DANONE posted stronger-than-expected quarterly sales on Thursday (Apr 18), with all businesses delivering volume growth as the world’s largest yoghurt maker managed to raise prices to cope with higher input costs.
The maker of Activia yoghurt, Evian water and Aptamil kept its goals for like-for-like 2024 sales growth at between 3 per cent and 5 per cent, with a moderate improvement in recurring operating margin.
“This update should see shares as a slight outperformer to peers this morning,” Jefferies analyst David Hayes said. “A confident tone on ‘everything going to plan’ in the release is supported by delivery in key areas.”
Shares in Danone have fallen 3.3 per cent since the start of the year.
Like-for-like sales rose 4.1 per cent to 6.79 billion euros (S$9.85 billion) in the first quarter, beating expectations for 3.4 per cent growth in a company-compiled consensus of 17 analysts.
“In what remains a challenging environment, we continued making good progress on our transformation agenda,” CEO Antoine de Saint-Affrique said in a statement.
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Like Nestle and P&G, Danone is one of several major consumer goods firms which have sharply raised prices over the past two years to manage high input costs.
Their problems began with the Covid-19 pandemic and unusual weather patterns hurting agricultural commodities, and have worsened since Russia’s invasion of Ukraine.
Danone increased prices by 2.9 per cent during the first quarter, its smallest hike in at least two years, against analysts’ expectations for them to rise 2.7 per cent. The prior fourth quarter, the company had increased prices by 4.3 per cent.
Despite investor concerns that the price hikes could lead retailers’ private label brands to capture market share, Danone’s first-quarter sales volumes/mix rose 1.2 per cent, ahead of the 0.8 per cent increase analysts had expected. REUTERS
