Sales up in Q1 at Danone

By Jim Cornall contact

- Last updated on GMT

Pic: Danone
Pic: Danone

Related tags: Danone

French food company Danone has published its first quarter financial report, which shows net sales of €6.236bn ($6.76bn) in the first quarter, up 7.1% on a like-for-like basis, with price up 4.9% and volume/mix up 2.2%, while net sales rose by 10.2% on a reported basis.

Reported sales also benefited from a positive organic contribution of hyperinflation geographies to growth (+1.0%), as well as a slightly negative scope effect of -0.2%, resulting from the combined effects of the integration of Follow Your Heart and the disposal of Vega.

Europe posted sales growth of 5.7% on a like-for-like basis, driven by 3.1% growth in volume/mix and 2.6% in price. In a context of supply challenges, Danone said the performance was led by Specialized Nutrition, which registered high-single digit growth on last year’s low base, and Waters, which posted double-digit growth, while EDP delivered a soft quarter, with plant-based growing low single-digit and dairy posting flat growth.

From a country perspective, France delivered a solid quarter, led by double-digit growth in Actimel, Alpro, and HiPro in EDP, but also Aptamil and evian. UK growth was driven by Aptamil and Fortimel in Specialized Nutrition, Activia, Actimel and Volvic. Performance was softer in Spain, with momentum in Specialized Nutrition, Waters and Plant-based offset by the weak performance of dairy.

North America sales increased by 5.5% on a like-for-like basis, benefiting from a positive contribution of 1.3% from volume/mix and 4.2% from price. Growth was driven by all categories, despite sustained supply challenges, with momentum in yogurt led by Oikos, Two Good, Activia and Danimals, and a strong quarter in coffee creamers, led by International Delight. Plant-based grew mid-single digits, with beverages showing momentum in growth and competitiveness while Adjacencies delivered continued strong growth.

China, North Asia & Oceania sales increased by 15.3% on a like-for-like basis, led by 13.2% in volume/mix and 2.1% in price. In China, Infant Milk Nutrition posted mid-teens growth. By channel, domestic channels selling Chinese Labels grew mid-teens; International Labels sold in cross-border eCommerce platforms delivered strong growth, largely offsetting the further decline of International Labels in Indirect channels (daigous, friends and family). Special Pediatric solutions and Adult Nutrition delivered double-digit growth, while Mizone registered a slight decline in the quarter, hampered by recent lockdowns. Beyond China, Japan delivered solid growth in EDP, while Oceania platforms showed momentum in Specialized Nutrition.

Rest of the World sales increased by 7.0% on a like-for-like basis, with volume/mix down 2.3% and price up 9.3%. Indonesia delivered high-single digit growth, led by the recovery in mobility that benefited the Aqua brand, while Specialized Nutrition posted a negative quarter, on the very high base of last year. Latin America posted mid-single digit growth, led by Mexico, where EDP delivered mid-single digit growth and Waters double-digit growth. Africa and Middle East delivered mid-single digit growth with a contribution from EDP, growing high-single digit, while Specialized Nutrition registered a soft quarter on the high base of last year. CIS and Turkey delivered strong growth, entirely driven by price while volumes were declining, in a very challenging context.

Russian operations

Danone said it condemns the ongoing war in Ukraine with no ambiguity. The company said it has decided to significantly adapt its operations in Russia, by refocusing its portfolio on essential dairy products, infant and medical nutrition, and ceasing all imports of evian and Alpro products; and stopping all new investments, including advertising, brand activations and consumer promotions.

Danone said it does not take cash, dividends or profits from Russia, and will donate any profits made in the country to humanitarian relief organizations.

2022 outlook

Following the presentation of its new strategic priorities and Renew Danone plan, Danone said it expects 2022 to be a foundational year.

In 2022, the company continues to expect price-led like-for-like sales growth between 3 and 5% and a recurring operating margin above 12%, assuming the reinvestment of 100% of Local First savings, a productivity higher than last year and a mid-teens level of input cost inflation (based on current macro-economic assumptions).

Juergen Esser, CFO, said, “Sales were up 7.1% on a like-for-like basis in the first quarter, kicking-off a good start to 2022. Growth was broad-based across geographies and categories, and benefited from a positive contribution from both Price and Mix. Volumes held well especially in North America and Europe as we continued to navigate a highly volatile and inflationary environment.

We are actively pursuing the agenda set out at our recent CME. In line with our Renew Danone approach, we are putting greater focus on the quality of our execution, supported by pricing and mix management as well as sustained productivity efforts. As announced, we have now started our reinvestment program with savings generated by Local First.

Our teams are mobilized to make 2022 the foundational year it ought to be for Danone as we move towards sustainable value creation for all. We reiterate our guidance for the year, with price-led like-for-like sales growth in the 3 to 5% range and recurring operating margin above 12%.”

 

Related news

Related products

Related suppliers

Follow us

Products

View more

Webinars

Food & Beverage Trailblazers

F&B Trailblazers Podcast