Danone Surpasses Q2 Sales Expectations with Increased Volumes, Boosting Shares by 4%

The company, known for its Activia yogurt, Evian water, and Aptamil infant milk, maintained its forecast for a 3% to 5% like-for-like sales growth in 2024, alongside a moderate improvement in recurring operating margin.

In the second quarter, sales volumes rose by 2.9%, surpassing the 2.1% increase anticipated by analysts. Danone implemented a modest 1% price increase during this period, down from the 2.9% hike in the previous quarter and below the 1.5% expected by analysts.

Danone CFO Juergen Esser assured analysts that net prices would remain positive in the second half of the year.

Consumer goods companies such as Nestle and Unilever have been reducing price hikes after several years of significant increases post-Covid-19, as consumers affected by the cost-of-living crisis turn to cheaper, non-branded alternatives.

Nestle recently highlighted a quicker-than-expected reduction in pricing in its half-year report, as it worked to regain market share.

"Market concerns about the impact of pricing pressures on consumer stocks will intensify in the coming quarters," said Bruno Monteyne, an analyst at Bernstein.

Danone's like-for-like sales rose by 4%, driven by increased volume mix, reaching €6.94 billion in the quarter ending June, exceeding analyst expectations of 3.7% growth.

Monteyne noted that Danone's results showed a strong performance in volumes but weaker pricing, raising questions about future margin impacts. "The risk of substantial negative real pricing through promotional activities is significant," he added.

Danone reported a recurring operating income of €1.75 billion for the first half of 2024, with a margin of 12.69%, slightly above the consensus forecast of €1.73 billion and a 12.6% margin.