DAVY VIEW

Danone's ambition to pivot its model to a local and more decentralised structure is not without risk; however, standing still presents an even bigger risk. Despite glimpses of progress in 2018 and 2019, Danone's long-term execution has been marred by inconsistency. This transformation warrants a structural and cultural readjustment - one that is without precedent at Danone. It's an all-in bet, almost binary, with €1bn of gross cost savings targeted by 2023. The equity infers future delivery consistent with its past, which we think is harsh. We lower FY21 EPS by 4.8% and upgrade FY22/FY23 EPS by 7% and 10% respectively.