France's Danone beat second-quarter sales expectations, boosted by higher sales volumes as price hikes slowed.
The maker of Activia yoghurt, Evian water and Aptamil infant milk kept its forecast for like-for-like sales growth of between 3% and 5% in 2024 and a moderate improvement in recurring operating margin.
Sales volumes rose by 2.9% in the second quarter, compared to a 2.1% increase expected by analysts polled in a company-provided consensus.
Pricing
The company raised its prices by 1% during the period, less than the 2.9% increase in the previous quarter, and 1.5% seen in the consensus.
Net-net the prices will remain positive in the second half of the year, CFO Juergen Esser said on a call with analysts.
Consumer goods companies like Nestlé and Unilever are slowing down price hikes after three years of steep increases following the COVID-19 pandemic, as shoppers hit by a cost-of-living crisis turn to cheaper, non-branded alternatives.
Nestlé, in particular, flagged a faster-than-expected slowdown in pricing in its half-year report last week, as it scrambled to regain market share.
"Market doubts of what pricing pressures will do to most consumer stocks in coming quarters will get stronger," Bernstein analyst Bruno Monteyne said in a note.
Quarterly Highlights
The company said its like-for-like sales rose 4.0% led by the increase in volume mix, reaching €6.94 billion ($7.51 billion) in the quarter ended June, above analyst expectations of a 3.7% growth.
Danone's quarterly results continued the trend of combining a big beat in volumes and a big miss in pricing, raising questions about the future impact on margins, Monteyne said.
"The spectre of material negative real pricing (through promotional activity or other) is strong," he added.
Danone's recurring operating income for the first half of 2024 was €1.75 billion, with a margin of 12.69%.
This was marginally above analysts' consensus, which expected a recurring operating profit of €1.73 billion and margin of 12.6%.
