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Danone beats first-quarter sales forecasts, keeps 2024 goals
Global Banking & Finance Review®
Company
By Dominique Vidalon and Richa Naidu
PARIS/LONDON (Reuters) -Danone posted stronger-than-expected quarterly sales on Thursday, with all businesses delivering volume growth as the world’s largest yoghurt maker managed to raise prices to cope with higher input costs though at a slower pace than previously.
The maker of Activia yoghurt, Evian water and Aptamil kept its goals for like-for-like 2024 sales growth of between 3% and 5%, with a moderate improvement in recurring operating margin.
Sales rose 4.1% like-for-like to 6.79 billion euros ($7.25 billion) in the first quarter, beating expectations for a 3.4% growth in a company-compiled consensus of 17 analysts.
“In what remains a challenging environment, we continued making good progress on our transformation agenda,” Chief Executive Antoine de Saint-Affrique said in a statement.
Like Nestle and P&G, Danone is one of the several major consumer goods firms which have sharply raised prices over the past two years to manage high input costs.
Their problems began with the Covid-19 pandemic and unusual weather patterns hurting agricultural commodities, and have worsened since Russia’s invasion of Ukraine.
Danone increased prices by 2.9% during the first quarter, its smallest hike in at least two years. Analysts had expected prices to rise 2.7%. The prior fourth quarter, the company had increased prices by 4.3%.
Despite investor concerns that the price hikes could lead retailers’ private label brands to capture market share, Danone’s first-quarter sales volumes/mix rose 1.2%, ahead of the 0.8% increase analysts had expected.
($1 = 0.9366 euros)
(Reporting by Dominique Vidalon and Richa Naidu; Editing by Benoit Van Overstraeten and Subhranshu Sahu)
Like-for-like sales growth measures the revenue growth of a company by comparing sales from existing stores or locations over a specific period, excluding any new openings or closures.
Recurring operating margin is a financial metric that indicates the percentage of revenue that remains after covering operating expenses, excluding non-recurring items. It reflects the profitability of a company's core business operations.
Input costs refer to the expenses incurred by a company for the materials, labor, and overhead required to produce goods or services. These costs can significantly impact pricing and profitability.
A price hike is an increase in the selling price of goods or services. Companies may implement price hikes to offset rising costs or to improve profit margins.
Volume growth refers to an increase in the quantity of goods sold or services provided by a company over a specific period, indicating higher demand or market penetration.
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