Danone has posted stronger-than-expected quarterly sales, with all businesses delivering volume growth, as the world's largest yoghurt maker managed to raise prices to cope with higher input costs.
The maker of Activia yoghurt, Evian water and Aptamil kept its goals for like-for-like 2024 sales growth of between 3% and 5%, with a moderate improvement in recurring operating margin.
Sales rose 4.1% like-for-like to €6.789 billion in the first quarter, beating expectations for a 3.4% growth in a company-compiled consensus of 17 analysts.
Price Increases
Danone, like rivals Nestlé and Unilever, sharply increased prices in the past two years to cope with higher commodities and supply chain costs.
Analysts and investors have, however, raised concerns this could lead retailers' private label brands to capture market share, and Danone said in February that price increases would be at a slower pace this year than previously.
Danone raised prices by 2.9% in the first quarter of 2024, compared to an increase of 4.3% in the fourth quarter of 2023.
Sales volume/mix rose 1.2%. Analysts had expected prices to rise 2.7% and volume/mix to increase 0.8%.
Transformation Agenda
"In what remains a challenging environment, we continued making good progress on our transformation agenda, strengthening our category fundamentals, intentionally driving our winning mixes and geographies while delivering on portfolio rotation with the successful closing of the disposals of our milk and dairy activity Horizon Organic and Wallaby in the US and Michel & Augustin," commented Antoine de Saint-Affrique, Danone chief executive.
We are confident that 2024 will be another year where we deliver on our value creation model."
The French firm plans to announce a 'new chapter' in its Renew Danone strategy at a Capital Markets event in Amsterdam this June.
Additional reporting by ESM
