Danone // 2020 Universal Registration Document

DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 82 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 6. Information concerning the Group’ s operating activities Note 6.6. Off-balance sheet commitments relating to operating activities Commitments given in 2020 Amount of financial flows for the period (in € millions) Total 2021 2022 2023 2024 2025 and after Commitments to purchase goods and services (a) (3,690) (2,410) (764) (279) (89) (150) Capital expenditure commitments (336) (316) (20) − − − Guarantees and pledges given (21) (21) − − − − Other (75) (39) (17) (10) (4) (5) Total (4,122) (2,786) (801) (288) (93) (154) (a) Commitments relating mainly to purchases of milk, dairy ingredients and other food raw materials. Commitments given in 2019 Amount of financial flows for the period (in € millions) Total 2020 2021 2022 2023 2024 and after Commitments to purchase goods and services (a) (4,149) (2,417) (1,047) (402) (171) (112) Capital expenditure commitments (181) (178) (3) − − − Guarantees and pledges given (17) (17) − − − − Other (182) (53) (21) (11) (14) (83) Total (4,528) (2,665) (1,070) (412) (186) (195) (a) Commitments relating mainly to purchases of milk, dairy ingredients and other food raw materials. Other commitments The Company and its subsidiaries are parties to a variety of legal proceedings arising in the normal course of business, notably as a result of guarantees given on disposals since 1997. In some cases, damages and interest are sought. Provisions are recognized when an outflow of resources is probable and the amount can be reliably estimated. Note 6.7. Financial risks associated with operating activities The Group’s financial risk policy and its organization are detailed respectively in Note 13.3 and Note 13.1 of the Notes to the consoli- dated financial statements. Foreign exchange risk Risk identification The Group mainly operates on a local basis and consequently in the currency of the country in which it is operating, thereby incurring no currency risk. However, the location of some of the Group’s produc- tion units may result in intercompany billings in foreign currencies. This applies particularly to the Specialized Nutrition Reporting Entity and, to a lesser extent, to the EDP Reporting Entity excluding the activities of the WhiteWave companies. Similarly, some raw materials are billed or indexed in foreign currencies, in particular for the Waters and EDP Reporting Entities. Lastly, the Group is also developing some export activities. The sales and operating margin of some subsidiaries are therefore exposed to fluctuations of foreign exchange rates against their functional currency. Risk monitoring and management The hedging policy related to operational foreign exchange risk is detailed in Note 13.3 of the Notes to the consolidated financial statements, section Operational currency risk management. Exposure Pursuant to its financial currency risk hedging policy, the Group’s residual exposure (after hedging) is not significant over the hedging period. As of December 31, 2020, the main hedged currencies in terms of value included the British pound, Chinese yuan, Australian dollar, Mexican peso, US dollar and Russian ruble. Commodities risk Risk identification Danone’s principal raw material needs consist primarily of: • materials needed to produce food and beverage products, mainly milk, sugar and fruit. In terms of value, milk is the main rawma- terial purchased, primarily in the form of liquid milk, for which the operating subsidiaries typically enter into agreements with local producers or cooperatives. Its price is set locally, over contractual periods that vary from one country to another. The other main food raw materials are fruit-based preparations; • product packagingmaterials, in particular plastics and cardboard (“packaging”). Packaging purchases are managed through regional or global purchasing programs to optimize skills and volume effects. Prices are influenced by supply and demand at the global and regional levels, economic cycles, production capacities and oil prices;