Danone posts strong first half results boosted by higher prices

FRANCE – French multinational food-products corporation, Danone, has posted a “strong first half,” after recording €13.33 billion (US$ 13.63B) in net sales, up 7.4% on a like-for-like (LFL) basis, despite an unprecedented external environment.

The LFL sales growth for the Activia yogurt and Aptamil baby formula owner included a 6.1% contribution from price increase to mitigate higher costs and a 1.3% contribution from volume/mix.

ADVERT

Meanwhile, the French dairy giant saw its H1 operating income increase by 62% to €1.38 billion. (about US$1.02 billion)

For the second quarter, Danone said it has recorded 7.7% LFL sales growth, with a 6.8% contribution from price and 0.9% contribution from volume/mix.

However, the company’s first-half recurring operating margin declined to 12.1% from 13.1% in the first half of 2021 due to higher input costs.

 

This strong first half, with broad-based progress despite an unprecedented external environment, is a testimony to the resilience, the focus, and the engagement of all Danoners.

Danone CEO, Antoine de Saint-Affrique Tweet

Danone’s waters unit grew its net sales by 7.9% to €1.3 billion, while the Specialized Nutrition business registered an 11.4% increase to €2.1 billion.

ADVERT

Meanwhile, the Essential Dairy and Plant-based (EDP) division saw 5.6% LFL sales growth in Q2.

Geographically, Europe’s sales rose by 5.4% in H1 and 5.1% in Q2 while in North America, Danone posted 7.2% LFL sales growth in H1 and 8.9% in Q2, driven by both price and volume.

In North America, Danone has recently stepped-up exports of Neocate formula and Aptamil baby formula to address shortages, which is also a significant contributor to its sales growth.

In China, North Asia, and Oceania, the company saw an 8.3% LFL sales increase in H1 and a 3.3% increase in Q2.

The company noted that the infant milk formula posted mid-to-high single-digit growth in the key Chinese market.

ADVERT

In contrast, the Mizone water business in China, saw its sales decline sharply, with Danone attributing the shortfall to lockdowns across the country.

Danone CEO, Antoine de Saint-Affrique, said: “This strong first half, with broad-based progress despite an unprecedented external environment, is a testimony to the resilience, the focus, and the engagement of all Danoners.

We started deploying our ‘Renew Danone’ agenda with discipline and consistency, further accelerating our growth in Q2.”

He added that while the quality of the company’s first half delivery is encouraging and leads to the ‘Renew’ journey, that helps them believe there is still much that can be done to deliver on both Danone’s purpose and ambition.

Danone has also raised its annual revenue growth forecast after its second-quarter sales that beat analysts’ estimates on strong demand for baby food and bottled water.

The company said it now expects like-for-like sales to grow at 5%-6% in 2022 compared with a previous forecast of 3%-5%.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro-industry. SUBSCRIBE HERE.

More News Articles

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.