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4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 6.Events and transactions outside the Group's ordinary activities
DANONE
REGISTRATION DOCUMENT 2015
102
Other operating income (expense) in 2014
In 2014, the net Other operating expense of €(511) million consisted mainly of expenses, including:
(in € millions)
Notes
Related costs
Impairment of the
Dumex
brand
6.2
(249)
Plan for savings and adaptation of the Group's organizations
in Europe
6.3
(160)
Restructuring of the Group's activities in Argentina
as a result of the economic climate
(26)
Capital losses on company disposals
(21)
Unimilk integration expenses (Fresh Dairy Products,
mainly Russia and Ukraine)
(14)
Note 6.2. Impact of the false safety alert issued by Fonterra with respect to certain ingredients
supplied to the Group in Asia in 2013
False alert issued by Fonterra with respect
to certain ingredients supplied to the Group
in Asia in 2013
Following a statement by the New Zealand government and Fonterra
on August 2, 2013 warning that batches of ingredients supplied by
Fonterra to four Danone plants in Asia-Pacificmight be contaminated
with
Clostridium botulinum
bacteria, the Group recalled selected
infant formula products from sale in eight markets (New Zealand,
Singapore, Malaysia, China, Hong Kong, Vietnam, Cambodia and
Thailand) of this region as a precautionary measure. The alert
was lifted on August 28 when New Zealand's Ministry for Primary
Industries (MPI) concluded after several weeks of tests that there
was no
Clostridium botulinum
in any of the batches concerned.
None of the many tests conducted by the Group, both before and
after this critical period, showed any contamination whatsoever
of its products with
Clostridium botulinum
. Danone's food safety
management system is among the most demanding and effective
in the world and includes rigorous testing of all of its products. But
because Danone makes consumer safety an absolute priority, its
teams nonetheless quickly and efficiently deployed recall procedures.
On January 8, 2014, the Group also announced its decision to
terminate its existing supply contract with Fonterra and make any
further collaboration contingent on a commitment by its supplier to
full transparency and compliance with the cutting-edge food safety
procedures applied to all products supplied to Danone.
Impact on Early Life Nutrition Division's sales
in Asia
The Early Life Nutrition Division's sales, notably those under the
Dumex
brand, were seriously affected by these recalls. Action plans
have been gradually deployed as from the second half of 2014 to
restore sales in affected markets, via the relaunch of the
Dumex
brand and the introduction of innovative products.
As of December 31, 2014, the Group could determine the early effects
of these initiatives, which were as follows:
•
in China, activity has gradually recovered but ended the year at
a level significantly below pre-crisis levels;
•
in the other countries concerned, which now generate more than
50% of the sales generated under the
Dumex
brand, the level of
activity is equivalent to pre-crisis levels.
Early in the second quarter of 2015, the Group noted that the situation
concerning the
Dumex
brand in China had once again worsened,
mainly due to the acceleration (i) of internet sales to the detriment
of the retail distribution networks, which are the sole means of
distribution of
Dumex
products, and (ii) imported super-premium
product ranges, from which Danone benefits significantly through
the success of
Nutrilon
and
Aptamil
(blue house) but which are still
detrimental to
Dumex
.
In order to bolster its early life nutrition activity in China, the Group
decided to rely on both the success of its international brands and on
the strength of its partnership with Mengniu and Yashili. Therefore,
Danone entered into a sales agreement with Yashili with regard
to
Dumex
's activities in China, in the amount of €150 million. The
agreement was signed on December 1, 2015, and is subject to the
approval of the competent authorities and Yashili's shareholders.