Danone sales up in 2021

By Jim Cornall

- Last updated on GMT

Pic: Danone
Pic: Danone

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Danone has published what it said is “a solid set of full-year 2021 results.”

Net sales of €24.28bn ($27.1bn) in FY 2021 were an increase of +3.4% on a like-for-like basis and +2.8% on a reported basis compared to 2020.

The company saw a return to profitable growth in H2, with FY2021 recurring operating margin at 13.74% despite what it said was an increasingly volatile supply and cost environment, thanks to productivity step-up, pricing actions and mix management.

The Essential Dairy & Plant-based division (EDP) posted sales growth of 3.7% in 2021 on a like-for-like basis, and recurring operating margin decreased by 33 bps to 9.8%.

In the fourth quarter, sales rose by +4.3% on a like-for-like basis, reflecting a slight decline in volume (0.4%), and an increase of 4.7% in value.

Danone said the dairy portfolio delivered sustained solid growth while the plant-based portfolio registered solid mid-single-digit growth amid supply challenges. Europe & Noram posted another quarter of solid sales growth, with positive volumes.

In Europe, sales were sustained by the plant-based, probiotics and protein platforms, with Alpro, Actimel and Yopro continuing to deliver “exceptional growth.”

In Noram, sales were driven by Oikos and Two Good in Greek yogurt, continued momentum in Activia, and International Delight in creamers. Plant-based sales improved sequentially, supported by tight management of supply and demand in a challenging environment.

Platforms in the Rest of the World posted strong sales growth, led by price and mix, while volumes were down. Latin America and Africa showed further sales recovery, while in CIS, growth was low-single-digits, led by pricing, in a still challenging macroeconomic context.

Specialized Nutrition sales increased by 1.0% in 2021 on a like-for-like basis and recurring operating margin decreased by -105 bps to 23.5%.

In the fourth quarter, sales improved, rising by 6.4% on a like-for-like basis, with volume and value up 0.1% and 6.3% respectively.

The company said Infant Nutrition posted very strong growth the quarter, driven by China and the Rest of the World. China delivered growth in the mid-teens, with resilient market shares. Domestic labels and International Labels sold through cross-border platforms maintained their growth and competitiveness momentum.

Sales of International Labels sold through indirect cross-border platforms (daigous, friends and family) were slightly negative on a low base, with travel and trade with mainland China still very limited. In Europe, category dynamics remained soft, while in the Rest of the World sales were back to strong mid-single-digit growth, driven by both volume and value.

Other operating income and expense reached -€1.08bn (-$1.21bn) versus -€519m (-$579m) in the previous year, mostly driven by the one-off implementation costs of the Local First project and by the investments related to the transformation of Danone’s operations. As a result, reported operating margin was down -255 bps from 11.8% to 9.3%.

Net financial costs were down by €49m ($54.7m) to -€261m (-$291m), resulting from the issuance of bond in June 2021 at 0% coupon and from the decrease in the cost of net debt driven by two bond reimbursements in 2020 issued at higher interest rates.

Recurring net income from associates decreased significantly from €85m ($94.9m) to €7m ($7.8m), reflecting the disposal of Danone’s stakes in Mengniu and Yakult. Danone is also engaged in a disposal process of its 20% stake in the Fresh Dairy JV with Mengniu, which is thus classified as an asset held for sale under IFRS 5 as of December 31, 2021. Recurring minority interests stood at €70m ($78m), broadly in line with the prior year.

As a result, Recurring EPS was down 1.1% to €3.31 ($3.69), and Reported EPS decreased by 1.7% to €2.94 ($3.28).

Antoine de Saint-Affrique: Danone CEO, said, “With Q4 sales up +6.7% on a like-for-like basis and volumes at +0.4%, we ended the year on a strong note. This led to FY growth of +3.4% on a like-for-like basis, underpinned by a sound mix component. All categories contributed to this solid performance.

We delivered on our commitment to return to profitable growth in H2, with recurring operating margin at 13.7% in 2021. This was enabled by a strong focus on execution and a step-up in productivity, a pro-active approach to pricing and the disciplined implementation of Local First.

I am grateful to all Danone employees, who have brought in these results in unprecedented and challenging circumstances. Their passion and commitment are, together with the strength of our brands and the relevance of our purpose, at the heart of our resilience.

We have, over the last months, moved forward with determination on our transformation agenda, deploying Local First pragmatically and strengthening key capabilities, with the addition of globally recognized professionals in HR, Operations and R&I to Danone’s leadership team. We still have much more to do, and I look forward to our CME on March 8 when we will be in a position to share more on the next steps in our growth and renewal journey.”

Danone will hold a Capital Market Event on March 8, 2022, when it said it will share its vision, strategy and priorities, as well as revealing its guidance for 2022 and for the mid-term.

The company also announced three new independent members of its board of directors from April 2022, subject to approval at the 2022 shareholders’ meeting.

They are Patrice Louvet, currently president and CEO of Ralph Lauren; Géraldine Picaud, currently Chief Financial Officer of Holcim; and Susan Roberts, PhD, professor of nutrition at Tufts University and co-director of the Tufts Institute for Global Obesity Research.

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