Danone, sales above expectations thanks to the Far East and more expensive brands

The agribusiness group Danone closed the first six months of the year with a net profit of EUR 1.219 billion, up 11.5% compared to the same period in 2023. Recurring net profit was EUR 1.162 billion (+2.6 per cent), when recurring EPS (earnings per share) stood at EUR 1.80 (+2.6 per cent) and EPS at EUR 1.89 (+11.6 per cent). Revenues, on the other hand, declined by 2.9 per cent to EUR 13.757 billion, negatively impacted by the exchange rate effect and the change of perimeter (Danone terminated its activities in Russia following the war in Ukraine). At constant exchange rates and constant perimeter, sales were up by 4 per cent. Danone, after the half-year accounts, confirmed the guidance 2024, expecting sales growth like-for-like between 3% and 5%, with a slight improvement in recurring operating margins.

Danone SA said customers are returning to more expensive branded products as cost-of-living pressures ease and some Asian markets recover. The French yoghurt producer said sales on a like-for-like basis rose 4 per cent in the second quarter, compared to 3.8 per cent expected by analysts. Almost three quarters of this was due to higher volumes and consumers buying more expensive formats, rather than higher prices. China, Japan, Australia and New Zealand grew faster than other regions, with sales up more than 8% on a comparable basis, fuelled by specialised nutrition, products such as yoghurt in Japan and the resurgence of the Mizone vitamin drink in China.

Specialised nutrition, which includes a range of products for cancer patients in which Danone is expanding, has been the company's fastest growing unit and is set to play an important part in the next phase of its recovery effort.

Danone is just one of the global branded products giants trying to win back struggling customers after a prolonged period of inflation and high rates forced households to cut back, often switching to cheaper supermarket labels. It bucked a trend set by rivals such as Nestlé SA, PepsiCo Inc. and Unilever Plc, which missed peak estimates for the quarter due to weak consumer demand in some countries, including the US.