Danone’s third quarter sales climb to US$7.13bn boosted by Chinese market

FRANCE – Danone posted a 3% increase in like-for like sales to €6.42 billion (US$7.13bn) in its third quarter ending September 2019 boosted by the performance of its baby food products in China.

While value growth continued to be the main growth driver at 4.6%, Danone saw sales in its early life nutrition segment rise by more than 20% in China, thanks in part to an increased presence in stores in lower tier cities, growth in e-commerce and innovations roll-out.

During the three months period, sales volumes however declined by 1.6%, impacted by lower demand in Waters Europe and Russia.

On a category basis, Danone’s essential dairy and plant-based (EDP) posted a slight increase in net sales (0.7%) on a like-for-like basis, including a 3.4% increase in value despite a 27% decrease in in volumes. Plant-based delivered consistent strong growth, including a double-digit growth of Alpro.

Its specialized nutrition posted strong growth in the third quarter, increasing 9.8% on a like-for-like basis, with an increase in value of +9.0% reflecting a positive mix both from a country and a product perspective resulting from value-enhancing innovations.

However, in the company’s waters division, which includes brands such as Volvic and Evian, sales were down 0.9% on a like-for-like basis.

In Europe, against an exceptional base of comparison, sales were down low-single digit in waters, particularly in August, as temperatures were significantly lower than the year-ago period.

“Our business continues to demonstrate its resilience by delivering acceleration in revenue growth in Q3,” said Emmanuel Faber, Danone CEO.

“The return to strong growth momentum for specialized nutrition in Asia is a highlight, reversing the trend reported last year.

“Across Danone, many of our initiatives aimed at quality of growth, product innovation, price-mix enhancement and revenue management discipline are gaining further traction with positive outcomes for our consumers and customers.

“Mindful of growing geopolitical uncertainties and softness in some markets, we continue to transform our business at pace so that it is well-positioned to respond to market needs. This keeps on track to deliver sales growth acceleration, steady improvement in recurring operating margin and strong recurring EPS expansion.”

After a 2.1% like-for-like sales growth over the nine first months of the year, Danone is now targeting full-year like-for-like sales growth between 2.5% and 3%.

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