Danone thrives during the pandemic, registers highest growth in 9 years

FRANCE – French multinational food-products corporation Danone has recorded a 3.4% growth for the financial year 2020 despite of the pandemic related challenges that affected businesses globally.

Danone said that the 3.4% LFL (like for like) growth was its highest since 2020, a reflection of the company’s strong resilience during the pandemic.

Net sales declined by 6.6% to US$28.63 billion from US$30.65 billion in the previous years.

The company’s net income on the other hand, jumped 1.4% to US$2.37 billion from the previous year’s US$2.34 billion.

On performance by product category, the group’s Essential Dairy & Plant-based category posted net sales growth of +3.4% in 2020 on a like-for-like basis.

This growth according to the company was sustained by both essential Dairy, up low-single digit, and Plant-based that posted double digit growth.

Plant-based posted a 15% growth and reached US$2.67 billion of sales in 2020, up from US$2.3 billion in 2019.

The specialized Nutrition category posted a 0.9% decline in net sales in 2020 on a like-for-like basis, notably reflecting the negative country mix from Infant Nutrition in China.

The company’s Waters was the most affected category, reporting sales decline of  16.8% in 2020 on a like-for-like basis.

Danone attributed the dismal performance by its water division to COVID-related restrictions to mobility that disrupted the company’s ability to serve consumers in out-of-home and impulse channels.

“After making 2020 a year of both delivery and progress under serious challenging conditions, we know 2021 is therefore going to be a year of recovery,” Emmanuel Faber, Chairman and Chief Executive Officer said.

Faber added: “we are focused on preparing our return to sales growth as soon as Q2, and are fully confident that we are building the right conditions and momentum to reconnect with our profitable growth agenda as soon as H2.”

During the year, Danone announced that it had entered into an agreement to acquire 100% of the shares of Follow Your Heart, a pioneering leader in plant-based foods.

Follow Your Heart holds leading positions in the plant-based cheese and mayonnaise categories, in addition to several other delicious plant-based products.

Danone said the acquisition will enable it enhance and expand its plant-based offering, including cheese, while contributing to its goal of increasing plant-based sales worldwide from more than €2 billion in 2020 to €5 billion by 2025.

Despite the impressive growth, Danone CEO has come under pressure from the a group of dissatisfied shareholders who believe the company is lagging behind competitors such as Nestlé and Unilever.

In his defence, Faber said: “I am conscious of the fact that this is not an easy moment for our shareholders, We take the decline of the share price very seriously.”

He added that the moves he has laid out since October — to cut €1bn in costs by 2023, restructure along geographical rather than category lines, renew management ranks, and sell underperforming businesses and brands — would pay off.

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