Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

France's Danone raises sales outlook despite hiking prices

Stock Markets Jul 27, 2022 05:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Danone logo is seen on a product displayed in Paris, France, February 26, 2020. REUTERS/Christian Hartmann/File Photo
 
ABT
+2.85%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
UL
+0.64%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Dominique Vidalon

PARIS (Reuters) - Danone raised its annual revenue growth forecast after its second-quarter sales beat analysts' estimates on strong demand for baby food and bottled water, even as the company raised prices to mitigate higher costs.

Danone, whose brands include Evian and Badoit water, Activia yoghurt and Aptamil baby formula, said it now expects like-for-like sales to grow at 5%-6% in 2022 compared with a previous forecast of 3%-5%.

CEO Antoine de Saint-Affrique, who took over in September 2021, faces mounting costs and uncertainties in the supply chain caused by Russia's invasion of Ukraine.

The company said its first-half recurring operating margin declined to 12.1% from 13.1% in the first half of 2021 due to higher input costs. It expects a full-year margin above 12% compared with 13.7% in 2021.

Finance chief Juergen Esser said that with cost inflation expected to remain in "the mid-teens" this year, Danone would tackle this by stepping up productivity which topped 5% in the first half.

Price increases contributed 6.1% to second quarter revenue growth. Danone would continue to raise prices prices whenever it can but had to walk a fine line between protecting its business against inflation and not "pricing ourselves out of the market," CEO Saint-Affrique said.

A highlight of the strong quarterly performance was an 11.4% jump in sales in the nutrition business, which includes infant milk formula and medical nutrition.

In the key Chinese market, infant milk formula posted mid-to-high single-digit growth.

In North America, Danone stepped up exports of Neocate formula and Aptamil baby formula to address shortages.

Top manufacturer Abbott Laboratories (NYSE:ABT) in February recalled dozens of types of its formulas, creating one of the most urgent food shortages in recent history for U.S. families.

One negative however, was the Mizone water business in China, which saw its sales decline sharply, hit by lockdowns across the country.

By 0834 GMT Danone shares were off 0.34% at 54.80 euros.

"Danone reads like a re-run of Unilever (NYSE:UL) with pricing surprising on the upside but input cost inflation keeping margins in with expectations. The good news story is continued strong China Infant Milk Formula," Jefferies analysts said.

Unilever Plc on Tuesday raised its full-year sales guidance after beating first-half underlying sales forecasts as the maker of Dove soap and Knorr stock cubes hiked prices to counter soaring costs.

Danone's quarterly like-for-like sales growth of 7.7% compared with analysts' estimates of 5.6% growth.

France's Danone raises sales outlook despite hiking prices
 

Related Articles

Britain's tax backdown bounces stocks and sterling
Britain's tax backdown bounces stocks and sterling By Reuters - Oct 03, 2022

By Tom Westbrook SYDNEY (Reuters) - Asian stocks bounced on Tuesday after Britain scrapped bits of a controversial tax cut plan, tentatively improving global market sentiment and...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email