Danone bounces back to profitable growth in H1, announces board revamp, share buyback program

FRANCE – French multinational dairy company Danone has bounced back to growth in the first half of 2021, reporting a 1.6% rise in consolidated sales on a like-for-like basis. 

Danone’s consolidated sales for the first half of the year amounted to €11.84 billion (US$14.07 billion), while operating income fell 4.2% LFL to €1.55 billion (US$1.84 billion). 

In a statement, the company attributed this to a return to growth across all categories in the second quarter with net sales for the quarter increasing 6.6% on a like-for-like (LFL) basis. 

The owner of Evian Water and Activia Yogurt posted €6.17 billion (US$7.33 billion) in second-quarter sales, up 3.6% on a reported basis. 

Danone’s second-quarter results were driven by a recovery in the company’s Waters unit, as well as sustained momentum for its Essential Dairy and Plant-based (EDP) division and a return to growth for Specialized Nutrition. 

In the quarter, the company’s Waters unit increased 19.5% to €1.13 billion (US$1.34 billion), led by 6.6% volume growth. Recovery was mainly driven by Europe mobility, while emerging geographies remained more impacted by Covid-19 related restrictions. 

Danone’s Specialized Nutrition division also returned to growth in the quarter, rising at 2.8% to €1.79 billion (US$2.13 billion); with adult nutrition delivering high single-digit growth and infant nutrition low single-digit growth.       

“We maintained strong momentum in our EDP business, led by growth in dairyand plant-based reporting its 6th consecutive quarter of double-digit growth, and a solid performance in Europe and Noram,” said interim co-CEOs of Danone, Véronique Penchienati-Bosetta and Shane Grant. 

The results are in line with Danone’s expectations announced in Q1: a goal of returning to profitable growth in Q2 and H1 thanks to the gradual reopening of economies. 

Danone says its return to growth was driven by its portfolio review process – including the sale of its plant-based nutrition brand Vega and its minority stake in China Mengniu Dairy – supported by selective reinvestments and channel execution focus. 

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Last year, Danone was significantly impacted by a 28% fall in bottled water sales amid Covid-19 related lockdowns, with Q2 2020 sales falling 5.7% to €5.94 billion (US$7.06 billion). 

The group’s lackluster performance led to the ousting of former Danone boss Emmanuel Faber by some shareholders and activist investors who disapproved the group’s strategy and overall performance. 

To effect necessary changes for profitable growth, Danone has appointed the former boss of Barry Callebaut Antoine de Saint-Affrique to be the new CEO; he is set to resume office this September. 

Danone further said it will replace nearly all of its board members over two years, including the son of its founder Antoine Riboud, who will step down as a board member after 30 years in April 2022. 

Danone has also launched a share buyback program of up to €800 million (US$1.15 billion), as a sign of the company’s confidence in the future. 

The company further reiterated its 2021 guidance: a return to profitable growth in H2 and full-year recurring operating margin broadly in line with 2020. 

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