Strong Chinese demand helps Danone to beat sales forecasts

By Dominique Vidalon

PARIS (Reuters) -Danone beat first-quarter sales expectations on Wednesday, as strong demand in China for infant milk formula and medical nutrition products outpaced weakness in coffee creamers in a competitive U.S. market.

The French consumer goods group, whose brands include Evian and Badoit water and Activia yoghurt, said first-quarter sales rose 4.3% on a like-for-like basis, compared with expectations of 3.8% in a company-provided analysts' consensus.

"With a 4.3% like-for-like sales growth in Q1, we have delivered a strong start to the year, across all categories, demonstrating the strength of our execution and the relevance of our health-focused portfolio," CEO Antoine de Saint-Affrique said in a statement.

The company's shares opened down 0.5%.

Danone posted a "solid set of numbers", said Bernstein analysts in a note, defying recent fears after some data had pointed to slowing growth.

The analysts also highlighted the 2.4% contribution from prices, up from 0.6% last quarter, which would help profits this year at a time of higher dairy costs.

Sales for the three months ended March 31 totalled 6.844 billion euros ($7.79 billion).

Danone's growing focus on health and science makes it more resilient in an environment marked by U.S. tariff uncertainty and weak consumer sentiment, De Saint-Affrique said.

China was the "star performer", said analysts at Barclays, with Danone gaining market share in infant formula, helped by its premium Essensis product. It is also seeing strong demand for medical nutrition products and the Mizone water drink.

Sales in North America, meanwhile, were up 3.7% in the quarter, driven by demand for protein products such as the Oikos brand Greek yoghurt range, which helped offset a "soft start" from coffee creamers in the United States.

Danone also faced supply chain issues in the first quarter that were now solved, finance chief Juergen Esser told reporters.

The company reiterated its full year 2025 forecast was in line with its mid-term ambition of like-for-like sales growth of between 3% and 5%, with recurring operating income growing faster than sales.

($1 = 0.8783 euros)

(Reporting by Dominique Vidalon;Editing by Sudip Kar-Gupta, Dominique Patton and Jane Merriman)