The flagship of the French agri-food industry, Danone, has set its growth targets for 2022 but caution is still necessary in a volatile economic context, insists its CEO.
Following the publication of Danone’s first half results, investors remained impassive on the Paris Stock Exchange, with the price rising +0.02% to 54.98 euros in a market that was slightly up 0.39% at 10:50 a.m.
Managing Director Antoine de Saint-Affrique underlined “the strong first-half performance, driven by all geographies and categories, even as we face an unprecedented external environment.”
“Unprecedented Environment”
Danone, owner of the Activia, Evian, Aptamil and Actimel brands, expressed confidence for 2022 by announcing an increase in its turnover growth target, driven by higher prices, according to a press release published on Wednesday.
The group now expects an increase in sales of between +5 and +6% like-for-like, against +3 to +5% previously, thanks to the “price effect”, “and confirms that it expects a higher current operating margin to 12%”. In the first half, sales amounted to 13.3 billion euros, 12.6% more.
Its net profit, however, fell by 31%, to 700 million euros, weighed down by impairments linked to the sale of the rest of the shares in the companies with Mengniu, the Chinese dairy giant.
Under the impetus of Antoine de Saint-Affrique, who took over the management of the group in September 2021, Danone has defined its new “Renew Danone” strategy for the 2022-2024 period, but the war in Ukraine makes it difficult to deploy.
“We are only at the beginning,” the leader said during a conference on Wednesday morning.
Price increase
“Price increases have happened extremely quickly where possible” in geographic areas like North America, the general manager explained.
“In Europe, in some countries, we are in our third wave of increases but we must remain competitive,” he continued, and “in some cases, we face difficult negotiations.”
In France, for example, trade negotiations to transfer food price increases to large retailers have been underway since March 18 and are a source of great tension between manufacturers and distributors.
Driven by these price increases, all divisions of the group recorded an increase in their turnover. The Water category grew by 16.6% compared to the first half of 2021, the Specialized Nutrition category increased by 14.7% and dairy and plant-based products (PED) by 10.2%.
Jump in sales in the United States and Asia
The group, which communicates its results by large geographical areas, highlights that its sales increase wherever it is present. In North America, sales rose 16% in particular, driven by Waters.
The shortage of infant milk in the United States also allowed the group to increase “its exports of Neocate pediatric solutions and Aptamil infant milk.”
In China, North Asia and Oceania, sales increased by 16.9%, driven by sales of baby milk in China.
On the “rest of the world” side, Danone stresses that “operating conditions remain extremely tense in Russia and Ukraine”, which can be felt “in the volumes”, specified Juergen Esser, CFO.
Source: BFM TV
