FRANCE – French food and beverage giant, Danone, has reported third-quarter net sales of EUR7.3bn (US$7.3bn), up 19.1% on a reported basis and 9.5% in like-for-like terms.
The third-quarter sales beat analysts’ estimates of a 6.9% rise in a poll compiled by the company as the firm was able to raise prices to counter soaring costs. Price increases contributed 10.9% to revenue growth.
These results also marked a sequential acceleration from the 7.7% sales growth achieved in the second quarter and reflected strength in all the group’s businesses, notably in baby food in China and bottled waters.
Danone’s Specialized Nutrition business led LFL sales growth, recording €2.13 billion in third-quarter sales – up by 12.2% on an LFL basis, led by China and Europe.
The owner of Evian and Bonafont recorded sales of €1.34 billion for its Waters business (+14.4% LFL), with volume/mix growth of 4.4%.
The closely-watched Essential Dairy and Plant-based (EDP) business saw LFL sales growth of 6.3% but recorded a decrease of 6% in volume/mix.
Geographically, the group registered sales growth of 6.0% in Europe on a like-for-like basis, driven by +8.0% growth in price, while volume/mix declined by 2.0%.
North America sales were up by 11.2% in Q3 2022 on a like-for-like basis, driven by accelerated pricing, up 10.2%, and by the continued roll-out of Revenue Growth Management (RGM) initiatives, leading to resilient volume/mix, at 1.0%.
China, North Asia & Oceania posted sales growth of +6.8% on a like-for-like basis, with the price up 1.6% and volume/mix up 5.2%.
For the units categorized in the rest of the World, registered sales grew by13.6% on a like-for-like basis, driven by price up 19.5%, while volume/mix contracted by 5.9%. Excluding EDP Russia, volume/mix was down 1.7% in the region.
Earlier this month, Danone announced it plans to shed its dairy and plant-based business in Russia, which accounts for 90% of its sales in the country and around 5% of group sales in the first nine months of 2022.
Danone announced that it will continue operating its specialized nutrition business (including baby formula) in Russia even after the shedding is successful.
CEO Antoine de Saint-Affrique commented: “We continue to implement pricing actions in a responsible and disciplined manner while focusing on the quality of our execution and reinvesting behind our brands and capabilities.
This shows in the performance of our Specialized Nutrition business, led by Aptamil, in Waters, where our Evian, Bonafont and Aqua brands continue to perform strongly in the marketplace, but also in Essential Dairy and Plant-based, with the resilience of [the] portfolio, notably in the US, Canada, and Japan.”
The company has raised its like-for-like sales guidance for 2022 to the growth of 7-8%, up from its 5-6% estimate in July and the previous steer of 3-5%. Danone reiterated it expects its annual recurring operating margin to be “above” 12%.
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