

In waters, performance was more contrasted across our two main brands. In China, Mizone started soft into the season in a slow category environment and despite market shares that are well-oriented. On the other hand, we posted very strong results in Aqua Indonesia in the quarter on the back of a dynamic waters category. Overall, for the first half, the APAC zone delivered plus 5.6% like-for-like sales growth and recurring operating margin of 24.7%, slightly ahead of last year.

Let's now turn to the margin bridge for the first half of 2026 on Slide #13. Our recurring operating margin increased by 12 basis points in the first half of 2026 to 13.3%. The IMF recall as well as the increase of some commodity indexes following the Middle East conflict impacted our margin from operations in the first six months of the year. Thanks to several cost initiatives launched over the last quarters, our teams around the world were able to counter those headwinds with an elevated level of productivity and efficiency gains. That immediate step-up in savings has been important to deliver on our business model. As you know, we believe in a value creation model driven by quality growth and fueled by consistent investment into future growth and efficiency initiatives.

Let's move to the next slide 14, to look at our EPS and cash generation over the period. The strong operational performance, which we just went through, remained the primary driver of EPS growth in H1, contributing plus 8.3%. This was offset largely by a negative currency impact of minus 7%. The remaining items had limited impact, with higher refinancing costs compensated by tax associates and minorities. As a result, recurring EPS increased by 0.9% in the first semester to EUR 1.92.

This leads me to another key indicator of our value creation journey, our cash generation. We delivered free cash flow of EUR 0.9 billion on the first half, supported by our strong operational performance. This was achieved while continuing to invest into the business and despite the temporary increase of security stocks to ensure customer service levels. This concludes the financial review for the first half of the year.

Let me turn to the next Page #15. Here, let me first thank our teams whose commitment and excellence in execution enabled us to deliver those solid results in the first semester, despite the challenging environment. It is reinforcing our confidence to continue delivering competitive growth and value creation in the future. We are therefore today confirming our financial guidance for year 2026 with plus 3% to plus 5% like-for-like sales growth and recurring operating income to grow faster than sales.

And with that, let me hand it back to Antoine for the conclusion.

On Slide 16 -- thank you, Juergen. Before we open the floor to question, I would like to leave you with a few final thoughts. As you've seen today, we delivered another half year of solid, high-quality results. As I told you, this performance reflects the relevance of our health-focused portfolio, the strengths of our growth platforms, and the commitment of our teams around the world. While we are obviously happy with these results, we also remain clear-eyed about the work that still lies ahead.

We are encouraged by the progress we are seeing in some areas, but we continue to operate with a mindset of constructive dissatisfaction and a relentless focus on execution. As you have heard me say many times before, we believe the food industry is at a tipping point. Consumers and patients are increasingly looking for science-based nutritional solution that support their health and wellbeing.

With our unique portfolio in health-focused categories, our strong science capabilities, and our commitment to quality, I believe we are uniquely positioned to benefit from these long-term trends. Our priority remains to deliver consistent performance while continuing to transform the company. We will continue to strengthen our portfolio through innovation, disciplined investment and selective acquisition, positioning Danone for long-term sustainable growth.

And with that, let me hand back to Paul to start the Q&A question. Paul, over to you.

Great. Thank you very much, Antoine and Juergen. So now we'll start the Q&A session with the first question coming from Guillaume Delmas at UBS.

Couple of questions for me, please. The first one on CNAO, so China, North Asia, Oceania. Volume mix slowed quite significantly between the Q1 and Q2. I think Q1 we were 10.5%, and now it's more 1.5% volume mix. I appreciate comps were a bit tougher in the quarter, but could you maybe shed some light on this slowdown and what's driving it in terms of division, category, or country? Looking ahead, it's not like comps get any easier. In fact, they're slightly tougher going forward. Are you confident you'll be able to maintain a positive volume mix in the back half of the year in CNAO?

My second question, on North America. Antoine, you said during the presentation that we are still at the beginning of the journey. You're clearly trying to signal the improvement will be progressive, patience may be required. My question here is, is the turnaround of North America maybe taking a bit more time than you initially expected? When we think about the key drivers, the creamers, traditional yogurt, plant-based beverages, where do you expect the fastest progress being visible very quickly, and what could take a little bit longer?

Guillaume, we'll do probably a duet with Juergen on that. Let me start with -- first, I am super happy with the performance of CNAO, I mean the quality of what they are doing, the quality actually of the delivery on competitors that are, as you said, very, very tough. It's really good in the market when it comes to IMF that has been normalizing. So happy with our performance. I mean the key driver of volume mix is Mizone and the waters category. The category itself is going down in the quarter. But all in all, pretty confident that we will keep delivering in CNAO. Juergen?

Yes. Just to reiterate our confidence in very solid growth patterns, including on volume mix in the region because it's true that Mizone has created a little bit of volatility in the second quarter, but what is really reassuring is the very competitive performance of our IMF business in China. And I think we've been discussing at length the exciting opportunity in Medical Nutrition. So I think we are well set for the quarters to come in CNAO.

So on your question on North America, no, it doesn't take longer than what I expect. But as we said, capacity in dairy will come progressively. So it's not opening of a new factory, but it's line by line over the coming quarters. This is enabling us to start reactivating the rest of the portfolio. So it doesn't happen from one day to the other. What we have in the pipeline from an innovation standpoint and what will help reigniting of the brands that we haven't been supporting because our capacity looks very strong. You will see the start of it in H2 with Activia. You will see some new formats coming on to Oikos, and more to come in the following year. And we will do things in an orderly fashion. So that, I mean, it is a solid and building competitive advantage for the long term.

In the short term, I'm very happy to see stabilization of our creamers. As we've discussed, it's step one. We also need to analyze the emerging consumer trends and naturally, it takes a bit more time, but the first indications on our creamers are encouraging. By the way, everything that is our protein is absolutely, absolutely fine. So things are deploying as per plan, pretty confident with what I'm seeing. But indeed, it's going to be progressive.

Our next question is from Nicolas Ceron at Bank of America.

Can I ask just one question on North America to follow up? We're all trying to understand to what extent it's really the capacity constraint that's impacting your performance. Maybe if you could just clarify what kind of volume growth you're seeing in yogurt in North America in your business? Are you seeing volume flat as you would expect for capacity constraint, or do you think volume going down?

The second question would be on the China clinical nutrition business. Are you seeing some pricing pressure from the government linked to volume-based purchasing? Because I know some of your competitors have been talking about that, and I was wondering if that impacts your business as well.

Nicolas, listen, on North America, as we said, on everything that is protein, we see a consistent, consistent growth. The rest of the portfolio was under quota. So as we progressively release capacity, we will leverage, as we said, that capacity to do two things, keep delivering to the protein growth because there is still more growth to be taken out of our protein, and starting to reignite the rest of our portfolio. Juergen, anything?

Yes. The only element to -- I think there's a lot of excitement watching Nielsen data, especially for North America, and you have seen the Nielsen data, especially the last revised ones for our yogurt business in the U.S. are moving in the right direction. So I think, which is a good indication that things are performing as we want them to perform progressively.

There was a bit of a reevaluation by Nielsen on the way they measure things. It starts looking more like what we see in our own data. Listen, on medical nutrition in China, it is a very exciting market. Number one, it's a very exciting market because in the place where we are the absolute leader, which is tube, we can go deeper. So in Tier 2, Tier 3 hospital, there is a huge conversion work to be done when it comes to moving from the parenteral to enteral.

We are super-excited with what we see in, by the way, other subcategories where we are only scratching the surface. Pediatrics, we have a nice business that is growing very, very fast. In oral nutrition, which is growing very fast, we are only at the start of the journey. When it comes to volume-based pricing, to be honest, it's not new. That's the thing that is happening everywhere in the world. We have been handling that in about every country in the world. For us, it's pretty much business as usual.

Thank you, Nicolas. Our next question is from Jon Cox, Kepler.

A couple of questions, if I can. One on the free cash flow. When I dig into your half year report, I see the inventory is up about EUR 250 million, which is a fair chunk probably of what was seen as maybe a light print on the free cash flow. Do you think this will unwind in the second half of the year, talking about the Middle East? Also maybe just on the CapEx is a little bit high, maybe you can talk a little bit about free cash flow and CapEx. You've said that now maybe you're starting to obviously spend more on new plants and things like that.

And the second question, just on the profitability. Again, looking at the EDP business, the margin is off 70 basis points year-on-year versus a year ago. Just wondering, what's going on there. I think a lot of us still think that, that business should start to see better profitability. I can see the 10 basis points beat was driven actually by waters, which is up almost 200 basis points.

Juergen?

Yes. Jon, look, on the free cash flow, you say it, we took a decision in the first half of the year to increase our security stocks internally because fair to say that global supply chains are a bit disrupted, especially when going through the Middle East region, and this is true actually for finished product as much as for some of the raw materials. As a precautionary measure, we increased security stocks that will fade away in the quarters to come, so it's really just a very temporary element.

The rest of the free cash flow, very strong and especially coming from our operational performance. CapEx is slightly increasing, but I think we talked EUR 40 million, EUR 50 million in the semester. As we discussed actually over the last quarters, as a result of the investments we are doing into medical nutrition and high protein, so nothing new to report on that front.

EDP margin, in H1, is a bit down. You are absolutely right. It's relatively easy to explain because the inflation kicks in from the second quarter onwards, and we will see, as usual, a bit of lag between inflation and price. So pricing, we'll increase prices selectively across the regions as we go through the third quarter already, so that will rebalance. Don't look at the EDP margin isolated in the first semester, I think it's not really telling because we share your belief that the EDP margin is going to increase over time.

Jon, and the second thing is, I mean, we keep investing behind our winning innovations. So we'll push high protein, we'll push Skyr, we'll push kefir, we'll push our plant-based offering, all the rest of it, making sure that we list them, making sure that we make them visible. So there, there is also a dimension of our consistent investment, Jon.

Our next question is from David Roux at Morgan Stanley.

Well done on a very solid set of results. I've just got two quick questions. Can we just go back to North America EDP and just remind me on your protein shake ambitions, is that something that you guys will revisit once the additional yogurt capacity comes online? Because that's gone somewhat quiet the last couple of quarters.

Then the second one is just a more broader question on emerging markets. It's a theme that we've seen the last couple of quarters, strength in emerging markets. How sustainable do you think this is? Do you think that there's been somewhat of a pull forward of demand given concerns around supply chains, et cetera, or do you see a sustained sort of underlying strength there? I think partly the concern or -- the question comes from concern over those consumers possibly getting squeezed a bit more on higher energy costs, et cetera, but we haven't really seen that play out yet.

David, thanks. I mean, yet again probably a duet with Juergen. On North America shakes, we'll keep going as fast as we can, and whenever we have capacity available, we will seize every opportunity there is. We don't talk specifically about shakes, but altogether, the trend is positive and things are going rather well, and we'll keep pushing the growth there. Nothing really special to report except that we're quite happy with the performance.

Just one element to add, which I think we stick to what we said. First priority is bringing back our yogurt business to where it belongs; and second, and really after, we are going to accelerate and press the acceleration button on protein shakes. That's very clear. But what is very reassuring is that despite the fact that we have not been allocating a lot of resources into the protein shakes, we are quite sticky on shakes. I'm sure you can see that when you go to the stores in North America. So yes, that's an opportunity in front of us.

So yes, the core and the innovation, but the core, the core, the core. On emerging markets, and we'll do there also duet with Juergen. If you step back and if you look at, Danone has actually a quite balanced footprint. Historically, actually, a pretty large footprint in emerging markets. The performance that you see in emerging markets has been actually quite consistent over time. Not everything goes well everywhere all the time. But by and large, we got some pool and we got pool that is not topical as you were worried of, but a pool that is very, very structural. You take a country like Indonesia, if you take one of our largest emerging markets, we offer great value at every price point.

In a market that has been, frankly, under pressure from a consumer standpoint for a long time, we are delivering a pretty solid performance. So we try to be relevant despite the ups and downs of emerging market. You see that in Latin America, you see that in places like Morocco, you see that in places like Indonesia or Vietnam, for that matter.

Yes. I think what is interesting is that a lot of our business in emerging markets is now coming -- a lot of growth in emerging markets is coming through the pipes of specialized nutrition, a lot through IMF, and here we are gaining scale, and that's really an opportunity for us. We can talk about Brazil, we can talk about India, we can talk about Vietnam. So there's many countries where we are really at a tipping point and where we are reaching very interesting numbers, not only in growth but also in dollars and euros. That will definitely be ahead moving forward in terms of performance for us.

Thanks, David. Next question is from Warren Ackerman of Barclays.

Hopefully, you can hear me okay. I've got a few sort of number-y type questions. Are you able to tell us what Kate Farms is growing at, just so we got an idea from a modeling point of view, when it goes into like-for-like, it will be helpful?

Secondly, on Mizone, I don't know whether you can actually tell us how much it was down in China in the quarter. Just trying to understand what the underlying CNAO number was to try and sort of piece that together.

Finally, when are we expecting the launch of Nuturis in China? I mean, you talked about premiumization, Antoine, I assume it's still scheduled for this year in the second half. Can you confirm that and maybe tell us how it's doing in Hong Kong, and do you think it could be another Essensis?

So let me start with the last one and Juergen will address, I mean, the first two. Nuturis is doing quite well in Hong Kong, and the launch is progressively deploying in Mainland China as we speak. It is super premium, so it's relatively a niche product. But it's a niche where we weren't playing. It's the top 5% of the market where only a local player was playing. So very encouraged with what we see in Hong Kong, moving according to our plans on Nuturis.

When it comes to North America and our specialized nutrition business there, you see that already outside of Kate Farms, a pretty good performance, double-digit growth. Kate Farms will only amplify that. Kate Farms is growing at a very strong pace and will enter, as you say, Warren, from Q3 onwards, the like-for-like performance.

China, Mizone was pretty much down actually in Q2, in a category which was very soft temporarily, definitely here. While weather has been helping a bit in Europe, weather has definitely not been helping in China. Good news here is that market shares are well-oriented, and it shows the relevance of our mix, but it did indeed, as you say, pull down quite a bit our CNAO performance in the second quarter.

Thanks, Warren. Next question is from Olivier Nicolai at Goldman Sachs.

Two questions. First, following up on the U.S., but focusing on the plant-based products this time. You've initiated a plan to turn around the performance at the beginning of the year. We are halfway through now, so are you on track? What are the major difficulties that you're facing in the U.S. for plant-based compared to Europe, where it's doing much better?

Secondly, just on Huel. How are you planning to position the brand versus Alpro, while you're already expanded into meal replacement, and how do these two brands complement each other?

Olivier. On plant-based U.S., we are basically on plan. As you heard me say the last quarter and probably the quarter before, we have a model that is working extremely well in Europe. Alpro, having moved from being plant-based to being plant-powered, focusing on the benefits it delivers, playing the food piano between beverages and yogurt is proving to be a very efficient model and also offers a platform for innovation, as you've seen with Meal to Go.

There was, and you heard me say it very publicly a number of times, not-invented-here syndrome in the U.S. Things are starting to move. The first sign you've seen is what we are doing in the field of protein with Silk, which is a step 1 in a plan that we'll continue to deploy, so you will see much more coming at the start of next year. Very much on plan from an activity standpoint. Now we need to make sure that activity is followed by impact. But if I see what we are capable of delivering in Europe, I trust that as we deploy the same or something similar in the U.S. over the course of the next few quarters, we should be heading in the right direction.

When it comes to Huel, Huel has actually a slightly different positioning from Alpro. Yes, Alpro Meal to Go is playing in the same space as Huel, but with a positioning that is very different and with a route to market that is very different. One of the things that really excites me with Huel is the team excites me. It's a super good team, and it's the capabilities that the team have been bringing or developing.

Direct-to-consumer, virtually no advertising above the line, all are community management. Issuing something like 300 or 400 assets per month, when it comes to online advertising. An incredible ability to manage their community and to develop a model that is largely, largely a direct-to-consumer model. So actually, I see the two of them as very complimentary. Huel starting, by the way, from a health and nutrition standpoint, Alpro starting from a plant-based standpoint, although Huel is plant-based, but starting really from two different angles. I see that more as an opportunity of segmenting a market that will keep growing rather than a frontal opposition.

Our next question is from Celine Pannuti from JPMorgan.

So 2 questions. First on China, Specialized Nutrition, could you -- infant milk formula, more precisely. Can you come back to tell us how is the market developing, in the quarter, in terms of market share performance, how you've been doing and, the supply chain disruption or, let's say, rather the higher scrutiny on import from across check border, whether that has had any impact on you or positive impact, if you think that you've gained market share from some of your competitors that have been disrupted.

My second question is on the cost side. Can you talk about what is your cost inflation expectation for the year? You said that in H1, there seemed to be a phasing in terms of pricing and cost inflation for dairy. So are we expecting a stronger H2 margin? Because I was expecting SN to be impacted by this recall, and it has not been the case. I know you don't guide on margin, but usually, you've been delivering closer to 40 basis points. Are we on track for similar delivery this year? It's just that it was a slow start.

Let me start with part of the last question and Juergen will come back to it. Our guidance is our guidance, and I've said it again and again and again. We are delivering consistently on a model which is 3% to 5% of our growth, with profit growing faster than the top line. We don't give margin guidance. We have a model that is value-creating for the long term, and we are confident that we will deliver on the model. Juergen will come on the cost side.

On China shares, we are doing actually pretty well. We said it, the market has been normalizing. And normalizing means, after the Year of the Dragon, the trends of the market are back to the same, so the way we execute in the market is back to the same. So it's a strategy of innovation, it's a strategy of premiumization, it's a strategy of deep relationship with the mothers, trying to demonstrate that our products are better from a scientific standpoint.

The Chinese authorities have always been very demanding. They are indeed more demanding. Is it a competitive advantage or not? To be honest, I don't know whether it is. We comply to the requirements of the Chinese authority, and we do what it takes for our products to be available in China.

And just to confirm that there is no real supply chain disruption element, neither positive nor negative in the first half. Market shares are pretty well oriented, thanks to Essensis, which continues to perform very well, and thanks to a continued shift towards more premium products, that continues to be the case. In that sense, I would say, pretty reassuring underlying fundamentals.

On cost inflation, not a lot to say. Obviously, energy and packaging costs are impacted by what we are seeing coming from the Middle East. It plays different on the categories. One single reason is that the hedging effectiveness is higher for categories like specialized nutrition or waters than it is for dairy, and therefore there's also different, I would say, margin phasing H1, H2, for the different categories. Beyond that, not much more to say.

We will stay true to our business model, which is a quality growth, delivering interesting gross margin and reinvesting while expanding a profit margin. So that's the overall business model we are aiming for, and we'll progressively go back to that.

Can I just say, should we expect margin in EDP to be positive this year?

What obviously Antoine said it very well, we are not going to give margin guidance by category, but definitely, the margin of EDP will benefit from the fact that we are going to do price increases selectively across all the regions, yes.

We have time for one last question, which is from Tom Sykes at Deutsche Bank.

Just I actually have 2, please. Just coming back to this margin from operations. I know you said there's a timing difference between COGS increases and pricing, but you'd stated before you've got mid-single digit, supposedly productivity in COGS. You've got mixed benefits by channel and product, and you've got the benefit of acquisitions. I don't quite understand why your gross margin would be down. So maybe if you could give some more details.

The depreciation charge looks like it's down by EUR 100 million in the financial report. Is there an impairment on that or is that the actual depreciation number, please? Because I guess that would have been, in theory, a benefit to the gross margin.

Just in the APAC growth of specialized nutrition of 4.4%, maybe I missed it earlier, but could you give relative growth at least or a view on China IMF versus other country IMF and adult nutrition in that 4.4%, please?

Juergen, do you want to...

Yes. On the first one, on margin from operations, first, it's a pretty organic number because M&A didn't really impact that number. All the deals we have announced are closing in the second half of the year, in that sense, no real impact, nothing really to report here. Why is the margin from operations down in the first semester? First, we had the IMF recall impacts, let's not forget that, in Q1. And secondly, as described, inflationary pressure with pricing kicking in only in the second part of this year. That's the two key drivers.

I think the teams, indeed, as you say, Tom, did an incredible job of acceleration of productivity and savings. So that we were able to continue reinvesting into our business, which I think is a very strong sign of confidence that the financial algorithm works for us.

On APAC plus 4.4% specialized nutrition, it's actually a pretty good number, as you say. It's as much driven by China as by the rest of the region. Actually, the vast majority or 2/3rds of the business in this region is specialized nutrition. And so IMF China has a very good contribution to that number, is growing competitively. I think that we are going to see a continued good contribution to the results of the company also in the quarters to come.

And sorry, just the D&A number?

And D&A number, frankly, there is no specific effect and is a one-off. So it's just a normal course.

Okay. So it is down by EUR 100 million.

Okay. Thank you. That's the final question.

Good. So listen, well, first, many thanks for joining us for this call this morning. As you can see, we are on the move. Happy with the quarter, but knowing that there is more to do, so we are on it. We keep driving and we'll see you soon on the road. Take care, everyone.

Bye. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Okay. Everybody, thank you very much for joining this session, and thank you very much indeed to Antoine de Saint-Affrique, CEO of Danone; and Juergen Esser, CFO of Danone. Thank you for making the very long journey to get here as well. It's much appreciated.

So before we dive into company specifics, perhaps you could give us an overall assessment as you see it of the current consumer and category backdrop. Yes, the Q1 stage, you noted the impact of the Middle East and the infant formula recall and market on your results. But has your outlook at all changed significantly over the first 6 months of the year?

No, I don't think so. What is structural in the market is staying. We said it a number of months ago. I think the food market is at a tipping point. People realize that they are what they eat. The link between health and food is more obvious every day. And you just have to look at the scientific literature also what you find on the Internet. So -- well, the demographic trend with aging population in need for mobility, the trend of cancer explosion in some ways, in need for proper support hasn't changed. So the fundamentals of the market are exactly the same, and they are playing to what Danone is. We are health through food, doing it in a way that is science-based and consumer and patient focused. So none of the fundamentals, I think, have changed.

And maybe one element which is important is that the Q1 was in many dimensions, exceptional for us for all the reasons you mentioned. It's changing absolutely not the way we are looking at the year. It's absolutely not changing the way we look at the guidance and it's absolutely not changing the way we look at the business model, which means all the focus of our organization is on volume mix growth and capturing the opportunities the markets are offering to us because the markets are coming our way.

Okay. Very clear indeed. So an outcome of the conflict is, of course, renewed inflationary pressures. Your productivity program has really been a really significant enabler for you, underpinning, I think, a lot of what you've been able to do in pricing, the A&P and opening up distribution. Is this level of COGS productivity you've had expected to be the same going forward? And does the inflationary pressure make any difference to that dynamic at all?

Well, in a way, it's a competitive edge, which we are now leveraging since what, Antoine, 2, 3 years, I would say. And there's still runway for us. It just means one thing that we can invest back into the business, which is important to us. And it means that in an environment we are today in with higher inflation coming through the Middle East consequences that the pricing we go to will be as limited as possible and as selective as possible. So in that sense, our ambition is to keep delivering productivity ahead of the industry without doing large-scale restructuring, and this is also very important. We want our people to focus externally and not internally.

Just maybe to add a word on that. There, what we've been doing, well, with the war in Ukraine and for the last couple of years is a good blueprint. As you said, very high level of productivity, doing silent restructuring when we need to do silent restructuring, focusing on delivering on our business model.

And you're saying you believe your relative productivity for sure is also there versus your peer group?

Okay. So picking up on one significant aspect of your overall performance these last couple of years, there's obviously been substantial mix benefits from your product innovations, whether, say, the functional component, protein, fiber, et cetera, or format changes, RTDs, there have been mix benefits. Are you able in any way to size or quantify those mix benefits. And I suppose when you look at your innovation slates that are coming forward, do you see that mix component remaining as strong as it clearly has been?

So obviously, we don't -- I mean, we don't guide or you wouldn't expect me to guide on volume mix. But if you step back and you look at the way we drive our business, there is a category mix effect. And if you look at the dynamic behind medical nutrition, which is obviously accretive, both in terms of growth and in terms of gross margin, you have a mix effect.

There is an innovation mix effect, obviously, when you launch high protein, when you launch some value-added variants of Activia, you're driving a mix effect. There is also a channel mix effect. As you know, over the last 5 years -- I mean, 5 years ago, we had about 55% of our business that was in hypermarkets to large retail stores. Today, it's 45% -- I mean, it's 45%. It's a mix of resilience effect and mix effect because obviously, mix is better in places like pharmacies to take an example.

And perhaps we could dive into a bit more detail in the divisions now and perhaps starting in North America and the obviously heightened focus, particularly on North America EDP. If we look at first at the Yogurt business, what do you see happening at the category level currently, particularly the difference in growth between higher protein, Greek yogurt and other yogurts?

Well, the first thing is you see a trend that is a lasting trend on proteins. The market -- well, overall yogurt market has been buoyant. By the way, the yogurt market is much smaller than what it could be. The consumption per head in the U.S. is about 1/3 of the consumption per head in Europe. So there's still plenty of ways to go.

The market has been buoyant. Protein has been buoyant and is a trend that is here to stay. It's a trend that existed a long time ago, by the way. 10 years ago, you started seeing protein bars that needed to be coated with chocolate because otherwise, they were really chewy and not tasting good. I know that because I was selling chocolate to the protein makers. You had people selling powder that you had to put in your glass to get to protein. The revolution that yogurt has been bringing is a product that the base of which is very natural. It's milk, it's yogurt with a health component that is perceived and is actually extremely healthy, a way to deliver protein that is extremely pleasant, be it in drinkable or be it in spoonable. And benefits, and that's where, by the way, we are taking the category, benefits that are not only about the content of protein, but what the proteins are doing to you or the proteins combined with the yogurt.

So this will keep going. It's very clear, and it will keep going because of the health trend, because of all the push behind milk and milk protein from the U.S. government and because of the accessibility of GLP-1. The rest of the segments for many reasons, in our case, for capacity reason hasn't been properly taken care of. But there are a number of things where you see trends that are here and that are going to accelerate.

Gut health is very central. It's expressed in many different ways. But you see an explosion from a very small base of kefir in the U.S. You see probiotics everywhere in all kinds of support. By the way, probiotics within yogurt is what Activia has been doing for a living for a very, very long time. So there is a deep trend behind gut health, premium probiotics, which are fibers, by the way, which is just emerging. It is something that we know how to address. We are growing double digit with Activia in places like Australia or Japan.

There is still a place for natural good-for-you value offer, which is what Danone is offering. Danone is a bit of a sleeping beauty in the U.S., very strong brand, launched in 1942, which we left a bit sleepy. So that is going to be the name of the game. And Danone now that we see step by step by step are -- I mean, lines coming on stream, so capacity coming on stream. We will be back to doing what Danone is doing, which is segmenting, playing a portfolio game and addressing the various segments of the market.

The Danone brand, we don't talk a lot about it. And by coincidence, I have a bottle with me. It's now a billionaire platform, growing double digit in Europe, growing double digit in Latin America and has not been leveraged at all so far in the U.S., and this will be part -- a very prominent part of the strategy moving forward. So it's not only an IQOS or Activia play, but also a Danone branded play.

And Activia is flying now in a number of places. Kefir is a big innovation. You've seen that we sold our participation in Lifeway in the U.S. It doesn't mean we will disappear from kefir forever in the U.S.

But it does look like some of the scanner data is showing slightly weaker volumes than maybe those trends outlined. Is that cyclical? I mean there are parts of the customer base, consumer base, which are a bit more under pressure, a bit more reticent to consume at all?

No, I don't think so. I mean you see stronger value data because -- I mean, when people see value, they're ready to pay for it. So you see what's happening in all the protein space, which is very, very premium. I think there is -- I mean, there is a move for value at every price point, actually. People do arbitrage when they see value, they pay for it.

In U.S. overall, I think what is very important to take away is that we are totally on track on the improvement journey we have been discussing now for a couple of months, which is true for Europe and which is true for creamers. So it will be progressive, yes, but we are going to improve quarter-by-quarter the performance of the American platform.

Okay. So I was going to say you're bringing the capacity on to market. So just to be clear, your expectations for the trajectory of like-for-like growth, EDP, North America are progressive?

Yes, it's going to be progressive. It's going to be quarter-by-quarter. We want to do the things properly, by the way. I can't get you any number for a given quarter. But it is about rebuilding in a structural way, the competitiveness of our business in the U.S. So as capacity is coming on stream, as we are progressively deploying the innovation funnel that we have behind the various brands, you will see over the next few quarters, a progressive improvement of the overall performance of our North American business.

And if I could, just one aspect in North America on the coffee creamers business. It does look like the 2 largest players within creamers have a lower share combined than they did even though -- that share is moving between the 2. Is there anything about smaller competition in creamers?

Well, there are -- I mean, there are 2 things. I mean the first thing is you need to take care of the core, because if you don't take care of the core, no innovation will replace the core. So that's what, in our case, we are doing, and you've seen that in the last couple of periods, creamers are heading in the right direction. The second thing is there is a trend around naturalness, which is emerging in the U.S., which is a trend that is eating into the overall market, very relevant trend, which is one in which at some point, we will play.

Okay. Understood. So maybe just also just on plant-based, if we could -- you recently announced the closure, I think, of the New Jersey facility. How quickly do you think plant-based continue?

Well, I mean, if you step back and you look at the story of plant-based, and I've shared it very openly with the market, if you look back 5 years ago, Alpro and Silk were more or less in the same state, which is coming at the end of a cycle where the brands have been created on ingredients: almond, soy, and have been created on speaking to people that were averse to milk and therefore, positioned against milk.

What we did very well in Europe is to pivot the brand from being ingredients driven to being benefit-driven and from being built as in opposition to milk to being built for itself because of the benefit it was bringing. So an Alpro yogurt is a great yogurt experience. It's not only -- it happens to be made with plant. It's a great yogurt. An Alpro Barista gives you a foam that is amazing in cappuccino. And by the way, the Barista can clean the machine easier than with most of the product.

Alpro beverage has fibers, calcium minerals you don't find in other products. So we repositioned the product moving to benefits and not in opposition to milk. We didn't do that in the U.S. and we didn't do that for all kinds of reasons, but there was, and I was very public about that, a big not invented here syndrome, where we've changed the teams. We've brought in place since January the teams that did the turnaround that we see on Alpro. They are going to deploy the book over the next number of months. I'm expecting to see progress in the next 12 months.

Okay. Very clear what you're saying on North America. So if we can now pivot towards Specialized Nutrition. Firstly, on Adult Nutrition, I mean, you did mention it before, but you've obviously been investing in your sales and the go-to-market capability in China, in particular. What's been the level of growth you've been able to get from that and the returns you're seeing? And is that an ongoing investment program or something that you're -- you've reached the level of investment?

When you look at Adult Medical Nutrition, well, the first thing is, and I was discussing the market is coming our way. If you look at the demographics; if you look at the health of the population; if you look at the pressure on the health system, everything that can improve or address the frailty of elderly people and therefore, their mobility; everything that help people recover faster and better from cancer; or everything that help people recover better and faster from stroke; all of that, by the way, having a positive economic impact on the health system. It's good for the individual, good for the health system, which are under pressure because of demographics. So the market there is coming our way.

What we deliver in Adult Medical Nutrition are products that are extremely sophisticated. Some countries, we have medical license, some long-term clinicals. The way to go to market on those products is driven by sales force. It is going into the hospital, it is talking to the health care professionals, it is making sure that you are present in the pharmacies, it is doing a job at health economics. So in some ways, and there are some exceptions because they are hybrid markets, your A&P is your sales force there. So we're super happy with the return on investment we get from the investments we made. We're growing very fast, both, by the way, in Asia and in Europe, and we'll keep pushing behind Medical Nutrition.

Yes. In the end, and we are discussing that quarter-by-quarter, it's a business growing high single digit, double digit every quarter. We're the #1 in China. And for us, it's only about expanding the reach into the system from Tier 1 to Tier 2 to Tier 3 to more and more hospitals and to pharmacies. So a very organic way of investing and a very predictable return. We have been buying our route to market in the U.S. with Kate Farms. And that's, in a way, accelerating the speed at which we can have access also to the health care market in the U.S. in order to play exactly by the same playbook as we play in China or in Europe, and we happen to be the #1 in Europe and in China.

Okay. And maybe just looking at or talking about infant formula, maybe you could walk through the effects of the product recall in Q1 or so far this year and whether you see there's ongoing effects at all and Q2 seems to have had a higher effect of testing requirements in China? And what do you see, if any, lasting effects?

Yes. So we'll probably do it on that. I mean if you look at where we are today, we are basically back to normal when it comes to presence on shelf. When we come to distribution, we didn't see -- I mean, we see some effect on brand equity, but no major effect on brand equity, varies very much. Our market shares vary very much from country to country. It's going to normalize totally over time. We are spending all our energy today talking back to the maternities, talking back to the HCPs, talking back to the mothers opening virtually because you cannot get into them, but opening our factories. So rebuilding the equity and the trust.

We don't expect a significant or very lasting impact on the market. It's a category where, first, our brand has lots of credibility. Second, it's also a category that is totally renewed in 2 years. So we are back on shelf. We are back on the front foot with the consumer and with the HCPs and doing the job of rebuilding the credibility.

Frankly, largely behind us, as Antoine said. So there will not be a lot of discussion around this topic, I believe, in the months to come.

And to your question of -- I mean, do the Chinese authority ask for more testing? Yes. We are very well equipped. We are very disciplined. So in some ways, it gives more structure to the trade, which is not necessarily bad news.

Okay. Clear. And when you look at the infant nutrition market as a whole, I mean, obviously, we're seeing declining birth rates, but price or premiumization mix gains. Are you comfortable that those dynamics can remain as strong as they have been over the last few years in the, obviously, especially in China?

In China, there is a very interesting statistics. If you look 10 years ago, the size of the market was EUR 20 billion. If you look today, the size of the market is EUR 20 billion, give or take. If you look 10 years ago, number of babies per year were 14 million. If you look today, it's below 8 million. So the market has stayed the same more or less in size with a number of babies that has been almost divided by half.

I think the dynamics you've seen at play in the China market is a combination of a number of things. One is market consolidation. You have a market where 7 years ago, you had about 1,000 players. Today, you have about 500 players. Top 3 players are 50-ish percent market share. Top 3 players in most of the countries in the world are 70-plus. So there is still a consolidation potential.

The second thing is it's a market that is extremely sensitive to science. It's a market where innovation backed by science has been helping the premiumization of the market. It's a combination of 2 things. It's a combination of science that really makes a difference. And you look at what we do with Essensis, you look at what we started doing with Nutricia. You have really deep science that can be proven and has an impact. It is about the ability that you have to tell the story. It is also something that is very common sense, which is when you have only one kid, you really take care, okay? So the direction of travel is that one. There was an extraordinary year or 18 months because of the Year of the Dragon, but it's a blip. But now we are back to normal, but normal is pretty good.

And the ambition remains to grow in China in Early Life Nutrition, thanks to market share dynamics and you look also at the last trading of market shares, they look pretty good.

Okay. And in terms of your capital allocation in Specialized Nutrition, obviously, you spoke about the acquisition of Kate Farms in Medical Nutrition. How important is it to you to have a larger share of U.S. infant formula.

So if your question is, would you buy a very large business that does exist and maybe for sale in the U.S.? The answer is no, not the U.S. business. If you look at the liabilities that are floating around this business, if you look at the challenges, it's not appealing at all. So let me be very clear.

When we look at acquisition, and we look to 3 filters. Obviously, a strategic filter. So does it make sense? I mean, do we gain market share? Do we gain capabilities? Do we gain our reach in a place where we are not? We look at our financial, I mean, ROIC, ROIC, ROIC; and we look at execution. Taking something that would bring us, I mean, liabilities for the next 20 years is not something I will do for the company.

Very clear. And if we look at overall M&A for the company, how important is the distribution or retail channel that the targets have -- that the acquisitions have? How important has that been relative to the business themselves? Because it does feel like you've been buying market access as well as kind of quality of the products that you're buying.

So I'm sure we'll do duet with Juergen on that. I mean the first thing is the filter I just described on, I mean, apply. The second thing is, as you know, our guidance is organic guidance. So we grow the business. And then when we acquire, we acquire things that are complementing our business.

If you look at the various acquisitions we have made over the course of the last 2 years, where you take Kate Farms, extremely strong business, gives us critical mass in the U.S. in Medical Nutrition with a footprint that is complementary to us, in a segment that is exciting, premium, accretive, et cetera. So ticks absolutely all the boxes in a category in the market where it doubles our size. So we were there already, but a market, that is a market of the future.

You take what we are in the process of doing with Huel. We haven't closed yet. The logic is at the same time, the same and slightly different. Fantastic brand, totally on trend, different target, but straight on what we do, human fuel. So food that you can take at lunch time and serve you as a lunch. Capabilities, we don't have our capabilities in which they are much better than us: direct-to-consumer, community management. So super exciting from a mix standpoint, from a relevance of the category standpoint, from capabilities they bring.

We bought not long time ago, a small business called Akkermansia, okay? Akkermansia from a consumer standpoint, very small, irrelevant, immaterial in terms of size. But it's a strain that has a very significant impact on gut health with very strong claims endorsed by EFSA, which works in a pasteurized way. It's a formidable technology brick out of which you can do something. So different angle through the same filter, which is strategic, execution, financial.

And probably the one element which is really important is as we are buying into companies which are complementary to our portfolio, the returns are very predictable. So we are not discovering a new landscape, a new category or whatsoever. And this is very important because we went from 7.5% ROIC 4 years ago to more than 10%, and we love the double-digit ROIC. And the M&A activities we have shall contribute to develop our ROIC. And so this is also in the way we are looking at it. And so it's great to see a Kate Farms or Huel, which will be accretive to EPS after 12 months. And so in that sense, it ticks all the boxes.

Okay. So if we zoom out a little bit and bring this all together, you've given a view on category growth and an outlook in part for the -- well, that you've given guidance for the year, but also your view on North America as well as ongoing productivity. Previously, you'd articulated that you were coming out of a period of higher A&P investment. And you've obviously the last couple of years delivered around 40 basis points of recurring margin improvement. Would you expect a similar degree of margin improvement this year, even though your A&P growth may be moderating?

Look, I mean, we are extremely committed to our guidance. And our guidance is the consequence of a business model. And the business model is about volume mix. And so in any year, whatever the inflation will be, the priority is growth through volume mix because it's the best way to get operating leverage, it's the best way to be able to reinvest into the business and expand our margin year-on-year-on-year. And so that recipe is not changing.

The variables are changing. So this year will be a year where the inflation will be a bit higher than what we have seen last year. And so we are adapting to it. We talked about productivity. We talked about price. And so you will see us delivering on our commitments and our guidance as the last years.

Maybe just re-insisting on one thing. I mean you know our guidance, 3% to 5% growth with bottom line growing faster than top line. There is a reason why we don't qualify the percentage of [ EBIT ] or a percentage EBIT margin. If you do that, and the company has been through that a long time ago, you start managing the company to a KPI, not to a business model.

And the consequence of that, and we have been there, is you start cutting in advertising, cutting in R&I or cutting in innovation when you are under pressure. We are managing the company to a long-term business model, delivering on our guidance, but not creating a new guidance, and we had the discussion in the past. When they were -- when we were expecting tailwinds, we said we will reinvest the tailwinds in the future growth of the company. So we will be consistent on our guidance.

Okay. So before we finish, it would be good to hear your perspectives on the use of AI within the company. If we look at the investments you've made so far in AI, would you view these as more on cost savings, operations side or in demand creation?

We'll do a duet as well on that. Listen, when we look at AI, we look at it in some ways in 3 dimensions. There is a dimension where in partnership with Microsoft, we've put everyone on Copilot to give a culture of AI throughout the company. So it's raising the floor of everyone in the company, so that they are familiar with AI, they use the tools. We do it in a sandbox to preserve our data, but making sure that we lift the company from an AI standpoint.

Then there are verticals where we say, well, we think there is a return on invested capital or return on investment. We think it can have an impact. We do things. So we obviously use AI in research and development. I mean when you have a base of 1,200 ferments, you start playing and forecasting around the ferments in a radically different way. We use AI in marketing. We use it in content creation. We use it in consumer relationship. I mean if you look at what we are doing with tools like a Stool Tracker, it's more than marketing, by the way. It becomes business model.

We use AI as well in everything that is productivity. So whether quality of our forecast, finance, a number of things. I'm sure that Juergen will complement. We are also starting to plan for the long run, the impact of AI on people. And if you say, well, in 10 years, 80% of the jobs would have changed, in a Western world where the availability of people is going to be scarce, making sure that you manage in parallel your pyramid of age and your pyramid of knowledge and making sure that you become very good at upskilling and reskilling; make sure that in 10 years' time, you still have the capabilities that you need, knowing that you won't find them or you won't find a number of them on the market is something that we are also doing. So literally 3...

The apprenticeship model is not completely dead and...

No, the apprenticeship model is not completely dead. The permanent learning model is not completely dead. And actually, that's where we believe that as Danone, we have a distinctive strength.

In the end, we went -- we are going through 3 phases. The first phase was very broad education on the topic. So we had individual productivity. I do my job better every single day. We went relatively fast into this collective productivity, especially on the supply chain management. So one of the reasons why we are able to deliver a very high level of productivity in our cost of goods sold is because we had focused there first and foremost because the business cases were the most tangible and the most easy to access.

So when you go today to Poland to Opole, it's one of the most digital factories in the world in specialized nutrition, and it shows what is possible. And Phase 3 is now as we go, which is going faster and more efficient on R&I and going faster and more efficient on the way we engage consumers and retailers, which is extremely important.

Okay. And maybe then just looking at Agentic AI. I think really interested on the procurement side of retailers and how they use it in price negotiations as well as on product discovery side, what are your thoughts and perspectives on that and how...

They use it, we use it. So we use it with our suppliers. We use it to prepare also what we do with retailers. So that is becoming standard practice. Where Agentic AI is super interesting is in consumer relationship. I mean the speed and the breadth at which you can detect what's happening, answer to what's happening, surfacing either issues when there are issues or trends is really impressive. The speed at which you can create, screen narrow product concept is really interesting.

So there is a whole dimension around consumer that is very, very interesting. There is a whole dimension in sales that is very interesting. We do -- I mean you'd go in France with one of our sales guy, uses image recognition powered by AI to do a store check, look at where the things are, how should they be. So you have a sales force productivity that is immediate.

Okay. Well, look, we've come towards the end of our formal Q&A. And so Antoine, Juergen, thank you very much, first of all, but perhaps you'd like to make some closing remarks on the outlook for Danone in 2026. And indeed, are we at peak protein or even peak protein growth?

So I mean the first question is, no, we are not at our peak protein. It's going to keep going. And what we are doing in protein, specifically on that topic, is yet again move from protein to benefit. What does the protein does to you? What does the carrier of the protein do to you? So we are only at the start of the journey. And obviously, the expansion of mean, GLP-1 is helping. Aging population is helping because people need protein for their muscles and for morbidity. Cancer is sadly helping.

So there are secular trends, which brings me probably to the second thing, which is where I started, which is the choice we've made of a company that is only health of food, which is science-based and consumer and patient focused, position us with a portfolio that is healthy. I mean, 85% of our products are 3.5 star or more with products that have an impact on your health, position us exactly at the point where the consumer trends are going. So the market is coming our way, which gives us all the confidence in the world that we will deliver our guidance.

Okay. Well, Antoine, Juergen, thank you very much indeed for your time today. Very clear and very interesting through your perspectives. Thank you very much, indeed.

Thank you, Tom.

Thank you.

Ladies and gentlemen, dear shareholders, good afternoon. On behalf of the group and all of our workforce, I'd like to welcome you to the Danone AGM and I declare the assembly open. As Chair of the Board of Directors, I will chair. I have Antoine Santa here with me, the Director General on my right; and then a bit further on Jurgen Essar the Deputy Director General and Financial Director; and on my left, Laurent Sacchi, Secretary General and Secretary of the Board. If you Well, we will now form the bureau, the offices of the assembly, and I call out the 2 active tells the 2 shareholders who are taking part in this assembly and have the largest number of votes and who have accepted this Ibrahim who represents Amundi, and Ann Lar Marinovic, who represents FCPE Danone, which is the salary shareholder fund of the company.

I would like to thank them very warmly for having agreed to do this, and I suggest that we designate Laurence Sashi, Secretary of the Board as the Secretary of this assembly. I would like to welcome the members of the Board who are present at this meeting and also the corporate auditors who are here in the room with us and who, in the course of the meeting will be telling us about their findings regarding the accounts and the information regarding sustainability measures.

I will now show you on your screen. the outline of the meeting. Laurent Sachi will remind you of the legal formalities that have been carried out prior to the assembly and also the agenda. I will present the work done by the Board in 2025. Pascal Lamy, who is President of the Mission Committee, will present his report and this will be followed by presentations from Antoine de Santa fika and Natalie Percier, who is Vice Chair in charge of Sustainable Development, and then we will have financials from Jurgen Esa. And then we will give the floor to our auditors so that they can inform you of their findings.

And finally, you will have the floor. We will have a question-and-answer session before we vote the resolutions. And we are planning to close the meeting at around 5 p.m. Thank you very much for your attention. And I give the floor now to Laurent Sachi.

Thank you very much indeed, Sheila. We will now move on to the rather more legal or administrative part of this introduction. I think you're familiar with how these meetings are conducted. I recognize many familiar faces in the room. Let me remind you that the assembly was convened by invitation and that we have fulfilled all of the prior formalities required by law, legal documents have been made available. They are in this green file in keeping with the legal and regulatory provisions, and they have been communicated or made available to the shareholders and the economic and social committee of the company once the imitation was set out.

Once again, this year, any shareholder, whether they be a registered shareholder or to the bearer is able to vote online by Internet using the boat access platform, provided their bank is a member of that platform, and most financial institutions are in France. It's a secure site that was opened on the 1st of April this year. And in keeping with regulation, it was closed at 3 p.m. 15:00 hours. I'll now read out the agenda. This meeting is gathered and will be required to vote on 17 ordinary and extraordinary resolutions. First of all, we have for the ordinary general meeting, approval of the company accounts for the financial year ending 31st December 2025, and Resolution 2 is approval of the consolidated financial statements for the financial year ending 31st of December 2025.

Three, allocation of profit for the financial year ending 31st December 2025 and setting the dividend at EUR 2.25 per share. Then we have the new have 3 terms renewal of Gela Schnapps term of office as director pursuant to Article 15 Paraboof the Articles of Association. Then renewal of Valeed. Sixth, renewal of Sanjiv Mehta's, term of office as a Director.

Seven, approval of the information relating to the remuneration of corporate officers. 8, Approval of the components of the remuneration paid during or awarded in respect to the financial year ended 31st December 2025 to nontheater our Chief Executive Officer, then we have approval of the components of the remuneration paid during or awarded in respect to the financial year ending 31st December 2025 to Sheila Schnepp, Chairman of the Board of Directors. 10, approval of the remuneration policy for executive directors for the financial year 2026. 11, approval of the remuneration policy for the Chairman of the Board of Directors, for the 2026 financial year. 12, approval of the remunation policy for directors for the financial year 2026. 13, this relates to the authorization to be granted to the Board of Directors to purchase, hold or transfer shares in the company.

The 14th resolution is ratification of the transfer of the registered office you may or may not know this. It has moved from Ulan to Lafayette, a few hundred yards away. Then we have the extraordinary general meeting. The agenda for resolutions is. Fifteen, delegation of authority to the Board of Directors to issue ordinary shares and securities reserved for employees participating in a company savings plan and/or to carry out reserved share placement without shareholders preemptive subscription rights, 16, delegation of authority to the Board of Directors to issue ordinary shares and securities, giving access to the share capital with the removal of preemptive rights reserved for categories of beneficiaries comprising employees, working within foreign companies of the Danone group or in situations of international mobility as part of employee share ownership schemes.

And finally, the customary final resolution falling within the remit of the ordinary general meeting, #17 powers of attorney for Manati. We have now the figures, and I would like to inform you that according to the attendance sheet that has just being communicated to me the present and represented shareholders or those who have voted by correspondence or Internet have together 466,595,444 shares out of the 640,122,962 shares with voting rights that if you work it out. And I hope the percentage is right, 72.89% of the shares. This is much more than the 25%, which is the quorum required for the general meeting. And I think we've beaten last year's record.

Votes by correspondence represent 476,614,560 voting rights. That's the vast majority. The Pas attorney of the chair represents 5,489,036 voting rights of the 640,172,962 shares with voting rights 39,863,794 shares have a double voting right. I would also like, therefore, to point out that the conditions required for this general meeting to meet appropriately as an ordinary and extraordinary general meeting. So we are able to meet. And in keeping with the recommendations of the Financial Market Authority as of the 22nd of April 6 p.m., 18:00 hours.

We have added 6 voting instructions that represent 448 shares and 879 voting rights. They were rejected in keeping with the applicable reglementary provisions because the voting instruction was invalid. So these instructions have not been included in the calculation of the quorum that I have just communicated to you. And finally, we have before remind us we will close the registration of the attendance sheet quarter now time. So if people arrive beyond that time, they will not be able to take part in voting the resolutions. If you wish to ask questions in writing, please use the sheets that have been made available to you for that purpose.

And please hand them as soon as possible to the welcoming staff so that we can answer your questions during the question-and-answer session. I would also like to remind you that the general meeting has been -- it's broadcast live on our Internet site, www.danone.com and it will remain available there on our Internet site for a number of months after this meeting. And finally, when handing out the electronic voting devices, you were asked to fill out a form to be invited to the next general meeting by electronic means.

So this is something that in keeping with changing in communication generally, and there was a decree of the 13th of February 2026, which means that if you filled out that form, you will receive all of the documentation in digital form on your e-mail address. So we would encourage you to fill out the form and to give it to our welcoming staff. Thank you for your attention, and I hand back to our.

Dear shareholders, 2025 has illustrated once again that the Danone model is the right one. It's a twin model based on economic growth the social measures. It dates back to 1972 but it's as topical today as it was then the words used today are different. We talk about financial and nonfinancial performance. But what really counts is that these notions remain valid today. They are intertwined engines of growth for a company like Danone for our 90,000 workforce and for your Board, it's a source of great pride to be able year-after-year to help write a new chapter, a major chapter of a venture that began more than 50 years ago now.

Regarding financial performance in 2025, Jorgen Esa, our Deputy Director General, will present this in some detail. But is really sound performance, particularly given that the broader context is brought and uncertain. Our growth is robust and healthy because it's based on value and volume, not just on price. And our profitability is continuing. It's path of gradual improvement year-on-year, and we are paving the way for the future with targeted investments, does this mean that we are completely satisfied with all of our achievements in all of the countries, in all of the categories and with all of our brands, of course, not. But your management, top management and Anandia Africa, who is certainly not someone who gives into complacency are focusing their energy on measures that will help make the group stronger still.

And this is the case for our business in America, which has been thoroughly reorganized so that we can make sure that this key zone for the group can be brought back onto a sustainable growth path. This is a continuous improvement of our financial performance that we've seen over the last 3 years, and this strengthened our balance sheet. As a result, we are able now to reactivate our acquisitions policy. A number of transactions have been reviewed and approved by your Board, and they all make sense. The sense is that these transactions will implement the ambitions that were presented by the Director General at the last Investor Day meeting.

And at the heart of our mission to increased health through food, we find science and innovation. And on to understand Arik will tell you more in a moment. Regarding the nonfinancial performance, the 2025 financial year is a source of great satisfaction. There are 4 major achievements that I'd like to highlight here. First of all, we have met nearly all of our 2025 objectives as defined in the Danone impact journey road map and also our objectives as a mission driven company. And this is really very rewarding. And indeed, Pascal Lamy, who is the President of the Mission Committee. will be giving you further information about this. I'd like to thank him very much for his commitment. Another source of satisfaction is that after tireless work over the last 10 years, we have achieved a global level, the court certification.

Danone is the largest company globally to have this recognition. Also, we have a AAA score from CDP, this is a particularly demanding body, and you can see this when I tell you that only a score of companies worldwide have achieved have been given that AAA ranking, whereas CDP has evaluated 20,000 companies. And finally, and certainly very significant Danone ranks first in the ATNI ranking out of 30 companies in our line of business that were assessed by ATNI. And this is rewards, it's the recognition that we have done well to make our products more healthy, but also tasty.

And of course, Danone doesn't plan to stop there. The governance of the group during the course of 2025, the full governance worked on drawing up the next nonfinancial road map that will take us through to 2030 management, CSR Committee, the Board and the Mission Committee each in their role contributed to defining ambitious and impactful goals for 2030. This will all be set out to you during the course of this afternoon, notably by Carin the time where some questioning a possible shift in CSR policies.

Also known as the backlash, Danone intends to continue its original approach, not because it is in line with way more fashion, but because it's at the heart of its corporate project. And lastly, if this is more matter for 2026 and 2025. I'd like to refer to the infant milk crisis as it's known affected our industry earlier this year. I don't understand that return to that in detail. But let me say here that your Board was particularly attentive and vigilant by convening a meeting on several occasions to track the development of a particularly sensitive situation regarding infant health.

Turning now to the portion of the meeting relating to group governance as well as the remuneration of the Chief Executive Officer and respective governance is a point that I view as very positive. It's perfectly stable because the Board remains with its 11 members if, of course, that is you vote on the resolution to renew the term set out by the secretary a moment ago. The characteristics of the Board remain unchanged, a closely net team, an exceptional concentration of sector skills, a remarkable independence ratio, feminization ratio in accordance with legislation, a very large contribution of international profiles, bringing their insights of markets across continents.

The Board was once again very much engaged during the course of this year, both in the Board itself as well as it 3 committees. As you can read on the screen member engagement was once again outstanding this year if we refer to the participation rate. Now the stability that I referred to a moment ago in respect of governance, also reflected in the remuneration structure of the CEO. The 3 pillars fix and your variable and long-term variable remain unchanged -- have remained unchanged since 2021. You can see on screen the detailed figures for 2025 in respect of 2025. And on this visual charge, the same degree of detail for 2026.

Now -- this year, what is put to your vote, the only changes will concern the components of the variable part. Variable part in respect of annual remuneration with a criteria pertaining to regenerative agriculture replacing the BCR certification criteria. And the fair wage network, we're almost at 100% on that. as well as greenhouse gas emissions because, in fact, it's always included in the long-term variable remuneration, we wanted to avoid duplication in terms of variable long-term remuneration, a criteria linked to the Dan live program, will be introduced replacing the criteria concerning the consumption cycle and production facilities so that each can have a criteria for the Danone impact journey Dan Life, Karin will speak to that in a moment that embodies the sustainable commitment of Danone to support each of our employees at every stage in their career so as to grow their potential and to nurture collective performance.

That's what I wish to say in opening this AGM, and I don't want to leave the lectin by expressing on behalf of the Board. My sincere thanks to the 80,000 Danoners without whom or this would not have been achievable. On behalf of the Board, I'd like to congratulate the management team led by its CEO, Antoine Santa for 5 years now that has genuinely as form this fine company recognized today for what has been undertaken and achieved has appealed. Lastly, I'd like to thank the Board members of particular those because our 3 committees are chaired by women, those who lead them as well as our lead board member, member of the Mission committee and his chair because this year saw both the assessment of achievements of our first road map that ended in 2025 and the preparation of the second that required a particular commitment.

I will now hand over to the Chair of the Mission Committee, Pascal Lai who will read through his report on the work of the Mission Committee.

We have Pascal Leme. I was looking -- I didn't see you. I didn't see that you're so discrete -- ladies and gentlemen, good afternoon. And just to recall that the committee that I have the owner of chairing must under French legislation report to you on the way in which Danone is implementing the nonfinancial performance obligations that it has underwritten as a mission company. And to do that, we're assisted by an independent external auditor. You will have found in the written documents made available to you the detail of the assessments and observations of the mission committee that I shall now briefly summarize, just to say, first of all, that FY '25 ends a first cycle of a 5-year pathway with its annual objectives.

And it's followed by another Sanyal, the same duration that has just begun in 2026. As in previous years, we note with satisfaction that the targets agreed by Dana after consultation with our committee were either reached or exceeded with 1 specificity that concerns the percentage of plastic parts designed to be recyclable where the formal collection systems, and that rate will only reach 100% in 2026. Indeed, has developed with its partners, innovative solution in this field of recycling of plastic parts. And these solutions are lagging behind owing to circumstances external to Danone's responsibilities, which led the auditor to conclude in his report that Danone indeed complied with each of its social environmental objectives as a purpose-driven or mission company results obtained this year are concerned, not just the major category set by the company, health, environment, social but as Gilles Schnepp just recall the B Corp certification, which was part of the engagement and was obtained this year as planned.

We also approved after discussion, the pathway for the next 5 years by ensuring that the new objectives maintain the previous level of ambition, even if, of course, they had to be adjusted to the changes in the Danone portfolio products, regulations or the comparative benchmarks that we use to be as complete as possible. I would add as Gilles Schnepp just said, even if these points pertain to 2026. The committee was informed by Danone of developments concerning the recall of infant formula that occurred during the course of the year. Now 2 comments in conclusion. Firstly, I'd like to thank my colleagues for their commitment.

Our contacts at Danone as well the auditors for their extensive availability, but also to mourn to surpassing 1 of the members of the Mission Committee, David Nabar, whose expertise and rigor contributed a great deal to the work of our committee in particular of maternal breast feeding. Lastly, in order to underscore the -- here again, by no means happen stands here as Gillette steadfast approach by Danone's management to highlight the convergence of its strategy with its mission company commitments. In other words, this convergence between financial and nonfinancial results.

And this, let me emphasize, by concluding that from our viewpoint. This consistency is truly remarkable at a time when we know the attention paid to nonfinancial results tends to be decreasing, at least on other continent than ours under shall we say various pressures and even -- and we have a few signs of that, indeed, perhaps in a more attenuated way in our own continent, this consistency is clearly very firm in the Mission Committee. I thank you for your attention.

[Presentation]

We're really in a truly remarkable business, Chairman, Ladies and gentlemen, shareholders, dear Danoners. I'm very pleased to be with you again for our shareholders meeting. It's a major event annually to review the path travel, share the progress and success of our strategy and present the outlook that it opens up for Danone and its ecosystem. For you as shareholders, as well as its employees, its consumers, its patients and its partners. We are evolving in an environment that is marked by profound transformations, economic and geopolitical challenges may the how issues rapidly changing consumption habits in this demanding context ability of corporations to adapt to transform themselves and strengthen their resilience is no longer a notion.

It's a precondition for success. More than ever, we remain true to our mission, Greenhealth through food, with healthy and quality projects and true to our dual project, combining economic performance, social responsibility consolidating our assets, creating lasting value and preparing the future and a cost changing well a company such as ours offers a bearing in terms of its history of its brands, and also the fact that it's rooted in communities in people's daily lives, we've been able to build and grow strong brands, experts in their category, recognized for their know-how and forward looking behind Danone yogurt, there's over 100 years of signed and research behind Evian. We celebrated that 2 weeks ago, almost 2 centuries of unique expertise in water management and a rare capacity to reinvent ourselves to address new generation behind new tricare, there's 130 years of engagements at the side of patients with global expertise recognized in specialized and medical nutrition.

These are strong foundations that allow us to move forward with confidence this strength is expressed through our territorial routes were their present where our consumers are close to our communities and partners, notably farmers in France, the historic cradle of Danone remains at the heart of our strategy. We're proud of producing locally and continuing to invest in our industrial plants serving jobs and the economic and social dynamism of communities. We are a key player of food sovereignty, these local routes, we carry this internationally. Danone is a company with international renowned present where demand is strong. and our skills really make the same difference. The same demanding approach guides our choice, better serve consumers and patients in their essential needs is healthy food at every age of life hydration and Unfortunately, the need is being felt medical nutrition.

It's around these convictions that is articulated our strategy and action that I'd like to tell you about today. I'm going to first of all, review our 2025 performance that demonstrates Gisel, the relevance of our positioning, our growth model for the out years. And then I'll go into greater detail regarding the rollout of Chapter 2 of our renewed strategy and explain how we're accelerating the pace to turn Danone into an even more efficient and resilient company. Before starting the heart of my presentation, it seemed to me important to address the developments that marked the beginning of the year an infant formula, it's a priority so for us all and above all, the families who count on us daily.

I know how much recent events were disruptive in a source of concern for all. That's, of course, the last thing we want to experience when we feed a deal 1.

We are taking the situation very seriously. And let me be very clear food safety and quality are and have always been -- they will remain our top priority at Danone. We are confident in the safety and the quality of our products which are based on sound scientific principles and rigorous testing. In light of recent events, we reviewed the consumer feedback received during that period, and we did not identify any cause for concern. However, in the context of evolving regulatory requirements, we have worked closely with the various national food safety authorities, and we have taken the necessary steps to comply with their new recommendations.

We have recalled from those markets, certain batches of infant formula and our priority has been to support parents and health care professionals to provide clear information and help restore trust. as that trust makes all the difference. Let me now turn to the 2025. Now before Jurgen goes into more detail about our 2025 financial results. I am pleased to share with you results that are once again robust and of high quality. The numbers that you see on this chart are much more than mere data. They reflect the hard work, the commitment and the passion of Danones, whom I would like to thank more sincerely. These achievements are theirs. In 2025, we embarked on Chapter 2 of our renewed strategy, and we grew revenue by more than 4.5% on a like-for-like basis.

That is all the more remarkable as it is underpinned by a positive volume mix throughout the year, which contributed more than 2.7% to growth in 2025. We achieved these strong results while continuing to pursue, as Pascal said, our sustainability approach with a focus on responsibility and impact. And Natalie will give you more information on progress made this year. under our climate strategy. But allow me to highlight just a few key achievements now.

Yet again, and Gilles mentioned this, we were awarded a AAA rating by the CDP. This underscores our leadership when it comes to transparency and strong performance in the areas of climate change, sustainable water management and forest conservation. We also received B Corp certification at the global level. And this is the culmination of a 10-year process started in 2015. And it tests to our goal of bringing together financial performance with social and environmental impact.

The overall 2025 performance that you see here demonstrates the strength and the resilience of our unique health-focused portfolio. which is fully aligned with the major structural trends transforming our sector. As I said, the food sector is at a turning point across the world. Consumers are becoming increasingly aware of the close link between diet and health as science advances, their expectations are changing, and they are seeking nutritional solutions that are ever more tailored to themselves and to their families.

Health through food has never been more relevant than it is today. That is why Danone, your company is ideally positioned. Our health-focused approach underpinned by science and high-quality standards, enable us to offer nutritional solutions that are tailored to every stage of life. This is not just what we do. It is, in fact, what constantly guides our strategy and its implementation.

And the results speak for themselves. our categories are growing faster than the food industry average, driven by strong converging trends, all geared towards healthier eating, protein, fiber, medical nutrition. These are 3 promising trends in which Danone has a real advantage. Demand for high-quality, nutritionally rich proteins is growing, particularly among consumers using GLP-1 treatment to lose weight, but who also wish to preserve their muscle mass.

Fiber is still largely underconsumed but plays a vital role in metabolic and gut health, whilst optimizing the effectiveness of protein. This is an area where Danone's expertise and probiotics really makes a difference. Finally, Medical Nutrition is proving its positive impact. It enhances treatment outcomes, speeds up recovery and reduces hospital stays, thus benefiting both patients and health care systems. Our revenue growth in 2025 was driven by our high-growth platforms, in particular, high protein products. gut health, infant milk and medical nutrition.

In North America, Oikos Pro exceeded the EUR 1 billion revenue mark in 2025, confirming the strength and development of this platform, the Danone brand, which also has sales at over EUR 1 billion posted very strong growth, too. Gut Health and Fiber, as I just said, are also solid growth drivers, particularly Activia. which is back to growth in Europe. Alpro is another key driver of growth in Europe. We have turned Alpro from a simple plant-based alternative into a plant-based nutritional supplement as reflected in our new packaging.

Finally, in infant formula, Optimal recorded double-digit growth, driven by the change in our core range and the launch of new products to meet specific nutritional needs. We have also expanded our geographical presence in high potential countries. At our last capital markets event in 2024, we outlined our ambition with Chapter 2 of Renew Danone. To strengthen our fundamentals while continuing the group's transformation. This is what we have begun to do in 2025.

We launched client-based innovations that remain true to our health-focused approach. We also overhauled the way we view our categories to create new opportunities for growth. For example, we launched Alpro Meal to go which is a new traditionally balanced plant-based meal replacement. designed for active lifestyles, providing 20 grams of protein and 26 essential vitamins and minerals. We are making healthy food, simpler and more accessible. We have also continued to expand our presence in strategic channels, creating value across all distribution channels and strengthening the resilience of our model.

In 2025, channels outside mass retail grew significantly faster out-of-home pharmacies, convenience stores, hospitals and home-based care. all posted double-digit growth. This diversification enables us to address new needs, complementing our long-standing mass retail partners and to reach more consumers and patients in more places and at every stage of life.

We also remain strongly focused on execution and competitiveness by strengthening several key capabilities. On the operational front, we made significant progress in recent years. We are very proud to be ranked tenth in the Gartner top supply chains 2025 ranking, which identifies best practices in supply chain management. This is the best performance among all FMCG players worldwide.

We are accelerating our transformation through our Industry 5.0 approach, equipping our teams and our sites with advanced AI capabilities, automating quality systems, predictive maintenance, and real-time performance visualization. Beyond production, we are also strengthening digital execution across the entire value chain. Our planning centers are equipped with AI tools. Our shared service centers are increasingly automated, and we have rolled out new in-store visualization tools all of this improves accuracy, speed and the efficiency with which we serve our customers and consumers.

But as Gilles said, we remain realistic. We know that there's still work to be done and certain areas in which perhaps we fall short, as Gilles said, in the U.S., our performance in 2025. did fall short of our expectations. We know we must raise the bar. Succeeding in this market means restoring performance in categories other than proteins and specialized nutritions. So from creamers to nonprotein yogurts and plant-based products, we appointed Ali Brussel as President of the Americas region and implemented broader organizational changes to create a performance culture based on excellence in implementation and greater operational intensity.

To bolster long-term performance and build lasting competitive advantage. We are strengthening the key capabilities that truly make a difference at Danone. We are convinced that the future of dairy products lies in more resilient and sustainable agricultural supply chains. And that is why we have launched the Danone Milk Academy, a unique multiyear global program, bringing together academics technical partners and Danone to provide farmers with practical, scientific and digital know-how. This approach is tailored to regional specificities and different farming models.

It aims to strengthen the dairy sector in a sustainable way. The same philosophy underpins partner for growth. This is more than a program. It is a catalyst for creating shared value, transforming our supplier relationships into long-term partnerships ever since it was launched 2 years ago. The initiative has helped improve efficiency, unlock capacity and accelerate our own sustainability goals. When it comes to innovation, we continue to invest in cutting-edge research.

Recently, we inaugurated the 1 Biome laboratory at Paris, this is dedicated to the study of intestinal microbiome. We also acquired the Aker Mansa company, Belgian pioneer in the field of probiotics with nearly 20 years of expertise. This further strengthens our scientific differentiation. Finally, we are investing in skills and leadership for our employees. in particular, through our global Dan skills training program to prepare our teams for the challenges of tomorrow and to continue the cultural transformation we began 4 years ago.

As part of Chapter 2 of renewal, we also clearly signaled our intention to be more proactive when it comes to acquisitions in 2025, we began along this path with a strong focus on strategic fit and rigorous governance. With the acquisition of Kate Farms, we now have a $500 million medical nutrition platform in the United States. This, for the first time is giving us significant presence within the U.S. healthcare system and the sector rather Kate farms has posted strong growth and the integration is going very well. In Australia, we acquired an additional 1% stake in our dairy joint venture management partnership with Saputo at the end of February, bringing us stake to 51% and enabling the financial consolidation of the business. We generated over EUR 100 million in revenue through this joint venture, which operates in Australia and New Zealand.

In Argentina, you would have heard, last month, we announced the creation of a joint venture with our long-standing partner, our core giving rise to a major player in the dairy sector in the region. By joining forces on an equal footing, we are creating a robust growth platform to bring healthy, high-quality products to add many Argentine consumers as possible. Finally, last month, we announced that we had signed an agreement to acquire -- human Huel, a global leader in balanced meal solutions with a strong presence in the U.K., the U.S. and a presence in the rest of Europe.

Over the past 10 years, Huel built a strong brand with leading digital capabilities. By combining Hull's strengths with Danone's global footprint and nutritional expertise, we are paving the way for tremendous opportunities in the new and rapidly growing world of complete nutrition. These decisions demonstrate our commitment to actively shaping our portfolio to support sustainable long-term growth.

And this cannot be achieved without taking into account sustainability issues. Balancing the growth of our business with a positive impact on society. That is at the heart of our DNA and our model, but it is also a challenge. Today, our industry faces major challenges, access to healthy food for all food security and sovereignty, climate adaptation and social progress. At Danone, we are committed to championing a model that supports our partners particularly farmers and offering consumers healthy, sustainable, high-quality food at the best price while continuing to invest in the future through science, the circular economy and the sustainability of our products and production methods.

That is the essence of our commitments. which are structured in our Danone impact journey. The second phase of which we're launching this year, a road map, which extends to 2030. and we want to go even further in promoting health through nutrition, managing our impact, our use of natural resources, supporting the necessary transformations and ultimately, strengthening the resilience of our business lines and our entire ecosystems in the long term. Before handing over to Natalie Elke, Vice Chairperson in charge of Sustainable Development. And Danone, Let's watch a video about our approach.

[Presentation]

Dear shareholders, ladies and gentlemen, as you know, the nonsustainability doesn't take the back seat in our strategy. It has always actually been at the very heart of our long-term value creation model. It feeds into our economic performance, our corporate resilience and the positive impact that we try to have on our societies and on the planet. You've just seen this with the 3 key dimensions of our sustainable development road map. First of all, health through food. Secondly, nature, and finally, working for our employees and communities.

We are now moving into the second phase of our sustainability road map. It's what we have termed the Danone impact journey, and I would like to share with you some facts and figures that illustrate what has been achieved and also our renewed commitments for 2030 and 2025. Our commitments led to concrete, measurable progress in line with our trajectory and that enjoy strong and unique external recognition. and this for all 3 pillars. First of all, the health through food pillar. Everybody recognized that Danone has the healthiest product portfolio in the industry.

And this is why we rank #1 in the key global index ATNI some 99% of our dairy and plant-based products for children have seen their sugar contact cut to less than 10 grams, this in line with the most stringent requirements. For the same product categories, some 9 Danone products out of 10 are recognized as being a healthy choice, and this in international standards. The social companies that we support guaranteed access to drinking water for 25 vulnerable people in 11 countries on a daily basis. The third pillar nature, there, we have cut back our CO2 and methane emissions. And this in a major way since 2020, we are continuing large-scale development of regenerative agriculture with our partner farmers, and we are also ensuring that sensitive raw materials are provided without causing deforestation.

And then our third pillar, the social pillar, there too, we have met our goals. We have been awarded the BCR certification globally after 10 years of tireless endeavors. So this is a world first for a company of our size. B-Corp is an independent label of international renowned. It recognizes good corporate practice in social, societal and environmental terms. Some 98% of our employees benefit from good health and provident coverage, thanks to our Dan Cares program. and half of managerial posts are held by women. This reflects our firm commitment in the matter. This is major progress on all strategic indicators. What it shows is that when we make a commitment, we follow up, we act and we get results, and this has a positive impact for Danone and for its ecosystems.

On the back of this advance, we want to renew our ambition for each of these 3 pillars between now and 2030, beginning with health There, our ambition is to reinforce our positive impact on food and diet at large scale and to ensure that we really stand out as completely specific and unique in our competitive environment. For instance, we want to cut back on sugar content for daily adult products.

We also want to try and prevent iron caused anemia, which is the #1 nutritional deficiency worldwide, particularly in Africa and Asia. So we have set ourselves a very ambitious target. We want to contribute to 14 million anemia screening test between now and 2030. And we once again assert ambition to be the leader in terms of healthy food with the healthiest product portfolio of the industry. Regarding climate commitments. We to continue to fight climate change. Our climate objectives are fully in line with the scientific data and compatible with the objective of limiting global warming to 1.5-degree Centigrade.

They have been approved by the key international organization, SBTI. The progress made in 2020 is in line with this objective. We pursue a strong and structural reduction of our CO2 and methane emissions throughout our value chain. In our industrial and energy operations, we have cut back on our CO2 emissions by more than 40%. In farming and raw materials, we are pioneers. We are the first Food Corporation to made a commitment regarding methane reduction. And this has brought good results. At the end of 2025, we had already reduced our methane emissions for fresh milk by more than 29%.

For transport and logistics, we have also made headway by reducing emissions by 17%. Our resilience depends on the resilience of natural ecosystems. And that's why we focus on 3 major levers when it comes to protecting nature. First of all, Regenerative farming, which aims to restore soils to protect biodiversity and to strengthen the economic resilience of our partner farmers. We continue this approach and roll out these practices. Our objective is that 45% of sensitive main ingredients in terms of volume should be sourced directly from holdings that have regenerative farming.

And this by 2030,; then we want to protect the water resources. We want to have the best practice in terms of management of water sheds and catchment areas. This will benefit our sites, the local communities. We have 28 years now being a pioneer partner with Rama, which is United Nations Convention for wet plants. This shows our long-term commitment to good management of this strategic resource. Finally, day-to-day management of packaging, this is key. And there our ambition is to work tirelessly to ensure that all of the packaging is recycled so that we avoid ending up in the environment. And this is why we have 3 major priorities: improving our packaging, make sure that it can be easily recycled, cutting back on the amount of virgin plastic used and recovering all of the packaging that is used where by supporting effective recycling systems.

Our approach is very clear cut. We want to protect nature and thus secure resilience and the sustainability and indeed, the very future of our business. Sustainability is, perhaps, first and foremost, about humans, about people. We intend to forge ahead with greater social ambition to help our employees and all of the people who work with us throughout our value chains. And this requires structural programs. First of all, Dan life, which is based on the Dan care program, but it's more ambitious still. The idea is to support our employees at all stages of their life, parenthood or when they become carriers or if they have a serious illness like cancer.

Then we have Dan skills, which is to give the 90,000 people who work with us, the skills they need for the future. And finally, the milk Academy to support and train farmers in regenerative agriculture. These will be our future partners, and they will be more resilient. In addition to that, we have made firm commitments in protecting human rights in having responsible supply chains and fair wages so as to ensure that our growth can benefit all in very concrete terms.

By way of conclusion, I would like to go back to some key points. In just a few minutes, I've tried to give you a broad overview of the aims of the second phase of the Danone impact journey. Basically, we are restating our deeply held conviction that sustainability is not just a matter of corporate responsibility. It's a strategic issue that is very inbuilt into our business model because it strengthens our resilience. It feeds into innovation, and it secures in the long term our supplies. This requires investment, and we plan this investment carefully. thinking of financial factors and real impact. Sometimes we meet hurdles.

They may be of a technical nature, regulatory due to competition or financial. And this means sometimes that we have to change the pace of transformation, but we always have the long-term vision, which goes hand-in-hand with pragmatic choices. And this is the hallmark of Danone. And this means that sustainability strengthens the confidence our customers have in us, our clients and our partners. And we hope also your confidence in a dear shareholders. I will now hand over to Jurgen Eser, who will be presenting financial results for 2025.

Thank you very much, Natalie. Ladies and gentlemen, dear shareholders, good afternoon. I'm delighted to be speaking here at this Annual General Meeting, and I will be presenting to you the financials for 2025 and also confirming our medium-term ambitions. As Antoine has said, we have now opened Chapter 2 of Renew Danone with solid results completely in line with the medium-term objectives set in 2024, which shows that our business model is indeed the right one. 2025 saw a strong growth in revenue by 4.5% like-for-like, but it was quality growth.

And it was based on the volume mix. The revenue amounted to EUR 27.3 billion. We give priority to growth that is driven by the volume mix, and this helps to improve the gross margin. And this is why the current operating margin has been improved by 44 basis points and is now at 13.4%. We've also reinvested in our brands in research and innovation and key skills so as to fuel future growth.

Good operating performance together with the financial stringency means that we have current earnings per share, up 4.6% and our free cash flow is at EUR 2.8 billion. If we look more closely at revenue for 2025, we can see that growth quarter-by-quarter was driven by the volume mix. As we move into Phase 2 of Renew Danone, we have a diversified portfolio, which means that quarter by quarter, we deliver sustainable growth across all of our business, as you will see, I think, on the next slide, and there it is.

In 2025, we achieved high-quality growth. across all of our product categories and all of our geographies. I'd like to make a few comments about the key regions. In Europe, revenue advanced by 2.3% like-for-like. The zone of Europe continued with sustained momentum. We have seen 9 quarters in a row of positive volume mix at the end of the fourth quarter. This good performance reflects the progress that has been made for dairy products.

So we have functional products such as high-protein range, kirana and the Alpro brand has also seen strong growth in plant-based products. Specialized Nutrition has been bolstered by the very good performance of adult medical nutrition and Waters also see robust growth thanks in particular to the Volvic and Avion brands. In North America, revenue was up 2% like-for-like. There was more moderate growth in 2025 for the EDP product category.

There were some hitches. High-protein products continued strong with double-digit growth, but coffee creamers were beset by temporary delivery problems. Specialized Nutrition recorded robust growth and the recent acquisition of Kate Farms, not yet included in our comparable data has a very strong growth. Finally, in China, North Asia and Oceania, revenue increased by 11.7%. Specialized Nutrition in this area recorded outstanding growth in 2025.

Thanks to comparative growth that was very strong for infant milk formula. And also, we continue to see very strong demand for medical nutrition products, Waters, the Mizone brand did very well. The EDP product category in this area recorded double-digit growth, thanks in particular to Activia as a brand and IQOS in Japan. These are just a few examples, which show that our growth was very high quality in 2025. And we are very pleased to note that we are able to meet our commitments regarding value creation across all of the main financial indicators.

We have generated a lot of free cash flow. I already mentioned this and this means that once again this year, we have reduced our net debt level, which is now EUR 8.4 billion as of end 2025. And finally, thanks to the improvement of operating performance. We are pleased to note that our ROIC is 10.7%. This is now a double-digit structural level and it's a key pillar of our value creation road map.

Finally, I'm very proud to put to you the payout of EUR 2.25 dividend per share, this is some 5% increase compared to last year, in line with the current earnings per share. But above all, it is a record level in the whole history of our company, dear shareholders. With this message, we would like to close the review of the 2025 financial year results. And I would now briefly like to present to you our first quarter 2026 revenue figures that were published yesterday.

And moving on, looking at the slides. As you know, since the 1st of January 2026, Danone has been reorganized with 3 new geographic zones. We've got Europe, Middle East and Africa and then the Americas and Asia Pacific. This means that our reporting structures have been changed, and we present our main financial indicators along those lines. The overall environment is somewhat fraught and yet the figures are good. over the first quarter with a growth of plus 2.7% like-for-like, thanks to volume mix of plus 1.5%.

It's positive for all product categories. Revenue in EMEA increased by 0.6% like-for-like. It should be noted the context was difficult with infant milk products having to be recalled and the conflict in the Middle East. In the Americas, revenue increased 3.4% like-for-like, thanks to a continued good performance in Latin America. And we're seeing a picking up of momentum in the United States and in Asia Pacific, revenue recorded a 6% growth level like-for-like. This is very good, thanks to a large extent, a specialized nutrition in China and the ED category in Japan. I would now like to close my presentation by reminding you that our long-term value creation model remains unchanged.

We presented this at the large investor seminar, and it is rooted in high-quality growth and attractive yields. As you know, we are planning for 2025-'28 revenue growth of between plus 3% and plus 5% and also growth of the current operating income that should outstrip the growth of revenue. This objective means that we should be able to structurally enhance the generation of free cash flow, aiming up to EUR 3 billion. And thus, continue to have a double-digit ROIC. The results for the first quarter of 2026 shows that we're on the right track, and we're confident about remainder of the year. Yesterday, we were able to confirm our annual objectives. They are fully in line with our medium-term ambition. And now I will give the floor back to Antoine. Thank you very much for your attention.

Thank you, Jorgen, and thank you, Natalie, for these presentations. As you can see, our results are solid, and we are now fully embarked on the execution of Chapter 2 of our renewed strategy. We continue to act with both responsibility and ambition to transform our food systems to the benefit of consumers and patients whom we serve, but also communities and ecosystems in which we operate. Danone is today a stronger company that has restored solid fundamentals and is projecting itself into the future. We continue to invest in our daily brand Activia, Danette Levi or Bledina site, but a few that have contributed to Danone's success who daily support the lives of millions of consumers.

In France, we innovate, and we prepare tomorrow's food thanks to world-class research exactly players of food sovereignty. We invest in our industrial facilities, and we work with our partners, our farmers to build strong and sustainable farming value chains, over 40,000 tonnes of production are being relocated to Ball in France. These are industrial investments but are above all choices of confidence in our communities like the tolerance that we're proud to support the epitomize and embody a company that is rooted popular, but also forward-looking.

And this momentum is also present internationally in the United States, we're strengthening our capabilities to meet the strong demand for hyperprotein yogurts in Asia that would be in China and Indonesia. We continue our expansion in Medical Nutrition. serving the health needs based on 100 years of expertise in science, health and nutrition, building on our routes in the communities in our international renowned.

We're well positioned today to address new expectations, and we do this. I hope you seen this with discipline, ambition and the commitment of our 90,000 Danoners to offer products that have flavor and that meet the highest standards of quality and safety. Our priority is clear, deliver steady performance by continuing the transformation of the group. We have charted a clear course driven by innovation, acquisitions and a clear focus on segments that are high growth or with high-value added where the science and the health benefits make the difference.

We remain committed to delivering quality results. thanks to rigorous execution, correct what needs to be corrected, amplify what works and to maintain a constructive demanding mindset in an increasingly complex environment in spite of an uncertain external context, particularly volatile. Our approach remains unchanged for 2026, discipline and focus on execution. All that in line with our medium-term ambition.

Thank you for your trust and confidence, your engagement at our side to continue to make Danone grow month after month, year after year. Thank you.

Thank you, Antoine. I suggest we now give the floor to Sumoforthis a statutory auditors -- so as to hear the report on 2025.

Chairman, ladies and gentlemen, shareholders, good afternoon, about half of the Board of statutory auditors, Ernst & Young and for visas. I'm pleased to present to you the conclusions of our work on the financial statements of the fiscal year ended December 31, 2025. as is the case with current practice of this meeting. I propose to summarize the key pics of the various reports we've issued both in respect of the ordinary shareholders' meeting and the extraordinary general meeting. All these reports were made available to you by the company. Let me begin, first of all, with our reports on the annual and consolidated financial statements.

These reports that are subject to approvals of the first and second resolutions of our AGMs to be found on pages 155 to 158, 126 to 129 of the universal registration document. Now the purpose of our assignment is to ensure the financial statements are true and fair. And to do this, we conduct procedures in the major entities of the group, both in France and abroad on an approach that is tailored to the organization of Danone to its activities and to our assessment of the risk.

In respect of 2025, we presented the conclusions of our work to the Audit Committee of company on 17th of February 2026 as well as to the Board on the 18th of February 2026. For the consolidated financial statements, we consider 3 issues as being key audit matters. The first pertaining to assessing revenue, in particular, the assessment of discounts offered to customers. It's a point of attention given the multiplicity of contractual relations and the significant pages on the complexity of their estimate at closing. The second point concerns estimates. On goodwill impairment tests and brands of indefinite life, which rest on the estimate and exercise of judgment by management. Lastly, final pool concerns is assessing tax liabilities as well as provisions for tax risk based on the judgment needed to assess the outgoing of probable resource.

On the annual financial statements, our report incorporates a mandate retechnical observation, Patni, to the first application of the new regulation, ANC 2206 report states that we consider the valuation of equity interest as being a key audit matter report, furthermore report on specific verifications provided by law aimed at ensuring the sincerity of certain information set out in the management report and documents and to shareholders.

Furthermore, we ensured the verification of the presentation of the consolidated financial statements with the SF European electronic information format for all these verifications we have new observation to make. And in summary, in respect to the first and second resolutions, we certify without reservation the accounts of Danone as presented to still -- in respect of the ordinary shareholders meeting.

We also issued a report on regulated party agreement that set out the terms and conditions, as said, agreements that we have been informed on our report is to be found on Pages 458, 459 of the universal registration document. We inform you that we have not being informed of any agreement authorized and implemented during the course of the past year to be submitted to the AGM report recalls the conventions and agreements whose execution continued 2025, but previously approved by your meeting. Lastly, in respect of the extraordinary general meeting. We've issued 2 reports covering the 15th and 16th resolution.

Resolution 15 pertains to the issuance of ordinary shares and securities for members of a corporate savings plan Resolution 16 concerns the issuance of ordinary shares and securities giving access to the share capital with removal of the preferential subscription right. These reports prompt no comments or particular observations or operations that fall within the framework of legal provisions.

In closing, I'd like to move to the presentation of certification of sustainability information on behalf of these ads. I'm pleased to present the conclusion. Our report is to be on Page 297 to 300 of the universal registration document. Our assignment is to express limited assurance on the state of sustainability of Dana and covers 4 areas. The first focus area is compliance of the analysis of process of dual materiality implemented by your company to determine the information to be published and also to respect the consultation obligation of the Social and Economic Committee.

Second, focus area compliance of information published with European sustainability standards and to comply with publication requirements of information as provided for the regulation of taxonomy for these 3 areas, we present in our report, the nature of the audits that we conducted the conclusions drawn there from and in support of the conclusions, the components that gave rise to a particular attention on that part. In this respect, the information public in respect of the dual materiality analysis mentioned in Section 42 and not referring to climate change mentioned in 431 of the sustainability report with a subject a particular attention on our part.

In summary, we have noted no errors, omissions or inconsistencies regarding the 3 areas previously described that we certify without reservation, Chairman, ladies and gentlemen, shareholders. I thank you for your kind attention.

Thank you to our statutory auditor. We're not going to open the Q&A session.

Before starting, let me inform you that we have received prior to this meeting, 12 written questions coming from 1 single shareholder. The answer of these questions are already available on our website, and you can, of course, consult them if you so wish. So we're now going to open the Q&A session. You been able to draft your questions in writing on cards made available to you. We're going to answer your questions, alternating between questions live and questions submitted writing.

Let's start with questions from the hall. Let's start over there with Panel #7.

Ladies and gentlemen, Chairman. Before I follow the figures you present, I'm a bit lost because you're talking about a net income. The earnings per share going from EUR 3.63 to EUR 3.80 that's an increase of about 5%. But when I go into the consolidated financial statements, net income of group interest per share goes from EUR 3.14 to EUR 2.82. That's a drop of 10%. So I explored a bit further. Are the constant current fact that it generates a bit of confusion. I hope the dividends you're going to be paying us are not in constant francs, but in current francs, I mean there's a difference of 15%.

So why present the figures like that? It's not very serious. Is it?

Thank you for your question. Well, first of all, you're right. We shared with you the current EPS EUR 3.80, which is indeed up for 86%. That's a very good result. It's true that it doesn't include exceptional effects the areas where there are exceptional effects in 2024, come back to -- in '24, we had exceptional profits. We sold companies. It created gains, but with just focused on -- particularly in 2025, we had exceptional one-off costs that were linked to 2 projects.

There was a transformation project in Europe and in Asia of depreciation of our brand Silk in the U.S. that was an impairment. I mean those are exceptional results, which are most noncash. And so we exclude that from the earnings per share. Now there's a direct link between the EPS and the dividend and the dividend that we're proposing today. Is 59% at current EPS, and that's been stable flat for years.

So we're going to take a second question from the whole from panel #12. Okay, let's move to 9, please. No questions either Okay. Okay. Well, there's actually no question, okay, what we'll do is take written questions? First question, does a plan to expand into cheeses onto 1 perhaps. Well, Danone does really plan to expand into cheese. We've got a very small cheese business in countries such Morocco, where we have a business and a presence with something that is about small fresh cheese and a triangle sold at a very affordable that's to be found everywhere in Morocco.

But we don't plan to expand into the cheese segment, Danone strategy, which is rooted in the legacy, the history as a group that was born in 1919 in Barcelona in the yogurt, but in yogurt that has been liberated by science. Our strategy is health through food that is underpinned by science. That's something we do extraordinarily well with yoga is something far more difficult to achieve with cheese.

So we remain our core business of cheese, proteins and many other things, but cheese and part of our core business. Thank you on to one, perhaps a second written question for your attention. But a question on artificial intelligence. Yes, there was a question on what's the impact of AI owners, how is the group using AI and what impact in terms of human relations. Now we've been working on this for a very long time and we've been working on for a very long time at very different levels, of course, on the use of AI.

And here, we're fundamentally doing 2 things: one, to equip all the Dunoon standless with knowledge of AL giving them a -- it's not just to tools, but to education, training on AI so as to create familiarity with the tool, with the enabler the way it works, and we do that very much across the board. And we use beginning to use AI, very intentionally where we believe it can make a disproportionate difference. So we use AI for industrial planning to go 40x faster and achieve better results.

We use it in certain fields of R&D where it opens up universes that are truly fascinating. We use it in certain areas of finance to consolidate things and to arrive at faster, more impact potful reasons on verticals. We use it, of course, in marketing on verticals where we think it can bring value. We use it in our plants. We've created an academy in Poland for the production supervisors to use AI in our plants.

We got extraordinary results.

And this is at the heart of what Nathalie was explaining. We want the entire company to be constantly reskilling and to be thinking far more long term. in order to manage the age pyramid and the knowledge pyramid, we know that in the West, we have aging societies and so there will be younger Danoners, new Danoners in the years to come, and jobs are changing as well. And so trying to find that fit between people and jobs and creating a learning society. That is something we're trying to do with our social partners because it requires engagement on the part of people who are being affected, but this can only be done in partnership with our social partners.

And I think that we have had a pioneering approach at Danone. And we're learning new things every day because things are changing so quickly. But certainly, it's a field for which we have a particular passion because after all, it's the future of society. Thank you very much, Antoine. We had 2 questions more for Jurgen about dividends.

A question on the payment of dividends in shares. And another 1 about the split between directors' remunerations and investment. So the first question was why not offer dividend payments in shares? Well, first of all, we're very pleased to be offering a dividend payout of EUR 2.25, which is a record number for our company, and it is paid in cash. It will be paid in 2 weeks. And it's paid out in cash because we have such strong levels of free cash flow in 2025, EUR 2.8 billion of free cash flow. And our net debt is at its lowest since 2016.

So the company is doing really well in terms of its balance sheet and cash flow, and that is why we are able to offer this cash dividend which leaves you with a choice. And of course, we would be very happy if you decided to reinvest that cash, that dividend in Danone shares. To answer the second question. The question that Laurent shared, which is -- what is our strategy when it comes to allocating capital between dividends and reinvesting in Danone.

As you saw in 2025 and in previous years, we reinvested in the company on the brands, on our plants and our various commercial initiatives. But we also made acquisitions, as you saw with Huel or Kate farms in 2025. And thanks to these strong results and our cash flow position. We are able to allocate capital across all dimensions. So lower the net debt, invest in the future and pay out attractive dividends. Perhaps we could give the floor to Gilles as well who may also be able to respond as indeed this is a part of the responsibility of the Board of Directors.

Did you have anything to add on the -- this allocation of capital?

Well, I think that a company like Danone, like all listed companies are very attentive to pay out that is the share that is paid out as dividends and what remains in the company. So to try not to have a level of dividends that actually weighs too heavily on the balance sheet. and which has an impact on investment, whether it's organic or external. And I think that we have found the right balance, and we believe to continue along these lines. we intend to continue along these lines?

We have a question on whether we might create an advisory committee of individual shareholders. The answer is that at this stage, we have not quite taken a decision. I know that some companies Liquide have done that, but they have quite a large number of shareholders. We meet with the Investor Relations team regularly. We have a letter sent out twice a year. A lot of information is available. The universal registration document, more than 500 pages. So plenty of information is available, and we have -- there's no decision on this particular front. Thank you. #10, please, Panel 10.

Our company consumes a lot of plastic. Part of it is recyclable. Part of it is recycled for bottles, we know what happens. But for the yogurt containers that plastic is waste. And we know that a great deal of oil and therefore, plastic comes from the Middle East. And so how sensitive are we to the present crisis if it were to continue?

Well, indeed, we use plastic not much if we look at it at a global scale. And we have considerably reduced our consumption of virgin plastic, 17% in the last few years. The first thing we did in a highly disciplined way, and Natalie mentioned this as well, is we sought to ensure that all our packaging would be designed to be recyclable. And we are pioneers on that front more than 85% of all our packaging is designed for recycling. Nearly half of our water volumes are in reusable and in fact, reused packaging. So we try to make sure that we design for recyclability.

The second point is that we try to encourage recycling. Some systems work really well. In Norway, for example, recycling rates are nearly 100%. I think they're 97% or 98%. It's highly effective and they collect all the containers, they have return deposit systems A similar system is being set up in Poland and in other parts of Europe, and we believe very strongly in the return deposit system because if the packaging has value, then it will be reintegrated into the value chain, and that is a circular approach.

We are among a few companies that are highly committed to this with Ellen McArthur and circularity. We constantly innovate on packaging as well. We reduce the amount of material used. We try to make packaging lighter. And we also use different -- radically different types of packaging. Of course, we want to achieve the same level of quality for the consumer, the same level of safety, food safety and affordability because that is also important to us. But we are indeed pioneering on that front. And to answer your question about the Middle East, flexible packaging is more exposed to this risk than we are. But certainly, this is something we are following with a great deal of attention.

Thank you. Yes, #11. .

I wanted to talk about water. We know competitors based challenges, water contamination forever chemicals. At the same time, water reserves are dwindling. The water table has been depleted. Glaciers are melting., There's less snow. So -- are you feeling a lack of water? Do you have to dig deeper for water? Is demand increasing -- and are you able to meet it.

I'll answer that question along with 1 written question that we received on water from an economic and an ecological standpoint. Now First of all, water as a resource is a priority for us, protecting it, protecting catchment areas in order to ensure that we protected the land on which rainwater falls. This is what we've done in Evian and the local areas where we have worked as well on wetlands, mechanizes to avoid water contamination in Evian when it falls on the plateau, it comes down the other side 15 years down the road.

So we're doing it here, we're also doing it in Indonesia in partnership with local communities, local authorities, but also Rama the UN convention on wetlands with whom we have been partnering for a long time to preserve water Second, there are very strict water conservation quotas. The sources that we use are very deep, highly regulated and with the local authorities, we're very clear on how much we can actually take and we are below that ceiling, far below it. We also adapt based on the local circumstances. So for example, we sometimes take less water and do not meet demand because we cannot afford to have that source become too depleted.

So this is to answer the written question. We have a very simple water strategy in countries where water is not drinkable. So producing high-quality mineral drinking water in Mexico, Indonesia, for example. These are premium waters of a very high quality in France and in developed countries. So in France, Evian is like the champagne of water, its benefits have been recognized for 200 years. Evian is a symbol of France, much like champagne. It is drunk in New York and Tokyo and Alula and all over the world. So our strategy is focusing, first of all, on access to water, whether in countries where there's no drinking water; and second, premium drinking waters in developed countries.

So it is a huge focus for us. And what I do today in Evian will have an impact 15 years down the road. So we have a very long-term approach as well. Thank you. Speaking of Evian, there's another question about Avion. And about the tourist complex in Avion, Why does Danone keep that complex given that it's probably not very profitable? I'll answer that question because I'm Chairman of the Avion Resort company. Now these results do not have much impact on the bottom line because it's quite a small company, the resort but you must understand that this segment is a legacy that we're very proud of because up until 1960 much of the revenue came from the tourism segment and not from the Water segment. That changed with mass retail, logistics and so on, of course. Third, to understand what we do on the water segment and the specificity of Danone is that as a mineral water provider, we need to be rooted in local communities.

And so we believe that being present there and managing the hotels, the casino, the golf course in Evian that strengthens our routes in the community. And actually, they have asked that we continue to operate the resort. Yes. And I would add that actually, it shines a light on your company when the G7 meeting takes place at Danone that has a positive impact on the company. For example, when the Berlin fill Harmonic comes to play in a concert hall build for Rostropovich, that also has positive repercussions.

A golf tournament that presents the same award to a man as it does to a woman. That too has a positive repercussions. We also host a French German meeting there, and all of that really puts Danone in a very positive light. We also have the 2 of the France coming to Avion soon. But it's also a family business. And a business is also a journey that people go on. And in order for that journey to occur, you need different stops and places along the way. And it is there that we actually train our management team every year.

It is like a training center for Danone. And we don't go there on holiday. It's hard work that is done when our management team participates in these trainings. Now we have a question about risk analysis. And perhaps on Tan and Gilles would like to answer the question on the way that we manage risk.

Well, the risk analysis is explained in great detail in the annual report. It's the formal part of the risk analysis under the authority of the Board. She will probably mention that. But the question that we've been asked was risk versus opportunity. So just briefly, perhaps, I could explain something that both Jorgen and myself already mentioned. The world has become a much more volatile place. It's more complicated place and everything is changing very fast. Since COVID, there have been a whole succession of crises, demiological crisis and wars more in number than the previous 30 years. So a volatile world has a lot at stake in terms of technology, geopolitical issues and major challenges.

And obviously, all of that spells risk. We try and divide this risk up into different categories and consider those risks. When you're a company like us that has a very clear mission statement that has gathered in strength and power, we're in a better position. And this is what we're trying to do with your company. There are challenges we need to adapt. We need to be agile, but there are also numerous opportunities. We can outstrip competitors. We can buy up other companies that are not doing as well as ours. and we can also be an island of stability for the shareholders and for our employees in a world that is very volatile.

I think Antoine has said it all. I don't want to be redundant, but the way in which we manage risk is to map them and we do this in a very pragmatic approach. And we have 1 person who's in charge of each risk and follows through that management of that risk. It's very transparent process as well. The risk assessment is done as an objective manner as possible, the more risk, if you will. And then we take into account the various factors that might impact that. And then we have the residual risk. And it's also very agile as a process. If you look at the universal registration document, you will see that risks change.

The world is changing very fast, and it's hard to predict what's going to happen. A lot of the risks in -- our risk map currently weren't there 2 or 3 years ago. It's a system that has really worked out very well. We are able to identify risks that might have an impact. And a risk that you control is actually an opportunity. We have a question from the room, #10.

Hello. Thank you. I'd like to thank all of the employees who work for Danone, who are very committed and hard working. I've got a question. It's a kind of pain point. Danone in China in your presentation there's strong growth there for the company. That's great. It means that Chinese consumers like the quality of our brands' products. However, there have been health issues for Danone and to other companies as well. And 1 supplier has encountered legal issues, a Chinese supplier who seems to be blamed for the health risk.

So China in the past, has had many health problems. And given all of that, I find it hard to understand that you rely on Chinese suppliers for infant milk formulas. Given that background, I mean, we've got research and development. We've got the buy plant and health has taken very seriously there. I'm sure that we can find safe supplies elsewhere. We don't have to go to China for them. Well, 2 points regarding the facts. It was 1 of our suppliers that was accused and the supplier we bought from was actually in the Netherlands. and then originally, and then the supplier sourced elsewhere, but the source originally was the Netherlands. Obviously, we stepped up our monitoring and inspection and we continue to do so.

Our #1 priority is quality and safety. And we don't make any shortcuts regarding that.

Thank you, Antoinne, we have a written question here. how do you care for your Danoners in terms of mental health. It's a complex issue, obviously. But the answer is fairly straightforward. We've got a number of concrete initiatives. And in 2023, we set up the B well program which has a lot of projects relating to mental health. We try to work on the work life balance, for instance, and also how to prevent stress. We also have psychologists who step in when times of crisis, if there are major problems. So mental health is of concern to us and is taken on board. And there's a second part to the question as well, which was -- you are a mission-led company, you say, is this not a form of social washing or green washing, That's Second part of the question.

I trust that Natalie lies intervention and the statement made by Pascal Lamy have convinced you that, that is far from the case.

So you want to have EUR 3 billion of free cash flow and an ROIC in double digits. So what is your discipline regarding capital allocation. Why is it that you've increased the dividends in that case? Is it to help, to be nice to the shareholders?

You're right. Number one, our dividend-related policy is related to actual earnings per share and the dividend pay out. So we've tried to keep those more or less in line. Every day, we look very close capital allocation. It's something we take very seriously because what we want to do is to generate profit and get good results. And that's why we're constantly readjusting capital allocation and thinking about investing in organic growth, and outside growth, reducing net debt. These are trade-offs all paying out higher dividends.

And we're fortunate enough to be in a situation that we can combine all of that at once, Thanks to the strong cash flow of EUR 2.8 billion at the moment. I would like to remind you that 4 years ago, it was only EUR 2 billion. So we're doing well. We're in a strong position. Thank you.

And a final question, perhaps regarding the situation in the beef sector, which is worrying. And we're asked also whether what we call local milk actually travels over long distances. Natalie has explained this very carefully, I think. We are very much involved in farming. and in supporting farmers and particularly dairy farmers because if there are no farmers in 5 years' time, if they don't have access to good pass, you land if there's not good water for their cows if nobody takes over farm holdings, there won't be any milk and there won't be any danonproducts anymore.

So it's a strategic issue for us. And we've been working on this for many, many years now. in a number of ways in enhancing visibility for farmers and guaranteeing a long-term contract with them with good prices. We've increased our milk collection in France. We also help young farmers who are setting up their business by giving them low interest loans because dairy farming requires a lot of capital. We also help and providing people to replace them when they need to leave the holding. And we're also helping them to get more involved in a regenerative style of farming.

With cows on past your land in a field and the idea of a rotation of the past your land, which is regenerative, we work on this constantly, and we're doing this in France. You asked about local milk, local means 60 to 70 kilometers from factories. We are really local, but we also do this in other countries like Morocco or Sea. We have a long-term partnership approach with the farmers so that they have future prospects that they have a future so that they can enhance their farming practice to reduce the methane and carbon emissions, but also to generate more profits.

Thank you very much, Antoine. I think this brings us to the end of the questions. I note a shareholders' concern about everything going online and becoming electronic regarding the invitation to the general meeting. It's an option. It's not compulsory. And many companies have offered this as an alternative. But if you don't choose that, you will still get everything in hard copy. Let us move on then to the voting.

I'd like to thank the hostess and the host for their support. Let me give you the final quorum. We've been given this figure by the centralized bank present and represented shareholders or those who voted by correspondence or Internet hold together 467,826,567 shares. That's a percentage of 73.8% of shares with voting rights. That's an absolute record in Danone. We are well ahead of the legal quorum, and this means that decisions taken by the Annual General Meeting are valid decisions.

I think that you're all used to the way we work. Let me explain about the voting devices that you now have available to you. they indicate the number of votes you have and you can vote on each of the resolutions. You can vote for, you can vote against or you can abstain. The green vote means for, the red means against and the yellow vote or if you don't vote at all, means you've abstained. For each resolution, there will be a summary posted on the screen. You do have the full text of each resolution in the documents that you could consult on the Internet side, but you did get the list was available as you came into the room.

When I say the -- you can vote now, you'll have 10 seconds to vote,; to press the right button. And when you vote, you can see your choice on the device. You can't change it. The results will be posted just a few seconds after each of the votes. And all of this is subject to the supervision of notary Lilleey. I will now read out the resolutions in an abbreviated form.

So the first resolution is the approval of the company accounts for the financial year ending 31st December 2025 vote now.

[Voting]

No more voting. 99.98% in favor. Thank you. Resolution #2, approval of the consolidated financial statements for the same financial year. Vote now.

[Voting]

No more voting. 99.99% in favor. It's adopted. The third resolution is the allocation of the profit for the financial year 2025. and the setting of the dividend at EUR 2.25 per share. The dividend will be paid out fully in cash. and attached from the share as of the 4th of May and will be made available for payment as of the 6th of May. You can vote now.

[Voting]

No more voting. 99.91% in favor. We now come to the fourth resolution, which is the renewal of Gilles Schnepp term of office as Director.pursuant to Article 15 to Paragraph 2 of the Articles of Association. You can vote now.

[Voting]

Voting ended in favor, 98.99%. Congratulations to Gilles. This brings us to the fifth resolution renewal at Valerie Shaul flocks term of office as Director. She is here with us in the room today. Vote now..

[Voting]

Voting ended. Result is 99.16%. Congratulations to Vanity and then we have the third resolution relating to the term of office of the Director. That is the renewal of Sanjiv Meta's term of office, vote now, and this is resolution 6.

[Voting]

Voting ended 99.08%. Congratulations to Sanjiv. He is also in the room with us today. And then we have the seventh resolution, approval of the innovation relating to the remuneration of corporate officers. referred to in Paragraph 1 of Article L22109 of the French Commercial Code for the financial year 2025. Vote now.

[Voting]

Thank you. Voting ended in favor, 93.19%. Eighth resolution. Approval of the components of the remuneration paid during or awarded in respect of the financial year ending 31st of December 2025 to Antoine de Santa Price, Chief Executive Officer of the company. Vote now.

[Voting]

Voting ended. In favor, 89.73%. Ninth resolution, approval of the components of the remuneration paid during or awarded in respect to the financial year ending 31st December 2025 to Gil Schnepp, Chairman of the Board of Directors, Vote now.

[Voting]

Voting ended. In favor, 99.85%, and tenth resolution approval of the remuneration policy for executive directors for the financial year 2026, the current year. Vote now.

[Voting]

Thank you for your vote. Voting has now ended. In favor, 91.26%. Resolution 11, still relating to remuneration. This is the remuneration policy for the Chairman of the Board of Directors for the 2026 financial year, Vote now.

[Voting]

Voting ended .99.8% in favor. Resolution 12, approval of the remuneration policy for directors for the financial year 2026. Vote now.

[Voting]

Voting ended. In favor, 99.66%. Resolution 13, authorization to be granted to the Board of Directors to purchase hold or transfer shares in the company. Vote now.

[Voting]

Voting ended. In favor 97.51%. And this brings us to resolution 14, ratification of the transfer of the registered office, which has moved from the ninth district to elsewhere in the Ninth District, vote now.

[Voting]

Voting closed. We have, in favor, 99.99%, that's almost unanimous. And then the 15th resolution is delegation of authority to the Board of Directors to issue ordinary shares and securities reserve for employees participating in the company's savings plan and/or to carry out reserved share placements without shareholders preemptive subscription rights.. Vote.

[Voting]

No more voting. In favor, 97.78%. Resolution 16 also delegation of authority to the Board, 2 is ordinary shares and securities giving access to the share capital with the removal of preempt and subscription rights reserved for categories of beneficiaries comprising employees working within foreign companies of Danone or in situations of international mobility as part of employee share ownership schemes. The vote is open.

[Voting]

No more voting. Resolution approved 97.77%, 17th powers over 34 maladies. Vote is open.

[Voting]

No more voting. In favor, 99.99%. That's the last resolution before pending the floor back to Gil Schnepp for the conclusion. Don't forget to hand in your voting devices as you leave and you will receive a gift in exchange. Well, the votes are now completed. All the resolutions tabled by your Board or accepted on behalf of the Board and the Danone teams, I'd like to thank you once again for your attendance and your trust and confidence. We look forward to seeing you next year, April 29, 2027, at Misonifor for a new AGM, there'd be no further business, the meeting is adjourned.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good day, and thank you for standing by. Welcome to Danone's First Quarter 2026 Sales Call. [Operator Instructions] 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 Rodie, Danone's Head of Investor Relations. Please go ahead.

Good morning, everyone. Mathilde Rodie speaking, Head of Investor Relations. Thank you for being with us this morning for Danone's 2026 Q1 sales call. I'm here with our CFO, Juergen 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 Juergen.

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 as this is a busy day for all of you. Let's go to Slide #2. As you would 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 company.

Our start to the year was also impacted by the infant milk recalls that affected the industry in the EMEA zone. This 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 2 important transactions during the first quarter.

I suggest we move to the next page, Page #3, so I can give you more color on it. Both transactions that we signed during the quarter will further strengthen our unique health-driven portfolio and contribute to our industry-leading value creation ambition. First, the acquisition of the Huel Company. Huel is the leader in complete 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. It is offering us new capabilities, especially in direct-to-consumer channel management, combined with state-of-the-art digital marketing skills. The Huel 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, Arcor, 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 accretive over time. Both transactions, which we expect to close in the second semester are fully aligned with our Renew Danone agenda and our capital allocation priorities and discipline.

Let me now move on to Slide #4. 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, Waters that grew plus 2.3%. The Waters 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 #5 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 Skyr 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 Alpro brand 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 adult 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&L. 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 category, 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 U.S., 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, a formula which has proven successful all these last years.

With that said, let's turn to the sales bridge on Slide #6. Reported sales reached EUR 6.7 billion in the first quarter. In addition to the plus 2.7% like-for-like growth previously discussed, we experienced adverse currency effects of minus 5.6%, resulting 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 #7. And let me pause briefly here because this is an important point. You will remember that as of this year, we have moved from 5 to 3 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 CNAO.

Let me now start the zone review with EMEA on the next slide on Slide #8. EMEA delivered plus 0.6% like-for-like growth in Q1, led by 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 functional-led innovations across dairy and plant-based. In particular, we saw good growth in our winning platforms, including in high protein, Skyr 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 that 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 #9. 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 yogurts 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 SToK brands continued to deliver strong double-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 still 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 #10. APAC delivered plus 6% like-for-like growth, entirely driven by volume mix within APAC, CNAO delivered plus 10.3% growth like-for-like. 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 Essensis within the IMF category. 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 2 main brands in the region, solid growth for Mizone 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 #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 focused 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 midterm 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.

Thank you, Juergen. So we'll start the Q&A session with a question from Guillaume Delmas, UBS.

First, quick housekeeping. Could you quantify the impact from the IMF recall on your Q1 numbers? At the time of the full year results, you were talking about 50 to 100 basis points. And then what kind of impact are you assuming for Q2? And then my 2 questions. The first one on the commodity cost outlook. And particularly on this, to what extent this outlook has changed in recent weeks? And as a result, what kind of COGS inflation would you be baking in, in your 2026 operating profit guidance? And still on input cost inflation, I mean, we've heard from a large French dairy company, they were already thinking about pricing actions. Wondering if it's something you're also contemplating or as you were alluding to on the call, Juergen, for now, you think your productivity savings can fully offset this additional commodity headwinds?

And then second question, short one, just on North America. Back in February, you sounded confident about a significant step-up in like-for-like sales growth from Q2. We've seen some early positive signs in Q1. So I would assume this is still the case. And if you can help us a little bit unpack what will be the key drivers behind that, if it's just the creamers basis of comparison or you would expect a more broad-based acceleration?

Thank you Guillaume, many questions. So let me go through that. First, on the IMF impact, the impact we saw in Q1 is exactly in line with what we discussed a couple of weeks ago. So nothing more to say here. It's been really an exceptional situation as we faced in a way, the combined effect of a larger industry recall together with the Middle East supply chain disruption. Europe supply chain situation is back to normal in most of the countries. Middle East, as you can imagine, is a bit more difficult because shipping a product into the Middle East is a bit more tough, but we are making also good progress there. So we expect a progressive normalization of the IMF business performance during the course of the year.

When it comes to the commodity outlook, I mean, the situation is obviously extremely volatile. You have seen that over the last weeks, impacting spot prices for transportation and packaging, obviously, immediately, but also for some other materials, including fertilizers. We have, as you know, hedging protection in place, which is moderating short term the impact on our P&L. The way we are addressing it in this very volatile context is that we have been accelerating, first and foremost, ongoing productivity efforts to mitigate the immediate cost impacts as much as possible. And for the rest, we are pretty much monitoring the situation to decide if and where we may need to take other mitigation actions, but there it's really too early to say. So we are focusing on really monitoring the situation at least for the next days and weeks to decide upon to do more or less.

For North America, I would say we are pleased with what we saw in the -- we are pleased with what we saw in Q1. We saw a step-up versus the Q4, and the step-up came through yogurt and came through creamers because of more capacity, as you mentioned, and because of the lapping in creamers in March. So obviously, we'll not give a guidance for a quarter, for a region, for subsegment. But our ambition is to further improve the situation progressively as we go in the year as you will have more capacity coming online and as we are activating more and more our brands across the portfolio in North America.

Next question from Jon Cox, Kepler.

Just -- sorry, just to come back to the formula. I wonder if you could just be a bit more granular in terms of what you think the impact was. If you just say take flat the Specialized Nutrition in Europe and do the minus 4.3%, that's about 65 basis points. I'm just wondering any more granularity on it? I understand the category is slowing down because of everything that's happened, what your thoughts are on the category in Europe as we go through the year. And then just knock-on impact elsewhere, it looks like there's a bit of a slowdown elsewhere, but nothing really material. I wonder if you can just confirm that about formula.

Yes. Jon, look, on the quantification, there's really not much more to say. what you see in Q1 is really in line with what we said despite the fact that the Middle East conflict was not really on our radar during the full year discussions. When it comes to Europe, as I said, the supply chain situation is pretty much back to normal. What we are seeing is, and there's no surprise that the category during those calls has been a bit softer. And this is why we are investing into rebuilding the trust with parents and key opinion leaders, which contributes to the recovery. Market share situation across Europe is quite fluid. We are up in some countries, down in some others, very much depending on local competitive situation since the recall.

Sometimes market share rating is a bit difficult because what happened in that situation is that people went instead to supermarkets, more to pharmacies. So there's been a big shift in shopping behaviors during the crisis. That is now rebouncing back. Net-net, looking at it, I believe that we'll be able to regain a strong competitive situation and that also the category will progressively recover. So this is why I believe IMF business for us over the year will progressively to go back to where it used to be. Not a lot more to say. Middle East will stay a little bit tense for the coming weeks, depending on how the conflict goes.

And into Asia, like China and stuff?

Yes. China, look, China was not affected by the recall. We had -- as you can see from the numbers, we had a solid sell-in in Q1. However, we are constantly monitoring social media, which is true for China and which is true for the world to understand any possible sentiment change. It's also true that in many countries, authorities have increased since the recall, the frequency and depth of quality controls which is true for China here, especially for imported products. Our teams on the ground are working hard to make sure that we address these requirements while avoiding any supply chain disruptions that you know overall for China, the category is normalizing. There is no new news. So overall, not a lot of news to say.

So the next question is from David Roux, Morgan Stanley.

Two questions from my side. Firstly, just on U.S. yogurt. Could you give us an update on where you stand with your incremental yogurt capacity in the U.S.? Is this now fully commissioned? And how long do we think this should take until it translates to sort of an improvement of the yogurt volumes there? And then my second one is on the Huel deal. Can you tell us what the right level of interest costs for Danone will be now post consolidation of this? And then what is the earnings accretion from this deal?

Look, David, I would say in the U.S., a good improvement in Q1 as we were traveling through the quarter. Yogurt, we started to benefit from capacity coming online. But as we discussed at several occasions, this is not a one-shot capacity increase. This is several production lines coming online as we travel through the year and especially as we travel through the first 6 months of the year. And so as this capacity comes online, we have the ability to reactivate not only high protein, which continues to grow strongly, but also to activate our other brands in the U.S. So that has started in Q1, but it really started. And so it will be progressive as we go through the next 2 quarters in particular. But I would say we are rather happy with that. Creamers as I said we were lapping in the month of March, the supply chain issues of last year. We could see that in the, let's say, internal reading, but also in the external reading in market shares, which gives us also confidence for the full year.

On Huel, look, first, very exciting, fantastic company, fantastic complementary product groups. And on top of the products they are selling, I think what is unique in their model is really the direct-to-consumer channel management combined with quite state-of-the-art digital marketing capabilities. So this is really exciting. It increases our exposure to fast-growing markets in -- both in Europe and in the U.S. And so it will enhance our growth profile in both regions. When it comes to interest costs related to the deal, you saw actually what we have been issuing in bonds over the last weeks, which gives you a sense of the interest costs linked to this operation. It will not be EPS accretive in year 1, as you can imagine, but it will be EPS accretive very fast because it's a fast-growing business at very nice gross margins. And we make sure that we are pushing this opportunity to the max, leveraging the totality of the product portfolio as they have a variety of product formats. So really excited about this of welcoming you to the Danone family.

Great. Juergen, can I just follow up on your last point on Huel. So is it fair to assume that some of the expensive debt that Huel has will be refinanced with some of the paper you've issued now?

Well you saw we issued bonds over the last weeks. So in that sense, the -- I mean, from a financing standpoint, things have been in the pocket.

The next question from Warren Ackerman, Barclays.

Warren here at Barclays. I've got one small housekeeping and then 2 questions. The housekeeping is in China, Juergen, are you able to kind of clarify whether you're seeing any issues on the border product coming into China on extended cereulide testing as we've heard from [indiscernible] just wondering whether that's something to think about as the housekeeping. And then my 2 questions are, can you maybe Juergen kind of outline the kind of growth that you're seeing in your kind of 3 sort of growth platforms, which are high protein, out-of-home and medical, just to give us an idea in terms of how they're tracking? That's the first one.

And then secondly, obviously a lot of focus on Asia. But can you talk a little bit about some of the kind of other EMs as well, particularly thinking kind of Latin America trends and perhaps some of the kind of Southeast Asia and India regions as well, just given the conflict?

Yes, first, on China and border, we see what everybody is seeing, which is that the authorities across the globe are strengthening instantly the, let's say, quality control. This is also true for imported IMF products into China that the teams on the ground are mobilized and are managing it to avoid any kind of supply chain disruption. So not a lot to report here. When it comes to our winning platforms, high protein is the #1 growth driver of the company has been and is, which is exciting. And it's -- I mean, in terms of scale, it continues to -- it's raising its contribution quarter after quarter as this is not anymore a European phenomenon or U.S. phenomenon. I mean, high protein is now a reality everywhere around the world. I've been talking about Japan. I could talk about Latin America, I could talk about Australia.

And so we are everywhere prioritizing investments into those platforms, while we are also investing into elements which are more essential protein delivery like Skyr. I want here to mention the Kefir also innovation we have been launching, which is not really on high protein, it's more on gut health. It has been extremely well welcomed in the European markets, which we initially launched, and we are rolling that out as fast as possible, but you will see that appearing also in other markets around the world. So we are very, very excited about it. Out-of-home continues to grow faster than sales in retail channels. And as we discussed at several instances, this is also due to the fact that all our innovations we are launching are eligible for out-of-home consumption, a lot of drinkable format.

This is also where Huel is extremely interesting because it comes with -- again, with ambient product format. So it's just strengthening on this point. And when it comes to medical; medical, I mean, exciting. I mean, if there's one thing which is really exciting us, it's medical across the board in the U.S. because Kate Farms integration goes very well. And in China, because we are making very good progress, not only in our, I would say, legacy business, which is tube, but also in oral feeding, which is pretty new to China as we've been discussing.

Last point on more emerging markets. Latin America doing actually pretty well, I need to say, seeing good dynamics, Brazil, Mexico in particular. Argentina, we're excited about the joint venture. So we will have a platform at scale. It will be a billionaire platform, which, yes, will not be any more consolidated top line, but it should be EPS accretive for the company over time. Southeast Asia, actually, very strong underlying dynamics, has not been contributing to the same extent in Q1 as over the last year because we had some phasing effects there. But here, we -- you know that this is one of the big growth opportunities of the company.

Next question from Jean-Olivier Nicolai, Goldman Sachs.

Just 2 questions first and then just a follow-up. Could you please comment on the consumer demand in Europe, what you're seeing? I know it's still early days, but do you expect on your experience, any type of down trading in EDP? Secondly, just to clarify on the previous comment you made on the IMF recall. I think you said by within the year will be sorted. Could you perhaps give us a little bit of comment what kind of impact you would expect for Q2? And then lastly, on North America, following the purchase of Kate Farms, which allows you to enter that medical nutrition opportunity, are you currently satisfied with the access you have to the hospital channel? Or would you actually need more scale to capture fully this opportunity there?

Consumer demand in Europe, I mean no surprise. overall consumer sentiment is quite muted. Having said that, and we discussed that over the last quarters, it's very polarized dynamics in food and beverages. The healthy food is on trend and consumers are willing to pay for value. We need -- you need to offer value, but then consumers are willing to buy. And so this is what we are seeing. High protein, Kefir, immunity, everything which we are proposing, which is functional, which is differentiated, which is premium, by the way, is working well for us. And so we are leveraging the science we have in our products to deliver on -- to make these products attractive to the consumer even at a more premium price. Same is for Danette, by the way, our premium dessert because people want to have pleasure during the day.

So it's not only about functional benefits on health, but also feeling good, especially in this difficult time. So less worried about down trading from a product standpoint. Obviously, we pay a lot of attention to be available in the right channels at the right price points. And so format management and channel management, including on discounters, but also on away from home is a very, very important part of our strategy moving forward.

IMF recall, look, please do not expect me to give a guidance for a subregion and a subcategory. We expect a progressive improvement, as said, supply chain situation in Europe is pretty much back to normal. Focus is really recovering the credibility and the trust of the category. And lastly, on North America, Kate Farms, very exciting for the reason you mentioned, which is the first time in the history of Danone, we have access to the health care system and the hospital system in the U.S. This is a fantastic platform.

And what we are doing as we speak is to combine the success of this platform with the science we are bringing from our global specialized nutrition hub -- and so we -- the early signs we have are very, very promising. We see good growth since the acquisition, and we are just starting to materialize the synergies we are seeing. You know that we -- before the acquisition of Kate Farms, we had already 2 smaller acquisitions of companies also in the same field in the U.S. called real Food brands and functional formularies. So now we are unleashing the combined power of those assets. So quite exciting.

Next question from Nicolas Ceron, Bank of America.

Two quick questions for me. First one, maybe you could remind us if you ship your baby food product by plane or by boat to China. And the second one, Juergen, do you have any strong view on what might be the changes in regulation in the U.S. baby food market following the Operation SToK speed that's going on?

Look, overall, you can imagine that our supply chain is very much a supply chain, which is using ship transportation or boat transportation, especially between Europe and China. But this is not only between Europe and China, and that's true for the -- for our overall operations in very particular situation. We may ship something by plane. But you can imagine that from a financial standpoint, that's a bit less interesting. We are having, I would say, good control on our supply chain because we are used to a bit of erratic behavior in those supply chains. So I think that's pretty much under control and nothing particular to report. When it comes to the U.S. and the infant milk market in the U.S., you know that we are not really playing in that market. So there's not a lot to say. So we are not following that very, very closely. I'm afraid to tell you.

And next and last question from Celine Pannuti, JPMorgan.

So my first question is coming back on the short-term impact. So Indonesia floating and overall, you see the momentum in South Asia is good, but do you expect Water to see a step-up in acceleration in Q2? And then Middle East, you have this constraint in shipping. Are you thinking that this is going to linger into the quarter? And how big is that? Because you said Middle East is 2 to 3 impact and is more for Specialized Nutrition. Just trying to understand a bit those elements. I see that consensus is at 4% on Bloomberg for Q2. So do you think that is in line with what you expect to be a progressive acceleration in [indiscernible]? Do you think that is a good reflection? Are you comfortable with that?

My second question is on margin. Given the weak start to the year, Specialized Nutrition impact, are we expecting any margin in the first half of the year? And in H2, you will be facing higher COGS inflation. Do you think we should start to think about that as we model for potential pressure in the second half of the year?

So let me go one by one through your questions. First on Water, I mean, Indonesia is a big business for us. It was a tough quarter because it has been raining a lot and a lot of flooding, which was very public, which when you have a business model like we have it going through all the hundreds and thousands of islands of Indonesia has been quite disruptive. But -- so that should be back to -- this is back to normal as we speak. And so we will see a better performance moving forward, which obviously will help the overall Waters performance. Middle East, I would say people are -- our people are doing everything possible to find workarounds to deliver our products in the region is going better and better. And of course, we are also hoping that the overall situation will improve. But here, I think the situation is better managed from day-to-day.

It happens that there is a lot of imported products going into that region. But again, workarounds are working better and better. Don't ask me to give you a precise Q2 outlook or to comment on what today's consensus is. I think what the takeaway should be is probably that we are confirming today with confidence our guidance. And I think that's an important statement. And this is true for top line and which means implicit an acceleration versus the Q1. And this is true for the bottom line. And we know that in our business model in Danone, the bottom line, the margin is a direct consequence of the top line because our business model is based on quality growth. For the margin, obviously, 2 things to keep in mind. One is the softer start to the year with Specialized Nutrition. And the other one, as you say, we don't know really what the inflationary pressure will do for the full year. Too early to say.

For the moment, we have hedging in place, as I mentioned, moderating the short-term impact, and we are accelerating as much as we can productivity. For the rest, I mean, you see the oil price one day at $80 and next day at $120, it's extremely difficult to make a forecast for that. So I think what will help us moving forward is the agility we have learned over the last years to react to an erratic environment and to launch mitigation actions. Our focus remains quality growth. And here, we are extremely pleased to see that the underlying dynamics of our business remains very strong because this is the best way to create value for the company for the years to come.

Thank you. And we have one very last question that came at the last minute from Tom Sykes, Deutsche Bank.

Just quickly coming back on the China Nutrition business overall. Sorry, I missed it earlier on the call. But could you give a view on what the growth rate of the infant formula is versus the adult nutrition in China, please? And what do you see as happening to your market share in international formula, please, in China? And perhaps what's happening to pricing like-for-like versus mix impacts on growth, please?

Yes. So look, China and Specialized Nutrition, solid -- pretty solid print in Q1. Very exciting growth rates in a number of areas in Medical Nutrition. Actually, on pediatrics, very strong, especially on the allergy formula. We are making -- on the adult side, a pretty good progress on launching or I would say, solidifying the presence in oral medical nutrition. This is something which hardly existed some time ago, and we believe that has a huge potential. So that's very exciting. So growing very fast on that side. On the other side, also IMF, with a pretty solid print in Q1. where we are benefiting from 2 things, where we are benefiting from, I would say, the overall very strong markets and market share position we have gained over the last quarters. And you have seen that our market shares have been evolving strongly.

And secondly, the strength of the Essensis brand or sub-brand, which has helped us to have a very strong print, by the way, in both Chinese label and international label. Pricing in that category, there's nothing really to report actually. Pricing for us has not been really a driver. I mean, not in Q1, not for the last quarters. In the end, all the numbers you see in pricing in IMF -- all the numbers you see in net sales in IMF over the last quarters are equal to volume mix contribution. So no particular comment on pricing.

Thank you, Tom. So with that, we end the Q&A. Thank you, everyone.

Thank you, everyone, for listening, for connecting and talk to you very soon. Have a great day. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Thank you for standing by. Welcome to the Danone 2025 Annual Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Our speakers today will be Antoine de Saint-Affrique CEO; and Juergen Esser, CFO.

I would now like to hand the conference over to your speaker today, Mathilde Rodie, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Mathilde Rodie speaking, Head of Investor Relations. Thank you for being with us this morning for Danone's Full Year 2025 Results Call. I'm here with our CEO, Antoine de Saint-Affrique; and our CFO, Juergen 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 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 Juergen and me today for our full year results '25.

Moving to Slide 3. Before we focus on what is a very good set of results, I thought it was important to talk about the recent development 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 rigorous 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 health care professionals, providing clear information and helping to restore trust as their trust makes all the difference.

Let me now get into the results on Slide 4. We are pleased to share with you another set of strong and good quality results. The numbers you see on this chart are more than figures on the page. They reflect the hard work, the commitment, the passion of the Danoners. 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% like-for-like 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 behind 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 '25, reaching EUR 3.80, close to all-time high and a robust financial position with EUR 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 believe it is essential to the long-term resilience of our business. This year, we were again recognized on the CDP Triple A list, reflecting our leadership in transparency and performance on climate, water stewardship and forest preservation. We also achieved worldwide B Corp certification.

These milestones marks the culmination of a decade-long journey and highlights our long-standing commitment to combining strong business performance with positive social and environmental impact. Taken together, the '25 performance you can see on this chart reflects the strength 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 5. 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.

Our 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, are 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 see 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 despite very strong evidence linking low fiber intake to a high risk of major noncommunicable 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 over time, recover more effectively, especially after surgery and return home sooner. Faster recovery not only improves patients' life, it also delivers clear health economic benefits for the health care 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 3.5 stars or more under the Health Star Rating system, we deliver every day nutrition that is high in protein, rich in fiber and grounded in biotics alongside medical nutrition that makes a meaningful difference in people's lives. And it's nutrition that tastes good.

These long-lasting trends underpinning our performance, as we can see on Slide 6. Our 4.5% 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 benefit continues to drive penetration across geographies, supported by the ongoing rollouts of innovations. In the U.S., Oikos PRO exceeded EUR 1 billion revenue in '25, a clear demonstration of the scale and relevance of this platform.

The broader shift towards value-added dairy is also supporting the growth of our Danone brands with a strengthened portfolio, including [indiscernible] the brand also surpassed EUR 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 '25. Also in Europe, Alpro is another key growth engine. As the leading plant-based brand and EUR 1 billion 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 Aptamil continued to deliver strong results in '25. Aptamil achieved double-digit growth, enabled by the renovation of our core 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 on 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 1 year.

In Medical Nutrition, we are seeing strong growth across both adult oral nutrition and tube feeding. Our flagship brands, Fortimel and Nutrition together now represent a rapidly growing EUR 1 billion platform. We continue to expand our portfolio, including hybrid protein solution 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 7. 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 Oikos 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 replacement 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 reestablishing Activia as the global reference in gut health. In markets such as Japan and Australia, where we are winning, we leverage the fact that our Activia products contain probiotics up to 100x stronger than regular yogurt, supported by scientific evidence and studies, and this is only the beginning.

Finally, we're 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, be it pharmacies, hospital, home care delivered double-digit growth. We are reaching more people in more places at all stages of their lives.

Let's move to Slide 8. 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 digitization of our operations from the shop floor to the shelf. We are accelerating our transformation. 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. While we are making progress on a number of fronts, not everything is working as it should, and there is still much more work 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 portfolio from creamers to nonprotein yogurts to plant-based and showing up there is -- there with the same strength and relevance that we do today in High Protein or SN.

As you certainly have noted, we appointed a new Americas zone President, [ Henri Bruxelles ] and made broader organizational changes to rebuild a 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 align with consumer shifts.

Alongside addressing underperformance, we are also broadening our reach by investing to capture new growth goals. We are expanding capacity where it matters most in High Protein, Skyr, Kefir, Alpro 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 9. Through sustained long-term performance and build 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 Milk 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 share value, moving us from transactional relationship to deep partnership with our suppliers. Since its launch over 2 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 strengthened 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 OneBiome 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 Akkermansia Company, bringing a clinical proven biotics 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 pursued a cultural transformation initiated 4 years ago, one made of focus on execution, passion for consumer and one we are performing and transforming go together.

Let's move to Slide 10. As part of Renew Chapter 2, we also made it clear we will move to the front foot on acquisition. 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 and reach into the health care 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 Kate Farm delivering strong growth.

Our ambition is clear: to build a powerful growth engine in North America. In doing so, further rebalance our category mix in the U.S. We're also pleased to have acquired last week an additional 1% 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 3 strong brands: YoPro, Activia and Ultimate, which together generate over [ EUR 100 ] million in revenue in '25. We hold 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 YoPro. So taken together, this move illustrates 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.

Thank you, Antoine, and good morning to all of you. Let me start our financial review with our sales performance on Slide #12. As you have seen from the press release, we closed year 2025 on a strong note with like-for-like sales growth of plus 4.7% in Q4, closing a year of consistent delivery. Importantly, growth was again driven by volume mix at plus 2.5%, while price added plus 2.1% in Q4. As we deploy Chapter 2 of our Renew Danone strategy, we leverage our well-diversified portfolio, delivering quarter-after-quarter sustainable growth across regions and categories. This becomes even clearer when turning to Slide #13.

For the full year, like-for-like sales grew plus 4.5% with all regions and all categories contributing. We will dive into regional details shortly, but let me mention here the standouts. First, Europe, which has delivered a very solid year with now 9 consecutive quarters of positive volume mix and continued progress in the dynamics of its EDP portfolio. And the undeniable highlight of the year 2025, CNAO, which delivered exceptional performance across all subregions from China to Japan to Oceania. This should not distract from the performance in North America, which did not live up to our expectations, as Antoine mentioned, especially in the second half of last year, a key priority for improvement in year 2026.

And finally, our more emerging markets in Latin America and Africa, Middle East. We do not talk much about them, however, worth stating that they delivered a very sound year 2025 and finished on a high note in the last quarter. Those regional dynamics are also reflected in the growth reported by category. In our EDP business that delivered a very solid year with plus 3.5%, benefiting from a very dynamic market environment all over the world.

In our Specialized Nutrition business that posted like-for-like sales of plus 7.4%, reflecting strong demand for both our Infant Milk Formula as well as our Medical Nutrition products. And lastly, in our Waters business that grew by plus 1.9% in 2025, the solid result considering the very uneven weather patterns across the region.

Before turning to the regional review, let me comment on our sales bridge for the year on Slide #14. Our plus 4.5% like-for-like sales growth was driven by a plus 2.7% contribution from volume/mix and a plus 1.8% contribution from price. Outside of like-for-like, we saw a negative 4.4% currency impact due to the appreciation of the euro against most currencies. Scope was slightly negative at minus 0.4%, reflecting the deconsolidation of Horizon Organic in early 2024, partly offset by the acquisition of Kate Farms from the third quarter onwards. Altogether, reported sales ended broadly stable at EUR 27.3 billion.

Let's now take a closer look at the performance of each region, starting with Europe on Slide #15. Europe confirmed its positive momentum in Q4 with plus 2.5% like-for-like sales growth and continued positive volume mix at plus 1%, while price contributed plus 1.5%. As you can see from the chart below, performance was steady throughout the year as the team continued to progress in the transformation of the EDP portfolio. Also in this last quarter of the year, high protein, kefir and Skyr all grew at double-digit rates. Our work on Activia, refocusing on gut health and Fibers is in parallel starting to pay off as the brand delivered positive growth in Q4 across the region, including in key countries such as France, U.K. or Spain. Too early to declare victory, but the trajectory is promising.

Next to Dairy, the Plant-based portfolio continued to perform strongly with Alpro again posting very solid competitive growth. The growth in Specialized Nutrition was driven by especially the solid momentum in Adult Medical Nutrition with strong performance from brands like Fortimel and Nutrison. And our Waters category delivered a very strong finish to the year, notably driven by Volvic with its innovations in flavored and functional water as well as by the Evian brand.

For the full year, Europe grew plus 2.3% like-for-like with 1.9% contribution from volume mix and solid recurring operating margin increased to 12%. This reflects the combination of solid gross margin improvement, thanks to operating leverage and significant reinvestments behind innovation and product superiority to fuel the growth momentum for the years to come.

Let's now move to North America on Slide #16. The last quarter of the year in North America was soft with plus 0.7% like-for-like sales growth driven by plus 1.3% price. We continue to see strong demand for our High Protein platform that keeps growing at double-digit levels, supported by consumer shift towards healthier choices. The Oikos brand is going from strength to strength, further expanding its market shares in the category. The growth of Oikos is unfortunately, to a large extent, offset by the unsatisfactory performance of our Plant-based and Coffee Creamers business.

In Coffee Creamers, we have seen our market share is increasing progressively. We are, however, clear that we need to double down on our efforts to bring International Delight back to where it belongs. To address the fast emerging clean label segment, we launched under the 2 good brand, a new coffee creamers range offering low sugar levels with no artificial sweeteners. Year 2026 shall mark for our Coffee Creamers business a year of recovery and return to growth, specifically from the second quarter onwards when base of comps will ease.

Next to EDP, our Medical Nutrition business had a strong quarter. The legacy Nutricia business is growing well, led by the Neocate brand, while Kate Farms, as Antoine mentioned, continues to scale rapidly as we progress on the integration. This will be more visible from the third quarter of 2026 onwards, but we will reflect Kate Farms in like-for-like.

For the full year, North America grew plus 2% with plus 0.6% contribution from volume mix and plus 1.4% from price. Recurring operating margin stood at 11%, down by 39 bps, reflecting the need for investments to rebuild top line momentum.

Let's now go to China, North Asia and Oceania on Slide #17. The CNAO zone delivered an exceptional year, closing Q4 with like-for-like sales growth of plus 10.4%, driven entirely by volume mix. We continue to win in Specialized Nutrition, where we achieved double-digit growth with a similar performance in Infant Milk Formula and Medical Nutrition. In IMF, Essensis continued to drive market share gains. In a normalizing category context after the Dragon year boost, we remain focused on our competitive performance. Thanks to the great job of the team around Bruno, we are very confident in our ability to keep growing through premiumization, further consolidating a still fragmented market.

Next to IMF, we saw the demand for our Medical Nutrition brands, notably Fortimel Neocate remaining very strong also in the last quarter of the year. In EDP, Japan delivered again a remarkable performance in Q4, thanks to its 2 functional brands, Oikos and Activia. As Antoine mentioned, we are pleased to consolidate in the future the dairy joint venture we have in Australia. Australia is like Japan, a very functional market where High Protein and Gut Health platforms are thriving, which bodes well for the future performance of our EDP category in this part of the world.

Finally, in Waters, Mizone completed a strong year with stable performance in Q4 in what is traditionally a very small quarter for the category. We have intentionally managed stocks down to minimum levels as we are, as we speak, launching with the Chinese New Year, several renovations gearing up for the 2026 season.

For the full year, CNAO sales grew plus 11.7%, entirely driven by volume mix of plus 12%. Recurring operating margin was slightly lower at 29.2%, reflecting increased investments to support further market share gains, notably in Specialized Nutrition and in Waters.

Let's now look at Latin America on Slide 18. The region delivered a strong Q4 with like-for-like sales growth of plus 8.3%, predominantly price-led. EDP delivered competitive growth across the region, and let me here highlight particularly the Danone brands as well as the high protein platforms with the Oikos and YoPro brands. Specialized Nutrition continued its strong momentum, driven by Aptamil and Medical Nutrition across both pediatrics and adult ranges.

And finally, Waters that returned to growth in Q4 after a difficult season. For the year, Latin America grew plus 6% like-for-like. We are making good progress in addressing the margins in the region and recurring operating margin increased significantly to 6.4%, nearly 3 points higher than a year ago. This was driven by underlying margin improvement as well as IAS 29 effects turning positive.

Finally, let's have a look at our AMEA region on Slide #19. The region closed year 2025 strongly with like-for-like sales growth of plus 8.3% in Q4, driven by plus 5.5% from volume mix. In EDP, Dairy Africa continued to post strong volume mix-led growth. Specialized Nutrition grew at double-digit levels with strong performance across all subregions. The Aptamil brand kept gaining market shares, and we believe we have plenty of headroom to further expand in the region. For the full year, AMEA delivered plus 5.6% like-for-like with volume mix of plus 1 point -- 2.1% and price of 3.5%. Recurring operating margin was steady at 10.4%.

I suggest we concluded the performance review of our regions. And so let's move on to the margin bridge for the full year 2025 on Slide #20. Our recurring operating margin increased by plus 44 bps in 2025, reaching a level of 13.4%. The main driver was once again the expansion of our margin from operations at plus 77 bps. This is reflecting our focus on volume-led growth as well as continued productivity gains across our cost of goods sold. Staying true to our business model, we continue to reinvest behind our brands and products to fuel future growth avenues and drive category leadership. These reinvestments have, as predicted, moderated in year 2025 compared to previous years.

Lastly, the contribution from other effects that mainly represents the positive impact from the application of IAS 29. The solid margin increase of year 2025, combined with our strong like-for-like sales growth has been the key driver of our recurring EPS performance.

Let's move to the next slide, Slide 21, to get into the details. Our recurring EPS grew at plus 4.6% in hard currency last year, reaching EUR 3.80. Strong operational performance, which we just went through, was the key driver with plus 5.9%. Higher refinancing costs and the final impact of 2024 disposals weighed slightly on EPS, but these were partially offset by tax associates and minorities. The negative currency impact was largely offset by IAS 29. We are delighted to report that we are delivering on our value creation commitment across all key financial parameters.

And so I suggest we move to the next slide, Slide 22, to provide you with some more details. We delivered last year EUR 2.8 billion of free cash flow, reflecting strong operational performance and strict financial discipline. Importantly, we achieved a strong cash flow while stepping up our investments into the business, never compromising on what will always be our #1 capital allocation priority.

In 2025, we increased as predicted our CapEx spending with a focus on capacity creation for medical nutrition and functional dairy. Our strong cash generation enabled us to pursue targeted M&A, including for the acquisition of the Kate Farms company, while at the same moment, slightly reducing our leverage. We're also very pleased that we have further increased our return on invested capital to 10.7%. As you know, expanding the ROIC and keeping it structurally at double-digit levels is key in our value creation journey.

And finally, let me mention that we will propose a dividend of EUR 2.25 per share, up around 5% versus last year, in line with the EPS growth. These solid results make us confident in our ability to deliver on our future value creation ambition, which leads me very naturally to my last slide, Slide #23, our financial guidance.

In line with our midterm guidance, our ambition for year 2026 is to achieve net sales growth of plus 3% to plus 5% like-for-like with recurring operating income to grow faster than sales. And with that, let me hand it back to Antoine for the conclusion.

Thank you, Juergen. And as we close this call and before opening the floor to questions, I would like to leave you with a few final thoughts, and I suggest we jump straight to Slide 25. Our priority remains to perform consistently while continuing to transform the company. We pursue this through innovation and disciplined acquisition, positioning the business for the future and selectively capturing opportunities in what is a fast-changing environment. Our focus remains on the high-growth value-added segments, where science and health-related benefits are a clear differentiator. We are committed to delivering quality results through disciplined execution, fixing what needs to be fixed, scaling what works well and maintaining a mindset of constructive dissatisfaction in an increasingly complex environment.

As you know, our ambition is to act as a true value compounder, building long-term sustainable value while remaining resilient amid ongoing volatility. As we look ahead to '26 and while the external environment remains uncertain, our approach remains unchanged. We stay disciplined, we stay focused on execution and aligned with the midterm ambition we have set out.

And with that, let me hand back to Mathilde to start the Q&A session. Mathilde, over to you.

Thank you very much. So we are ready now to open the Q&A. And the first question is from Guillaume Delmas, UBS.

I've got two questions. The first one is on your operating margin in EDP. Because if I remember well, since the reset of 2022, when you first introduced Renew Danone, EDP margins have not materially improved, and they remain quite below the 10% mark. So my question here is compared to your initial expectations back in 2022, is EDP profitability running a little bit behind schedule? And why are you not seeing the strong volume/mix development and the productivity savings boosting the division's margins a bit more? And I guess looking ahead, what do you think is the medium-term margin profile for this business? Is it around 10%? Could it go even higher? So any color on that would be very helpful.

And then my second question is probably won't surprise you on the IMF recall. I mean, I appreciate this morning, it's too early to quantify the impact, but maybe, can you talk about what empirically you've seen so far. So any shortages or issues with on-shelf availability? Any consumer hesitancy towards your brands. And zooming in on Mainland China, where I don't think you had any product recalls, did you actually benefit from competitors' recalls in the first weeks of 2026?

Thank you. So listen, we'll do as usual and do it with Juergen, and let me start with your last question. The first thing is those kind of events is not overall good news for the category in general. When it comes to China, none of the products we sell in official direct channels in China have been impacted. And we obviously work in full transparency with the Chinese authorities.

When it comes to Europe, we expect to see, and we see supply disruption. We see obviously lots and lots of activity on our consumer care lines. We see also a sentiment that is balanced, actually.

Obviously, lots of emotions are with the first recall. As I said, by the way, before the recall, we looked at all our consumer complaints, and we didn't notice anything. So the entire focus of the organization is fundamentally about two things, making sure that the products are back on shelf, and making sure that we do reassure the consumers and the health care professionals were extremely active both on the Internet and in our Care Line.

As to the impact in terms of -- the lasting impact in terms of consumer sentiment, in Europe, it's too early to say, but we didn't notice things that are just -- I mean, extraordinary. You may have seen there was a publication yesterday of ESTAR, which I would refer you to on actually the -- I mean, then assessing the impact of exposure as low to moderate for infants. So this will also help reassure the consumers.

Yes. Juergen speaking. When it comes to the financial impacts, 2 or 3 important elements. First, given the fact that most batches which are currently being recalled were sold already in the course of year 2025. We have to date not experienced a significant return of stock. And therefore, while the recalls are underway, the current financial impact on year 2025 do not seem material to us.

Having said that, and to your point, the recall of several industry players at the same time has created, especially in European retailers, some disruption on the shelf because some retailers were first taking off all the product before sorting and replenishing the shelf. And we expect that supply disruption to have a one-off impact on our Q1 performance. We estimate this one-off impact to be between 0.5% to 1% of net sales in the first quarter.

Moving forward, as Antoine said, our ambition is to win back trust and credibility because it is extremely important in that category. And it's obviously very early days. We need to monitor the situation very closely, but the few data points that we have on market shares are rather reassuring.

On EDP margins, you are absolutely right that the key focus on us. And you may remember that when we were together launching the Chapter 2 of Renew Danone. We were very clear on what we are expecting from EDP in terms of contribution on growth, and I think we are delivering on a very nice way on it with plus 3.5% in the year 2025, as much as on margins, because we declared very clearly that EDP margin target is to go into double-digit territory.

You do not see that yet reflected in the EBIT numbers of the category because we are heavily investing for that growth. Gross margins are going up, and you see gross margins of the company increasing supported big time by EDP gross margin increases. But at the same time, we are fueling the growth. We are fueling the growth in Europe. As Antoine mentioned, with all the elements we are doing on Activia, on High Protein, on Skyr and Kefir as much as refueling the growth in North America, very importantly, on the full EDP portfolio.

I think that and we said that all along, we will keep reinvesting to drive our category growth. And in the cases where we have lost competitiveness, to reinstate our strength and competitiveness of our brands. I mean, what you see on Activia, I mentioned Activia is progressively getting back to growth. With good innovation, with, I mean, bringing back the gut challenge, so we see the things moving in the right direction. We will keep investing behind that to make sure that we reclaim and we regain our leadership in that field because we are convinced it's the field of the future.

So the next question is from Celine Pannuti, JPMorgan.

So my first question, I would like to come back to what you said on the Infant Milk Formula to clarify the commentary. You mentioned the 50 to 100 basis point impact on Q1. Is this at the group level for Europe? And then in terms of your market share performance, can we -- I mean, what have you seen? I know it's early days, but in Europe or in China, how things are trending for you?

And then maybe, I think, Antoine, you mentioned it's not great news for the category. From a midterm perspective, how do you think this may play out from higher regulation or maybe more consolidation? Would be interested to hear your perspective there.

Then my second question is on North America, where volume turned negative in the fourth quarter. You mentioned that capacity is underway and as well creamer are getting more positively, more competitive. How do we think about volume reacceleration throughout 2026, please?

Celine, we'll do duet again. Let me start with IMF, where we'll do a duet, and then we'll come back to the U.S. I mean, shares we didn't see. It's too early to say. We didn't see any significant share movement, one way or the other. I mean, what I was saying, it's not good for the categories. You don't win on events. You win on science. You win on your competitiveness. You win on being the best at execution. So short-term shares gain or loss on an event is not -- I mean, it's not good news. It's not something that is structural. We don't see anything major, but it's very, very early.

IMF is very, very regulated category. I mean, I think, in our factories, we have over 300 checkpoints when it comes to quality. There are rules in every countries that are extremely, extremely strict. So do we expect a further strengthening of the regulation? Not in any major and significant way. I mean, there has been a change in the rules and regulation when it comes to, I mean, salaries, and that has been an ongoing move for the last couple of weeks. But by and large, we don't expect the rules of the categories to change. Where we are very confident, to be honest, is we are confident in the quality of our product. We are very, very close to both the consumers and the health care professionals and we have innovation that is really differentiating.

So too early to say. We don't see any significant impact. We will have to work because indeed, noise around the category is never a good news, but I don't see it as something structural.

Yes. Juergen speaking, when it comes to the financial impact, I confirm the 50 to 100 bps on Q1 at group level. But as you say, in the end, it's coming through the region of Europe and Middle East because this is where the recalls are happening. We expect the situation to normalize in the months of -- during -- in the course of the month of March.

So on the U.S., I was very clear. I'm not happy with the performance. There are things we are super happy with. Protein keeps driving very well. Everything around medical nutrition is just flying. Kate Farm is going from strength to strength. Our Nutricia business is going from strength to strength. So it's very -- I mean, that I found very exciting.

We have a couple of good things that are coming on stream. We see some early green shoots in creamers. We've launched Two Good in Natural, but to be honest, I think we'll only see progress as of, I mean, later in the year, so quarter 2 onwards.

We are relaunching Danimals, but there is still more work to do. I'm not happy for one with Silk. I think, I mean, we've made because we didn't have enough capacity choices in the rest of yogurt capacity is coming on stream, so we should get better, but we could have done better.

There has been a really deep change in leadership in the U.S., obviously, with Henri, who comes with deep knowledge and huge track record, but beyond Henri, we went very deep in leadership change in the U.S.

The lady that has been running the turnaround of Alpro in Europe is now in charge of the category and of the creamers in the U.S. I expect the end of not inventory and rapid movements in the U.S.

Yes. And maybe just one element to add, which is that we have one more quarter to go where we are running against a high base of comps for Coffee Creamers from Q2 onwards. This will ease and will have also the recovery of that region.

Next questions from Jon Cox, Kepler.

Yes. Sorry, just to come back to this 50 to 100 basis points. You're saying on a group basis, so this is not just specialist nutrition on a group-wide basis, 50 to 100 basis points in Q1, which at 100 basis points level would be 25 basis points on the year. That seems relatively material. I know maybe by the time you get down to EPS level or not, but it seems quite material. And that's just on the recalls themselves rather than any, say, brand damage done in Europe as a result of the recalls.

Just to add to that, elsewhere, you're talking about the Middle East recalls. Are there any signs that any of the governments elsewhere in the world are going to introduce the European standards and what would the impact be in terms of potential recalls in Asia and elsewhere?

Second question, just on the gross margin gain, I can see it's 90 basis points. It sort of leads into the question earlier about EDP margin, just not moving. And I think most of us thought that would be the driver for overall group margin improvement. Is that gross margin gain really coming through EDP, and you're just actually reinvesting all of those savings into driving top line growth. And I'm just wondering about the sort of the return profile of that, if you're just investing so much into the EDP business to drive growth. But on the other hand, the profitability isn't moving. And the risk is once you stop investing, actually, that volume will go back to where it has been historically in dairy in Europe and elsewhere.

First, on the first point. Look, we have this morning been issuing our guidance for the full year with a lot of confidence. And we have been issuing the guidance for the full year with a lot of confidence because we have now been consistently over the past 4 years, delivering on our commitment. We left year 2025 with very strong dynamics. And yes, the IMF situation will create a one-off, as I described it for Q1.

Having said that, the last year stepped up the resilience of our portfolio, leveraging a larger range of growth engines and not only IMF, and are, therefore, expressing the confidence. We today -- the guidance today with confidence. That confidence is supported by many things, including the belief that the IMF situation will progressively normalize, but it will also be supported by what I said before, sequential acceleration, for example, of the U.S., and here specifically from the Q2 onwards, when we run on an easier set of comps for Coffee Creamers.

On gross margin and EDP, I confirm what I said before, we see very promising dynamics in EDP. Let's not forget that we only started to transform the portfolio, some 2 or 3 years ago. So we were very clear that this is not a quick turnaround, but it takes some time to make it happen, and we are very happy with what we have seen in the year 2025. We are transforming in a very significant way the portfolio in Europe. All the innovations, we have been putting in the shelves, are working, and we have learned something very important from the past, putting innovation and only supporting it for 1, 2 or 3 quarters, you're going to lose the innovation. You're going to lose the renovation. This is why we are so much committed to support the innovations at the core to make sure we get sustainable success, and this will also be reflected in the profit margin at some point.

So next question is from Warren Ackerman, Barclays.

First question is on Medical Nutrition. Could you quantify the Medical Nutrition growth globally in Q4? Maybe if you're able to break out China, Europe and North America? I'm interested in your outlook, specifically on Kate Farms, how big is Kate Farms? What was the growth in the year or the quarter? And just trying to understand how big could Kate Farms get as you kind of expand? I know you've got some ambitious plans for the brand.

And then secondly, can you talk about some of the other growth engines like EDP Japan, you're saying it's a standout performance. Can you maybe put some numbers on that? And I guess the other sort of topic as well, just to try and understand a little bit is the out-of-home growth, particularly EDP Europe? If you're able to put some numbers on that as well, it would be great.

So we'll do a bit of a duet on that. Maybe starting with EDP and EDP in Japan. What is really interesting in Japan, is we have been constantly over the course of the, I think, the last couple of years, going between high single and low double digits in Japan.

On the base of Japan is an EDP -- Japan is an EDP business essentially, on the base of a strong differentiation, on the base of science, on the base of strong claims. And this is really an inspiration for -- I mean, this is really an inspiration for Activia. I mean, delivering claims that are proving the uniqueness of Activia versus other yogurts are differentiating ourselves and justifying a premium. So that is the model. By the way, we have the same, it's a smaller business, and it was under our Saputo, but we have the same with Activia in Australia. It's a good model on what we want to do around EDP.

On out-of-home and EDP. Out-of-home and EDP takes 2 different forms. It is what you can do in all the hotels, restaurants, I mean, around, I mean, fresh dairy, obviously. But I think the biggest and most important access of developments there is into our drinkables. And it's true for dairy. And you see that with what we do around Oikos, which you find also in gems, which you start finding in many different places, all you see that with what we just launched, I think, it's in Germany with Alpro meal replacer. And if you haven't tried it, we'll send some to you, which is made basically to capture those people that are working at lunchtime at the exit of the office in proximity stores. The -- I mean, our out-of-home channels are growing much faster than mass retail. Juergen?

Yes. On Medical Nutrition, the dynamics are actually pretty good and especially as we leave year 2025, growing double digit in North America, growing double digit in China and North Asia, Oceania are growing double digit in many emerging markets.

Actually, we're quite balanced between what we see in Milk Nutrition for infants and Milk Nutrition for adults. But on both, we see very, very strong traction. It's getting now to a scale, which starts to impact also company results. You talk about Kate Farms. Antoine mentioned it in the prepared remarks, it's now a $500 million business.

It's farm nutrition.

Exactly, which I think is something, which you will see reflected in the like-for-like performance of North America from Q3 onwards when we have both Kate Farms, Nutricia, the whole Medical Nutrition platform impacting the results.

Kate Farms is actually growing strong double digits as we speak. And so we see coming to life the expected synergies of our existing and legacy platform we had in the U.S. and the, let's say, network access, we are getting to hospitals and the health infrastructure in that part of the region.

Maybe to complete on the combination Kate Farm and Nutricia. So I said it in the prepared remarks. The combination of the two is $0.5 billion. We've -- as you know, we folded in some ways, Nutricia into our Kate Farms business.

The complementarity of the product line, the complementarity of our customer access, the complementarity of the scale is just fantastic. So the business has real momentum. And I think it will have -- I mean, be a game changer in the U.S.

And on Japan, as you mentioned, Japan, EUR 400 million business as we leave year 2025, growing at strong double digit, and we have more capacity coming online very soon in order to support this fantastic dynamic on a portfolio, which is extremely focused on high protein and gut health. So that's very exciting. It's one of the largest dairy markets of the world, and this is why we are very focused on success there.

We have the next question from David Roux, Morgan Stanley.

Can you hear me?

Yes.

My first question is just on the North America yogurt capacity, which you mentioned. Could you just give us an update as to where you are now with this rollout. How much headroom to overall capacity in the U.S. will this help with once completed. And how we should think about the CapEx evolution for the group from this going forward?

Then my second question is on working capital. You've called out working capital at record low levels relative to sales in the release. I think you mentioned some destocking of Mizone, but perhaps can you give us a bit of color around what has been driving this and how we should think about that working cap to sales ratio going forward.

And then my last question briefly on FX. I understand you don't usually give color on this, but given that FX was a meaningful factor this past year, can you give us some expectation for the FX impact on revenue and EPS at current levels for the forthcoming year?

So I think -- I mean, the bulk of the question will go to Juergen. On Noram, literally, the capacity is coming on stream step by step by step. So we are adding line after line to basically respond to a demand that keeps being absolutely buoyant and to be able to reenlarge our offering. Obviously, what we invest into CapEx is not only behind EDP or behind yogurt, but we invest into CapEx in medical nutrition, as you've heard last year with what we are doing in France in Stanford, behind infant nutrition. So we invest where we see value-adding growth for the company.

Yes. And maybe when you look at overall CapEx, and this is what we shared at the CME for Chapter 2 when renew Danone, CapEx for the company is going to slightly increase. We were the last year traveling just shy of 4%. We said it may go up to 4.5% in order to support capacity investments into high protein, which is true for areas like North America, which is true for areas like Europe and which is true for areas like Japan, which I just mentioned, but also for Medical Nutrition, where we are obviously progressively investing for the future growth.

For working capital, very happy with how we finished the year 2025 at minus 10%. I think we are now getting into best-in-class when it comes to working capital management.

Actually, the benefit of working capital in year 2025, not so much coming from stocks. It's more about a much more efficient way we manage the balance between receivables and payables, and we are benefiting here from something Antoine said in the prepared remarks, which is the digitalization of our process flows in our global business services. This is really giving us a fantastic platform to -- for the ambition to say sustainably at a good level of working capital as we have it today.

For the currency, look, I would wish I could predict how currencies will move in year 2026. You saw the impact we had on sales at minus 4%. In the full year, it was minus 6% in Q4. Really here, I don't want to -- please understand that I don't want to give a number because any number I will give will be a wrong number.

And next question from David Hayes, Jefferies.

So I don't want to be the annoying person and labor the guidance context, but I'm going to be that annoying person. So just to come back to that quickly, just trying to gauge in your kind of that confidence word you used. I mean, you saw one of your peers yesterday impacted by this recall talking about with their best guess on the brand equity impact through the years that they might be at the lower end of the range. Was that something that you considered including, or to your confidence point, you don't feel there's need to caveat that based on the current trends and brand impacts that you're seeing at least early on in the -- in this process.

And then the second question, just on the Rest of World. Was there some benefit from Ramadan? Again, we heard a competitor yesterday talk about that was sort of a help in the period of Indonesia. Obviously, a big market in that region. So was there Ramadan timing that we should take account of? And that gives back a little bit in the first quarter this year.

Thanks, David. We'll do again a bit of a gut. I mean, we don't see at this stage any major brand or brand equity impact on IMF. There is obviously a disturbance on the shelves. There is obviously, for a period of time, I mean, a sales force that is focused on talking to the customers replenishing the shelf. So as they do that, they don't do -- I mean, they don't do other things. But from a pure brand and category standpoint, we haven't seen anything major at this stage, too early to say. We obviously look at it very, very carefully, but I wouldn't be definitive one way or the other.

On Ramadan, I mean, to be honest, we are -- we don't comment on the move from Ramadan from one week to the other. Juergen, I don't know if you want to...

On the Ramadan, nothing to add, I would say. On the guidance, 3% to 5%, we are, in a way, growingly consistent is what we are now saying since 4 years. We feel good about the 3% to 5% guidance we have launched that was in year 2022, and you saw us delivering in that corridor is a very consistent manner. And so there's nothing to add to what I said before on the guidance. So we feel good about it.

And the next and last question is from Tom Sykes, Deutsche Bank.

Just firstly, on the gross margin. It looks like that was sequentially down a little in H2, which is the first time in a little while. Could you maybe say what the reasons for that are? Is that FX? Or could you say something about COGS productivity and just whether you'll be able to price under your COGS inflation like you have been doing, please?

And then just on the growth of high protein, either North America or globally. Could you give a view as to the run rate of growth now versus perhaps where you were in the first half of the year, please?

So let me start, maybe with the growth of high protein. We still see the growth in the protein world being very, very down -- being very dynamic. If you look at the overall category growth of the yogurt category, it's very dynamic. I mean, I think at global level, it's high single digits, and it's being driven by protein. Protein by the way, takes different forms. I mean, it's high protein, like the likes of Oikos or YoPRO. It is also things like Stevia. And I mean, Stevia at Danone is doing extremely well, I mean, you see it reflected also, and I mentioned it in the remarks in the numbers of the Danone brands. So there is, I mean, there is a deep, deep trend around protein in different forms. And we believe that our trend is here to stay. It is becoming, as I said in my prepared remarks, also it is becoming more sophisticated. So it's not protein for the sake of protein, the protein that are doing something or protein that are complemented with something.

The protein that are doing something are you seeing that we've launched under Oikos protein and digestive benefits, what we've launched in Europe under HiPro, which is muscle recovery or what we launched behind Stevia, which is a different positioning, but one that is also very relevant when it comes to protein that feed you in your daily activity as you need for something that is high in protein and low in the rest.

So it's a trend we believe to be long-lasting trend. We see progressively the market shifting to different kinds of protein, and we're obviously not only suffering the way, but leading the way in more ways than one.

Tom, on the gross margin, you're absolutely right. H2 expanded a little bit less than H1. It's not about productivity, which really was very strong across the year. It's more about the phasing of material inflation, especially coming through from dairy ingredients, things like whey or things like lactose, which were quite high where prices were quite high in year 2026, where we were better protected through hedging in the first semester than in the second semester. That's why we had a bit more impact in the second semester coming from it. Good news is that those prices have started to come down. So nothing particular to say for year 2026.

So with that, we are ending the Q&A. Thank you, Tom, for the last question.

Thank you, guys, and we'll see you, or most of you, soon in the coming weeks. Good day, everyone, and good weekend.

Good day, and thank you for standing by. Welcome to the Danone Third Quarter 2025 Sales Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded.

I would now like to turn the conference over to your speaker, Mathilde Rodie, Head of Investor Relations of Danone. Please go ahead.

Good morning, everyone. Mathilde Rodie speaking. Thank you for being with us this morning for Danone's 2025 Q3 sales call. I'm here with our CFO, Juergen 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 21 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 Juergen.

Thank you, Mathilde, and good morning. Thank you all for joining our quarter 3 call. A great occasion to share with you our latest sales performance and to discuss the progress on our midterm ambition.

So let's begin by looking at our headline results for the quarter, starting with Slide #2. As highlighted in our press release this morning, we are announcing a strong set of numbers with like-for-like sales growth of as much as plus 4.8%, a growth that is driven mainly by volume/mix of plus 3.2%. Building on the momentum from the first 6 months of this year, this represents another quarter of consistent quality growth. In what remains a volatile and uncertain environment, our portfolio continues to deliver with resilience.

We are increasingly leveraging 2 important elements. First, a unique portfolio focused on health and wellbeing rooted in categories that grow faster than the average of the food and beverage industry. And secondly, the quality of execution that is progressively increasing even if we have still areas of improvements.

Let's break down this performance by region on the next slide, Slide #3. The strong momentum we see in Q3 reflects broad-based growth across the regions. Europe continued its consistent path of step-by-step improvement with a solid delivery across all categories. In fact, Europe has now delivered 8 consecutive quarters of positive volume/mix, a testament to the effectiveness of the ongoing transformation. In North America, we saw this quarter a mixed performance with, on one hand, high protein yogurts continuing to outperform in a very dynamic growth space and despite major capacity constraints. While Coffee Creamers are progressively rebuilding its distribution, we have more work to do to bring plant-based break back to sustainable growth.

The standout also in this Q3 is the China, North Asia and Oceania zone. The team around Bruno delivered again exceptional growth in this part of the world, with all subregions contributing strongly from China to Japan to Oceania. And in the emerging markets of Latin America as well as Asia, Middle East and Africa, we saw a strong growth overall with our Dairy and Specialized Nutrition portfolio being the key drivers.

Having discussed the regional picture, let's now turn to our performance by category on Slide #4. Our like-for-like sales performance reflects quality growth with a solid contribution from volume/mix and positive price actually in each of our categories, demonstrating the underlying demand for our science-based and value-added portfolio. In EDP, we delivered like-for-like sales growth of plus 3.5%, with volume/mix up plus 1.7% and price of plus 1.8%. Our global high protein platform, with brands like Oikos and YoPRO, continues to grow strong double digits with no sign of any slowdown.

We are constantly fueling this growth by rolling out what has proven to work, but also by launching next-generation innovations into this dynamic space. In parallel, we see increasingly strong demand for other functional dairy innovations, for example, kefir. In plant-based, Alpro continues to thrive, whilst we know that we have more to do in the U.S. with our select brands.

In Specialized Nutrition, we posted like-for-like sales growth of plus 8.3% with volume/mix up plus 6.5% and price of plus 1.8%. This comes on the back of a strong Q2 and reflects not only the exceptional demand in China, but also in other geographies. Our premium Aptamil platform grew at global level again double digit, winning broad-based market shares. Demand for our Medical Nutrition segment remained also very high across all geographies with brands such as Fortimel and Neocate achieving again double-digit growth.

In Waters, sales were up plus 2.3%, with volume/mix up plus 1.3% and price of plus 0.9%. We saw solid execution and delivery across Europe, with strong demand for our recently launched vitamin water under the Volvic brand and continued solid performance of our Evian brand, including in the U.S. At the same moment, we are continuing to post very solid performance for our Mizone brand in China, completing another successful summer season.

To put those like-for-like numbers into context, I suggest we review now our sales bridge for the quarter on Slide #5. In addition to the plus 4.8% like-for-like growth previously discussed, we experienced an adverse currency impact of minus 5.1%, resulting from the appreciation of the euro against most currencies over the past 6 months. Importantly, though, for the first time since long, we reported a positive scope effect, which contributed with plus 0.7% in Q3. This is reflecting primarily the recent acquisition of Kate Farms, the first contribution to our compounding ambition. This ambition means to grow our company not only in like-for-like, but also in euro terms after an initial period of portfolio pruning and divestments. For Q3, it results into a reported growth of our net sales of plus 0.7% with sales in absolute reaching EUR 6.9 billion.

Now let's take a closer look at each of our regions and their contribution to the like-for-like performance, starting with Europe on Slide #6. Europe delivered solid like-for-like sales growth of plus 2.6% in this quarter, driven by plus 2.1% contribution from volume/mix and a positive contribution from price. As you can see from the chart on the bottom left, this means a further step-up in the performance that Pablo and the European team delivered since the journey started some 3 years ago.

In EDP, we are seeing double-digit growth in YoPRO, our high protein platform, but also in our newly launched innovations such as Activia kefir and Danone Skyr. This is an encouraging sign for our future growth ambitions, knowing that we have still many regional white spaces for rolling those successful innovations out. Our Alpro plant-based products, particularly yogurts, continue to win share in the market. The brand is now consistently posting quality growth in an overall category that is back on track.

In Specialized Nutrition, let me highlight particularly our Medical Nutrition platform that delivered again a strong performance with Fortimel growing double digit, expanding progressively its reach to patients across Europe. And in Waters, we posted solid growth, notably driven by the evian, Volvic and Zdroj brands. So overall, another strong quarter in Europe, supported by all categories.

Let me suggest that we move on to North America on Slide #7. In North America, we saw like-for-like growth of plus 1.5% with a 0.3% volume/mix and a plus 1.2% price contribution. In EDP, we saw continued strong demand for our high protein range with the Oikos brand going from strength to strength. Innovation in this space continues. And in Q3, we launched Oikos Fusion, a high-protein product, enriched with probiotic fibers very suitable for those consumers looking to manage their weight or taking GLP-1 like medication. As you know, we are, like all the industry, managing a situated production capacity for the yogurt category. And Q3 has been particularly tense.

We will benefit over the coming quarters from more capacity coming online, which will release some of the current supply constraints. In some other areas of the EDP portfolio, the performance is not where we wanted to be. We have been progressively recovering distribution in Coffee Creamers and this is obviously a journey which takes time as the space we left on the shelf has been taken over by competitors. Beyond the distribution rebuild, we will leverage the moment to further innovate in this category, addressing the emerging trend of naturalness and clean label. The U.S. team is actively working on solutions to bring this business back to where it belongs.

And lastly, on EDP, we are progressing with our ambient protein shake exploration. We are encouraged by the early results and,, as we speak, selectively expanding its distribution. We are hence continuing with this soft launch approach and are awaiting robust data on repeat purchase in order to decide on the level of acceleration and investment allocation for year 2026.

Next to EDP, we saw satisfactory performance in Specialized Nutrition driven by our Medical Nutrition platform. Worth here to mention that outside of the like-for-like performance, we see a strong double-digit growth momentum of the Kate Farms company, which we are currently combining with our existing U.S. medical platform.

Let's now move on to the CNAO zone on Slide #8. Q3 is another outstanding quarter in the China, North Asia and Oceania region with like-for-like sales growth of plus 13.8%, driven entirely by plus 15% volume and mix. This reflects both strong underlying demand for all categories where we operate together with a further step-up in competitiveness.

In EDP, in Japan, both Activia and Oikos are continuing their stellar performance illustrating our strategy in action, bringing added value propositions into one of the largest dairy markets in the world that allows us to premiumize and win market share through functional differentiation. In Specialized Nutrition, the Chinese business was again firing on all cylinders. Demand for our infant mix formula and medical portfolio remains very strong.

In IMF, the category is in a solid dynamic, growing particularly in the online and social media channels. We are continuing to win market share, thanks to our superior digital business model as well as thanks to our Aptamil Essensis innovation launched some 2 years ago with further expansion opportunities in front of us.

Beyond China and Japan, let me highlight the strong performance of our Specialized Nutrition portfolio. In Oceania, we are reporting an increasingly meaningful contribution to the zone's performance with growth across the segments. Worth mentioning here, especially the great momentum of the Souvenaid brand, addressing symptoms of mild memory and cognitive impairments. And finally, in Waters, Mizone has successfully delivered also the 2025 summer season, expanding its reach with the fastest-growing segment of the category, namely the healthy hydration segment.

Moving on to Latin America on Slide #9 now. In Latin America, we delivered like-for-like sales growth of plus 4.3% in quarter 3 with volume/mix of minus 2.3% and price of plus 6.6%. We have a solid momentum in EDP, where we are winning with Oikos, YoPro and the Danone brand as the market moves increasingly towards value-added dairy products. In Specialized Nutrition, we continue to win share with Aptamil, which is growing double digits. We're expanding in parallel our medical nutrition reach across our pediatric and adult ranges. And in Waters, the beverage market remains challenging due to weather and adverse economic conditions, especially in Mexico and here especially in the Away From Home segment.

And finally, looking at the Africa, Middle East and Asia zone on Slide #10. The AMEA zone saw a clear acceleration in Q3 with sales growth of plus 6.8% with a solid contribution from volume/mix at plus 2.6% and price at plus 4.2%. In EDP, we continued to report strong growth, particularly in Africa with both the Danone and Activia brands. In Specialized Nutrition, the region continues to deliver strong competitive growth underpinned by our focus on science-led innovation and market execution.

In particular, we continue to see a strong growth momentum of the Aptamil brand in expansion markets such as Vietnam, India and the Middle East. Beyond Aptamil, we are pleased with the successful rollout of our patented R&I biotic engine in regional early life nutrition brand platforms. And finally, in Waters, we are reporting a solid performance, including in Indonesia, in a very competitive market environment.

Let me conclude the regional review, a review which proves the breadth and resilience of our portfolio in delivering on our ambition. Let's move on to Slide #11, recapping our key takeaways and priorities as we look ahead. We have delivered over those first 9 months of the year strong performance with consistent quality growth led by volume/mix. This reflects continued demand for our products across a well-balanced geographical footprint. We have several platforms delivering exceptional growth across the different categories. And at the same time, there are some areas that require further progress, which we will translate into future growth opportunities.

As you did certainly expect, we reconfirmed today with confidence our guidance of plus 3% to plus 5% like-for-like sales growth and recurring operating income growing faster than sales. That's probably a good moment to stop and halt. Thank you once again for listening. Looking forward to your questions.

And with that, Mathilde, back to you.

[Operator Instructions]

The first question is going to be from Guillaume Delmas, UBS.

Two questions for me, please. So the first one on Specialized Nutrition in the CNAO region because that's third consecutive quarter of double-digit like-for-like sales growth and accelerating every single quarter. So Juergen, can you maybe help us unpack this performance in the quarter as in what kind of category growth are you seeing at the moment? What's your market share development? And any sell-in, sell-out discrepancy we should be aware of? And I guess, looking ahead, how long do you think you can maintain this kind of double-digit run rate? So when would you expect a marked deceleration or maybe it's just going to be about a very soft landing because you've got this upcoming Nuturis rollout, which could be a key driver of growth going forward for SN CNAO?

And then my second question is on North America EDP. I think the 1.5% like-for-like you reported in Q3 is the weakest quarterly print since at the end of 2019, so that's nearly 6 years ago. Comps are not getting easier in the fourth quarter. So just wondering here if these trends are a negative surprise to you? I mean, even worrying to you, particularly from a market share point of view? And are you still confident you can stabilize within this, your Coffee Creamer business? And I think the ambition at the start of the year was to by the end of 2025, grow Coffee Creamers in line with category growth. Do you still think you are on track to achieve this?

Guillaume, thank you for your questions. Obviously, the CNAO zone is delivering exceptional growth. And particularly, China is again firing on all cylinders, as you say. So let me double click on it. Early Life Nutrition, the category is actually progressing as we expected. And as we have been discussing over the last few quarters, we see a very moderate segment growth started in stage 1, thanks to the birth rates of year 2024, moving progressively in stage 2, so no surprise on that front. It translates to overall very moderate growth of the category.

In the growth of the category, what we are seeing is that there is a shift from offline channels to more online channels, to social media channels, which is not a surprise when you look at the overall shopping trends of the Chinese consumer. In this category, we continue to outperform and win market share clearly. The shift to online channels actually allows us to leverage what the team has built over the last 10 years, which is a unique digital business model, which is truly a competitive edge. And secondly, and there's obviously no change in this message is that the Essensis platform is winning market share across China. Innovation, we launched now some 2 years ago, has become a quite sizable platform, and we see further growth opportunities on this front.

And in parallel, as you say, we are preparing Nuturis, has been soft launched in Hong Kong, and we will bring it to Mainland China at the right moment when we see that we have positioned Essensis in the right way and that we have a solid print there. When it comes to China Medical Nutrition, obviously, different dynamics because there is an underlying strong demand from a category perspective, and this stands actually across all segments. And it starts from special pediatrics posting a stellar performance and especially our allergy formula under the Neocate brand.

As we discussed a good 1 year ago, it has a lot to do with the fact that there is more and more babies rightly diagnosed and therefore, they are getting the right medical nutrition, and we're seeing that reflected. But we are seeing also very strong demand on our Advanced Medical Nutrition business, benefiting with no surprise from strong demographics. So here, we are pushing distribution of our tube feeding solutions as we have been discussing. We invested into medical sales force quite significantly and that starts to pay back.

And at the same moment, we are building the future of this category with the oral nutrition segment. So looking forward, yes, China has been firing on all cylinders. Let's be careful not to extrapolate that for all the coming quarters. However, we have good reasons to believe that China will deliver significantly also to our growth in the coming quarters.

When it comes to North America, let me step back for a minute. It's an important question. It's not a question of comps, let me be very clear on this one. When we look at the performance of the last 2 quarters, we cannot be satisfied as we missed some important growth opportunities. But there is a few reasons, probably 3 plus 1 reasons why we are confident that North America will progressively go back to where it belongs. First, high-protein yogurts, they continue to fly. The demand is extremely high. We are quite seriously kept by production capacity. Finally, we have new capacity coming online starting from Q4 and that we go into 2026, which will release some of the pressure we had in Q3 was particularly tense on this part.

That will allow us not only to continue pushing high-protein yogurts, but also to finally again activate the rest of the yogurt portfolio. We have been particularly shy because there was no capacity available. And you will see Danimals is coming with a relaunch in Q4, which is important for us because it's a big brand, and the kid segment is very strategic to us.

On Coffee Creamers, let's be very clear here. Yes, we have been progressively recovering distribution. But yes, this is also a journey, which takes time as this space on the shelf has been occupied by competitors. And as you can imagine, we are doubling down on our efforts to get our space back. But what we are also doing and that's important is that we are leveraging that the moment to bring our product portfolio closer to the emerging trend of clean label and naturalness, which will help us to bring our International Delight brand back to where it has been.

The third element I would like to mention here, and I mentioned actually also in the prepared remarks, is Medical Nutrition. Now with Kate Farms, first time, we have a sizable platform in the U.S. that will help us to accelerate on this very important category moving forward. We wanted to become really a powerhouse of growth for North America. And lastly, there's a leadership factor, as you can imagine. Henri Bruxelles, who is the newly appointed President of Americas as of January 1, is already bringing a fresh perspective to the different categories. He is bringing back both, I would say, obsession about superior consumer experience, but also a renewed sense of urgency.

So many reasons why we believe that North America will again play a very important role for our growth momentum in the future, and I have not even talked about the protein shakes.

Thank you, Guillaume. So we're going to take the next question from Warren Ackerman, Barclays.

Warren here from Barclays. Two from me as well. First one is on Europe, Juergen. Very pleasing performance in Europe. Could you maybe double-click a little bit on European EDP, where are you on the rollout of some of the more valorized ranges on the Skyr, kefir, high protein? What kind of ways are they now in Europe? Are we at a tipping point where it's offsetting the kind of more general ranges?

And then can you maybe sort of outline what kind of growth you're seeing in the out-of-home channels in Europe that we don't see in the scanner data? So if you can double-click on European EDP and what you're seeing in terms of market shares and the trends? That's the first one.

And then secondly, just on the guidance. You're running, I think, at 4.4% organic at the 9-month stage. Your guidance is 3% to 5%, so you're clearly tracking at the top end of that, the guidance range. You haven't today changed the guidance to the top end, but you're tracking at that level. Is there anything we should think about for the final quarter of the year? Is there any kind of sort of conservatism built into the guide? Any moving parts that you want to call out for the final quarter of the year, that would be helpful.

Good morning, Warren. Yes, as you say, Europe progressing pretty well in this transformation, is getting better quarter by quarter. I think it's now 6 consecutive quarters where we see the growth accelerating and this is including in EDP. And as you say, this is thanks to the fact that our more differentiated portfolio becomes more important in terms of weight percentage of the portfolio quarter-by-quarter. All the innovations are working extremely well.

High protein, we have been discussing for quite some time. Activia, back to growth in Activia, especially on fibers and what we are doing with the kefir, we are progressing very well. Skyr also doing very well. But all of those elements, we have been launching only 2 years ago. So we are still early in that journey. But this is exactly where the opportunity is because when you take products like kefir, Skyr, we have not yet even rolled them all across Europe. And this is where we see the opportunity, and you will see us going for that in a very speedy manner.

To your point, we continue to outperform outside of large retail. This is also part of our strategy. This is where we have been underrepresented for decades. But this is also where we have been intentionally innovating for. The majority of our innovations is drinkable format, suitable for away-from-home point of sale and on-the-go consumption. And that means that we continue to grow 2 to 3x faster in away-from-home than in large retail. That is what the strategy and priority moving forward, which will stay on top of the table.

When it comes to the guidance, obviously, we are very happy with the first 9 months of the year. You can imagine that we are not giving quarterly guidance, neither by category, neither by region, as you know. There is no particular message actually for Q4 to pass here. Overall, what is important for us is that we want to demonstrate that our portfolio focus on health is a superior portfolio and that this is also translating into a faster growth vis-a-vis the industry. We feel good with our 3% to 5% guidance for year 2025, but also beyond. And we are now consistently delivering in that corridor. And in a way, while our ambition is to grow sustainably as fast as possible, there's always something in a business which doesn't go well, and we had 2 softer quarters in North America. This is why we feel good about this guidance.

Thank you, Warren. So the next question from Jeremy Fialko, HSBC.

So just a couple of things from me. So the first one is, if you could talk a bit about Latin America. We've had some quite mixed things from other companies in the region. So if you could talk about how you're seeing the conditions in the various markets you compete?

And the second one is, could you talk a little bit more about the rollout of the high protein? So why are we so confident this category is going to carry on at these very high rates? Where you think the big -- is the next sort of big rollout opportunities are? And perhaps a bit more detail on the kind of the scale of the capacity expansions you've got coming on in the coming quarters?

Jeremy, Latin America, we see what everybody is seeing, especially in Mexico, where consumer sentiment is pretty muted. That's one of the drivers why our Water performance in this year has not been satisfactory beyond the weather conditions, which have been quite awful during all the season. Actually, we don't take that as an excuse. We focus on those elements where we have value-added propositions and where we can grow. And you saw that quite nicely in Q3, which is particularly about Specialized Nutrition, which is now growing consistently at a very good speed, particularly in Brazil, but it spans all across the region to Argentina, actually. And this is on both Early Life Nutrition and Medical Nutrition on those categories.

But also on dairy, which is doing well, and dairy is doing well across the region, thanks to Oikos and the Greek yogurt and high-protein yogurt, which are showing the same dynamic as everywhere else in the world. Thanks to our other core brands, including the Danone brand, which is doing very well. So overall, I would say, a satisfactory performance.

Let me use that moment to say that when you look at our Specialized Nutrition business across emerging markets, and I put it together, Latin America plus our AMEA zone, you see that this is a EUR 700 million platform as large as China, growing at high single digits. So this is becoming more and more for us a key growth engine moving forward, especially with Aptamil growing very, very strongly across but also Medical Nutrition, which we are building.

The second element and to your second question on high-protein yogurts, we see still a massive trend from a consumer perspective on health and well-being. Yogurt actually is a very powerful, efficient and convenient source of proteins and other goodies, and this is better and better understood. The consumption of yogurt is different region by region, but when you take the U.S., U.S. per capita consumption is one-third of the consumption of Europe, which gives you an idea of the size of the opportunity in front of us.

And the protein trend continues. Clearly, there has been a recent study published in the U.S., which is saying that 71% of American consumers want to add more quality proteins to their diets. So there's many reasons to believe that this growth continues. On our side, we are actually innovating in that space, so that we go from quantity of putting into quality of protein and other ingredients. We launched what we call Oikos Fusion, which is a patented blend of a whey protein, amino acids and prebiotic fibers, which help to build or maintain muscle during weight management journey.

So it becomes more and more functional, more and more science-based. And I think that will help to keep the momentum of the category moving forward. And then this capacity coming online for us, especially in the U.S., it will also release some of the pressures we have seen particularly in Q3.

Thank you, Jeremy. The next question from Celine Pannuti, JPMorgan.

So I would like to come back first on the U.S., if you could a bit help to understand some of the moving parts. So Juergen, you said that comp is not an issue, and you have a tougher comp, I think, in the fourth quarter. But at the same time, you're talking about this capacity coming online. Are we, therefore, expecting to see a sequential improvement in volume/mix in Noram?

And if you could as well try to go a bit deeper in understanding the sequence of actions and potential improvement in Coffee Creamers as we look into the next quarters and, you know, as well give us a bit more details on plant-based because it seems that it has been several times you've tried to prop up that performance and has not yet happened? And maybe lastly on that, you briefly mentioned the Oikos high protein. I know you were launching it in Costco. Can you give us a bit more details on that launch and its potential contribution going forward?

My second question will be so shorter. It's on the overall guidance. You mentioned the top line, but if I think about the profit growth and the fact that Specialized Nutrition is growing much faster this year and, obviously, a more profitable category from a gross margin and EBIT margin standpoint, can we think about how you -- how do you think about potential uplift to gross margin? Between putting that to the bottom line and reinvestment? And if so, if there are more reinvestment, where about are you putting this in the second half of the year?

Look, on North America, I think I probably said it -- I said almost all 2 softer quarters, but there is nothing structural here. We are pretty confident in the ability of the North American business to again deliver very solid contribution to the growth of our company. And this is because we are not dependent on one single growth engine. High protein yogurt, we will get a release on the constraints, which were really tense in Q3 as capacity comes online in the course of Q4. That we'll definitely have, in a category, which continues to fly. And this is releasing, as I said, not only the constraint on high-protein growth, but also on the rest of the Europe.

Coffee Creamers, we are fighting back our products on the shelf. That's the journey, as I said, and actually gives us the opportunity to also innovate at the same moment to make our products more on trend of naturalness and clean label. And I think that's an important one actually to get international delight back to where it belongs. We have been winning share, and let's not forget that for 2 consecutive years on Coffee Creamers. 2025 is now a more challenged year because of, let's say, the supply chain issues we had at the beginning of the year. But structurally, we believe that this brand is a very powerful brand in a continuously growing category.

Plant-based, I think this actually coming now to North America. We bring a lot of the goods, best practices we have been executing on Alpro in Europe region that will help. And you will see that in the not so far future translating into the way we are relaunching silk in the U.S. So we continue to be optimistic that this will play a role in our growth trajectory in North America on both sides on milk, but also on plant-based yogurt, something we have not been talking about so much over the last 1 year. And you know that plant-based yogurts play already a very sizable role in Europe, not yet in the U.S. There's the right space for us.

And finally on protein shakes, actually protein shakes, we continue to receive very positive feedback from consumers. We are still not having a robust repurchase data, that takes some time as usual, but we are not standing still and just waiting. We have decided to selectively expand to retailers in the U.S. to build more awareness. And then once we have sufficient data, we are going to decide on the level of acceleration for 2026.

And finally, Kate Farms is not to be underestimated, I believe, an amazing business. The traction we are getting on the ground is amazing. And finally, we have a $500 million platform of Medical Nutrition in U.S., something we never had before, which we believe can also get us a sizable contribution there. So overall, I would say, many reasons to be confident in the growth perspective of this region.

When it comes to the guidance, look, I think top line is very clear. Bottom line, we are sticking with what we always said. For us, what is important that quality growth translates into operating leverage so that we can do both, expanding our margins progressively and reinvesting into our business. And I think this year, 2025, demonstrates again that the portfolio rooted into science is a superior portfolio growing faster than the industry. So you will see us doubling down on science on brand investments. You saw probably that 2 weeks ago, we opened a research center in Saclay, particularly on gut health, particularly on OneBiome in order to make sure that we stay pioneer in science for gut health for the years to come.

And so we will progressively increase our margins at the right speed. And any upside, and we have been saying that, I think, consistently, any upside, which goes beyond, we will invest back into the business in order to solidify our growth momentum for the years to come.

Juergen, if I may just follow up on the U.S. answer you gave? I mean how much visibility you have on the short term? I mean, clearly, you made the point about the potential in the coming quarters? Just because I know that Q4 is a tougher comp, is this something that we should think about as we think the final quarter in that region or all the positive you mentioned, including the capacity, means that your volume will remain positive?

Celine, I think the two elements to say. Again, no particular message to pass on comps on either for Q4. And on the other side, we are not guiding by quarter by region. So probably good bucket there.

Thank you, Celine. The next question is from Jon Cox, Kepler.

It's Jon from Kepler here. A couple of questions for you. Just really following up a little bit on that North America. You call out the plant-based as being responsible for the slowdown. But plant-based is a relatively small part of the overall pie. Just wondering if you could say, well, this overall slowdown half is maybe the plant-based and half is caused by the cream is still coming back, less capacity in protein. Just to give us a bit of an idea because otherwise, you'd think, well, the plant-based has just fallen off a cliff because it's a relatively smaller part of the business compared to the creamers and the protein and all of those type of things.

Secondly, just on Europe, and obviously, that's a different story as things get better. Can you just give us a bit of a rough idea on the split in the European yogurt market, particularly with regards to your own portfolio. So I think in North America, protein is over half of yogurt. But in Europe, it's probably a lot smaller. Just to give us a bit of an idea of when can we see or expect this ongoing acceleration. It seems to be more driven by mix. Where are you as part of that journey and towards the sort of value added?

And maybe just a follow-up question from Warren's actually on the guidance for the year. You seem to be saying North America, you've got the capacity coming on in protein. You're confident in some of that plant-based improving. Ambient protein doing better in North America, in Europe, things moving ahead and obviously, a lot of momentum in China. Why should we assume there will be a slowdown from Q3 in Q4?

Good morning, Jon. First question, you are absolutely right, plant-based in a way when you look at the size within the North American portfolio, it's not sizable enough in order to explain meaningful acceleration or meaningful deceleration. And this is not the message we have passed. There are two elements which are important for North America.

The first one is really that capacity constraints have been heavy in Q3 on yogurt, which forced us to make important choices. That will be getting better over the coming quarters, starting in the course of Q4, and that we definitely have for the quarters to come in North America. And on the other side, we are fighting back on Coffee Creamers, as we said, to get back the product on the shelf. And this is really the two, I would say, key priorities for North America for the quarters to come.

For Europe, we are actually, as you say, very happy with EDP. The portfolio setup is very different for dairy, U.S. versus Europe, you say it. In the U.S., half of the portfolio is Greek yogurt and most of that is high protein. It's still a minor part in Europe, but building very, very fast because it's growing at a very fast speed, high protein, Greek, Skyr. It's getting more space on the shelf. Retailers are willing to open more space.

The year 2026 and the negotiations to come will be a great opportunity to also negotiate more space for these high-growth segments. And so it will get more and more weight. And so in that sense, you are right. It's quite, I would say, fairly balanced contribution from both volume on one side because we have more and more consumers discovering and rediscovering the yogurt, actually, and mix because we are going to more premium value-added propositions.

And then on Q4, there are some things in Q4, which will go better and some things in Q4, which may not go that well. I mean, China, now 2 quarters firing on all cylinders, which is really exceptional. And then some other elements, we have things where we can see acceleration. In business, it's never a linear journey. And so this is why we don't give any kind of guidance for Q4, neither for other quarters.

I want just to follow up on the creamers. When does the comp get easier because you've now had, what, 3 quarters of the incident? I think it was you removed from some shelves and maybe there was a capacity problem as well. I guess that will roll off in, what, Q1 or Q2 next year?

If I recall it well, I think it was at the back end of Q1 that we were having some supply issues. So that's probably the moment we'll rollover.

Thank you, Jon. The next question from Charlie Higgs, Redburn.

Sorry, it's another one on Coffee Creamers in the U.S., please. Are you able to quantify roughly how much shelf space you've lost and what the ambition is to get back to? Because I think you won quite a lot of shelf space because the main competitor had issues. So just whether you think you can actually get back to what it was previously?

And then just a bigger picture on Creamers. Coffee prices in the U.S. are soaring at the moment. It could pressure coffee in the away-from-home channel. Do you think Creamers could be a beneficiary of high coffee prices in the at-home channel? Or do you think they're more of a discretionary item that could see pressure along with the whole coffee category?

And then my second question is on Water, please, where I was wondering if you could speak a bit more about Mizone, which slowed a little bit quarter-on-quarter, but it's still very solid. What are your plans there to keep the brand momentum going and could you also just touch a bit on Indonesia and Aqua and what you're seeing in that market, please?

Charlie, let me start from your second question on what I would say a solid print for the Waters category in Q3, Europe doing well across many brands, including Evian. In China, Mizone completing another successful season. When you look at the number in terms of net sales, we are growing, I think, 5.6% in the Q3. What it is hiding is that the underlying volume growth is high single digits again. We are investing into distribution. We are investing into getting more space with distributors and on point of sale in order to prepare already for 2026 season.

In an overall beverage category, which is growing at the low single-digit pace, we see that healthy beverages are outperforming, and this is exactly where Mizone is positioned. And this is where we see that we have the opportunity, and this is why we are pushing hard on distribution here. So I would say that's on track. Indonesia, also with a better quarter. You know that Q2 was pretty muted. We're not happy with the weather there. Q3 definitely was a bit back to normal, in that sense. It's a very competitive market, all across, I would say, food and beverage. We have a very strong brand with Aqua, a leader in the market, a local brand, and we are investing into making sure that we are staying ahead of competition there, but it's a very competitive space.

When it comes to Coffee Creamers, in a way, what's happening there is that we had our supply chain issues in Q1. Shares and distribution was falling down quite significantly. You can see that from scanner data. Market shares have stabilized in Q2 and since then have been recovering as the distribution has. That's the journey again, because it's store by store to get it back. Overall, this is a space which in a way continues to grow because people prepare more and more coffee at home because there's, from an economic standpoint, more affordable way to have your coffee experience and the category is benefiting from it.

As people are looking for more healthy proposition, it's important that we will internationally like offer the right product, and this is why I was saying you can expect us to innovate and renovate towards naturalness and clean label in order to play a leading role in this category, which continues to show a solid growth momentum.

Thank you, Charlie. Next question from Tom Sykes, Deutsche Bank.

Just on your pricing. When you look at your country category average -- obviously, group pricing and the pricing by category, where would you say is the biggest difference for yourselves versus competition? I think you were kind of asked earlier where were you investing the efficiency gains the most? And would you be able to offer kind of an aggregate the degree to which you're below market pricing at all, please, obviously, driven by your efficiency gains?

And then just on the high protein in North America, could you maybe give a view on how much of the consumption is first-time consumption? And how much is repeat users? What occasions are growing most quickly? And when you're saying you're now focused on quality, that sounds a bit like you're trying to get existing users to trade up. That doesn't sound like volume. So just wondering, is that a pivot a bit in the strategy and U.S. high protein at all, please?

Tom, look, you saw that pricing has been playing a minor role in our growth dynamic already for many quarters. And that's our strategy actually. We are obsessed, I can say, about volume/mix growth. And for us, pricing is something we do when we need to do it for the differential between inflation and internal productivity. We have been discussing at a few occasions that we are delivering productivity on our cost of goods sold ahead of the industry and the operations teams are doing a fantastic job here, which is limiting the necessity to take pricing.

Now the way we take price or the way we invest into price is very strategic. On one side, it's consumer driven, so the price where there is high demand on high-protein yogurt, for example, especially with the price of protein rising over the last 12 months. And on the other side, we are investing into price where it makes sense. I was discussing earlier about, for example, Mizone in China, but there is also other categories in other regions where we intentionally invest into price, not to lower the price on the shelf because that's not our game, but in order to win distribution points for our products. And this is probably what you will also see moving forward into year 2026.

North America and the demand on protein, there is more and more consumers consuming more of our high-protein yogurt. And this is, I would say, an encouraging sign and trends, which means there is plenty of opportunity from us. And as I was saying, the U.S. consumption of yogurt is only 1/3 of the one of Europe. So there's a lot of headroom. Having said that, people understand better and better, the difference between proteins, the source of the protein, but also how to absorb the protein in the best way. And that means you need to have certain prebiotics and probiotics consumed at the same moment.

So we are going from quantity of protein to real benefit. And this is why we have been launching Oikos Fusion which is exactly enriched with these additional ingredients to make sure that you get the best benefit to your body and wellbeing. So it means that we are looking -- we are expecting further volume growth, but we see also mixed opportunities by differentiating versus what competition is having in this space.

Thank you, Tom. Next question from David Roux, Morgan Stanley, and I think it's going to be the last question.

Sorry about that. I'd like to just go back to infant formula in CNAO, for a moment. I've got a couple of questions there. My first one is, can you give us a sense of what like-for-like for China infant box formula was? Or how does that compare to the 17% for Specialized Nutrition in CNAO? And then just building on from this, you spoke about market growth across the stages earlier, but perhaps you can quantify Danone's growth across the infant milk stages, once again, past relative to the 17% for SN in the region?

David, look, very good performance, not only in Q3 on Early Life Nutrition in China. The team has really built, over those last years and particularly those last 2 years, something where we have a competitive edge. And I was talking about two areas where I think we are ahead of competition. One is our truly digital business model. And the other one is on the Essensis platform, which is standing out at shelf because here, again, it's not ingredient-led, but benefit-led. This is helping us to win share quarter-by-quarter over many quarters, and we still see further headroom to grow our market shares with Nuturis, the innovation, which we only soft launch in Hong Kong, still to come to Mainland China. So I would say, very confident on our ability to win in that category in China.

When it comes to the category itself, what we are seeing is that the category has been overall stabilizing in -- at the back end of 2024 has been going into the growth momentum in stage 1, first, thanks to the birthrate. Stage 1 is, from a weight perspective, a bit smaller than stage 2 and stage 3, which is normal because in stage 1, you have still mother's breastfeeding and then moving progressively into mixed feeding. Now Stage 2 is in growth, and then it will go to grown up mix later on.

So it's a progressive evolution of the growth trends for the different stages. Overall, what we see today is a category, which is in moderate growth. And obviously, not easy to predict what the years to come will bring. It will depend a lot on the birth rates moving forward. You know that the government is trying to give many incentives to increase back birth rates, and we will see how effective that will be. What we do is, we focus on what we control and this is our initiative and growing our market share in this very attractive category.

And just perhaps a quick follow-up there. Please, can you remind me of Danone's revenue exposure to the infant milk stages in China?

Yes, as I was saying, we are pretty much in sync with what the category is having. So stage 1 is the smaller part of this category, so stage 2 and what comes after has a bit more weight in the portfolio. So in that sense, it's beneficial that the growth moves now on to later stages.

Thank you very much. So that was the last question. Thank you for your time this morning.

Thank you to all of you. Thank you for listening this morning. Great results for Q3, and we look forward to engage with you over the coming weeks. Have a great day.

This concludes today's conference call. Thank you all for participating. You may now disconnect your line. Thank you, and have a good rest of your day.