Danone issues Q1 results

By Jim Cornall contact

- Last updated on GMT

Danone's Wexford facility in Ireland. Pic: Danone
Danone's Wexford facility in Ireland. Pic: Danone

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Danone has published its first quarter of 2021 statement, which shows consolidated sales stood at €5.7bn, down 3.3% on a like-for-like basis, with a 3.7% decline in volume and a 0.3% increase in value.

On a reported basis, sales were down 9.4%, mainly driven by the negative impact of exchange rates (7.0%) that resulted from currency devaluations against the euro in the US, Latin America, Indonesia, Turkey and Russia. Reported sales also included a slightly positive scope effect (0.4%) as well as a 0.4% organic contribution from hyperinflation geographies such as Argentina.

In terms of regional dynamics, Europe and North America sales declined by 2.8% on a like-for-like basis, from a high base of comparison that was driven by the pantry loading that benefited these regions in March 2020 for Specialized Nutrition and, to a lesser extent, Essential Dairy and Plant-based (EDP).

Rest of the World sales decreased 4.2%, with China, Latin America, and Africa experiencing continued pressure in the quarter.

In the first quarter, EDP net sales were up 1.6% on a like-for-like basis, including a 0.5% increase in volume and 1.1% in value, sustaining momentum despite an exceptional first quarter last year marked by panic buying and pantry loading.

Danone said Europe and North America delivered solid growth, driven by probiotics, protein and plant-based. Europe delivered another quarter of growth. This performance was driven by the continued strength of the plant-based portfolio, growing well into double-digits, while the probiotics and protein platforms posted another quarter of solid growth. The Essential Dairy portfolio registered broad-based market-share gains led by Actimel, Danette and YoPro.

North America recorded the largest absolute net sales quarter ever despite a high base of comparison, sustaining a solid growth momentum, notably in coffee creamers and plant-based, which delivered strong and high single-digit growth respectively. In the Rest of the World, sales were flat, with soft dynamics in CIS, while Latin America and Africa started to show the first signs of improvement compared to previous quarters.

In the first quarter, specialized nutrition net sales declined by 7.7% on a like-for-like basis, with a decrease of 7.0% in volume and 0.7% in value, from a high base of comparison driven by the pantry loading of March 2020. Adult Medical Nutrition delivered another quarter of strong growth, driven by China. Infant Nutrition remained penalized by Covid-related channel disruptions in China, with cross-border channels sales down around 45%. Domestic channels confirmed their growth momentum. All in all, China sales decreased at a steep double-digit rate. In Europe, sales declined at a mid-teens rate, but market shares held up amid continued soft category dynamics. In the Rest of the World, Danone said it continued to register a solid performance and market-share gains, led by South-East Asia and Middle East.

Despite short-term uncertainties,the company said a gradual reopening of economies is assumed to start from H2, as vaccination programs are rolled out. Meanwhile, a broad-based acceleration of inflation in milk, ingredients, packaging and logistics is expected.

Danone said it expects to be back to like-for-like growth in Q2, and to return to profitable growth in H2. FY recurring operating margin is expected to be broadly in line with 2020.

During Q1, on February 18, 2021, Danone announced it acquired 100% of the shares of Earth Island, maker of Follow Your Heart brands of plant-based foods. The transaction closed on April 14, 2021.

On February 28, 2021, Danone announced it had reached an agreement with COFCO Dairy Investments Limited to convert Danone’s stake in China Mengniu Dairy Company Limited, currently held indirectly, into a direct holding. On April 16, 2021, the conversion process was finalized. This conversion is a first step towards facilitating Danone’s disposal of its stake in Mengniu.

Related topics: Manufacturers, Danone, COVID-19

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