DANONE - Registration document 2015

Overview of activities, risk factors

2.7 Risk factors

DANONE

REGISTRATION DOCUMENT 2015

RISK IDENTIFICATION

RISK MONITORING AND MANAGEMENT

Interest rates

Danone is exposed to interest rate risk on its financial liabi-

lities as well as its cash and cash equivalents. Through its

interest-bearing debt, for example, Danone is exposed to the

risk of interest rate fluctuations that affect the amount of its

financial expense.

In addition, in accordance with IAS 39,

Financial Instruments:

Recognition and Measurement

, interest rate fluctuations may

have an impact on Danone's consolidated results and conso-

lidated equity.

Danone has established a policy for monitoring and managing

interest rate risk aimed at limiting the volatility of its financial

result through the use of hedging instruments.

Counterparty, credit

Danone is exposed to counterparty risk, especially on banking

counterparties, as part of its financial riskmanagement activities.

As part of its normal activities, Danone has financial institu-

tions as counterparties, mainly to manage its cash and foreign

exchange rate and interest rate risks. The failure of these coun-

terparties to comply with one or more of their commitments

could adversely affect Danone's financial situation.

Danone's banking policy aims to reduce its risks by focusing

on the quality of counterparty credit and by applying limits for

each counterparty. Danone's exposure to these risks is des-

cribed in the Note 5.4 and 12.6 of the Notes to the consolidated

financial statements.

DANONE shares

Pursuant to its share buyback policy and the authorizations

granted by the Shareholders' Meeting, the Company may

choose to repurchase its own shares. Any fluctuations in the

price of the Company's treasury shares repurchased in this

manner have no impact on Danone's results. Any decrease in

the Company's share price could, however, have an impact on

the potential amount paid out in shares in connection with the

financing of acquisitions.

Other company shares

Danone holds stakes in listed companies. Any significant and/

or prolonged decline in the prices of these companies' shares

could have an adverse impact on Danone's results.

Danone has established a monitoring policy for this risk.

Danone's exposure to these risks is described in the Notes 11.2

and 12.7 of the Notes to the consolidated financial statements.