Charge of 600 Million Euros Announced by Group Danone

31/01/05 - Slower volume growth patterns for the HOD industry, an increasingly aggressive pricing environment on HOD (Home and Office Delivery) formats and faster than expected erosion of cooler rental revenues has led Groupe Danone to incur a charge of approximately 450 million euros in its 2004 consolidated accounts. The charge occurs in relation to its holding in DS Waters, LLP, the US Home and Office Delivery bottled water activities (HOD) joint venture that it formed with Suntory Limited in late 2003. The combination of Danone and Suntory's HOD businesses did not generate the cost synergies necessary to offset those negative factors, Danone says.

The one-time charge consists of an impairment of Danone’s holding in DS Waters and a provision for its related commitment to Suntory, Danone declares.

Danone' first entered into the US HOD market when it acquired McKesson Water Products, the leading HOD player on the West Coast, in early 2000. Late in 2003 Danone agreed to combine this business with the Suntory Water Group, a major nationwide HOD player; DS Waters, LLP was created from that merger.

Danone expects to have a solution regarding the long-term strategy for its holding in DS Waters, LLP by the end of the first half of 2005. The company has extended its review of HOD activities to Europe, and as a result, will incur in an impairment of approximately 150 million euros in relation to Danone Springs of Eden BV, its joint venture with Eden Springs Ltd on the European HOD market in 2004.

Danone full year 2004 audited results will be approved by the Board of Directors on February 10th and released on February 11th.