Danone // 2020 Universal Registration Document

3 Business highlights in 2020 and outlook for 2021 3.3 Free cash flow 49 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 3.3 FREE CASH FLOW At the date of this Universal Registration Document, Danone esti- mates that the cash flows generated by its operating activities, its cash flow and the funds available through confirmed credit lines managed at the level of the Company will be sufficient to cover the necessary expenses and investments, the debt service (including the financing of the exercise of any put options granted to holders of non-controlling interests) and the payment of dividends. Free cash flow reached €2,052 million in 2020, down from €2,510 million in 2019, implying a cash conversion rate of 8.7%. The decrease from last year has been driven by a deterioration of working capital due to negative channel mix as Danone’s exposure to traditional channels in emerging markets is highly cash generative. Capex stood at €962 million in 2020, broadly stable compared to last year (€951 million in 2019). FREE CASH FLOW Transition from operating cash flow to free cash flow Year ended December 31 (€ millions) 2019 2020 Cash flow from operating activities 3,444 2,967 Capital expenditure (951) (962) Disposal of tangible assets & transaction fees related to business combinations (a) 17 47 Free cash flow 2,510 2,052 (a) Represents acquisition costs related to business combinations paid during the period.