Danone’s Q2 results impacted by 28% fall in bottled water sales

Danone’s Q2 results were impacted by a sharp fall in bottled water sales, as Covid-19-related lockdowns around the world led to falling water sales, particularly in the out-of-home sector.

Danone owns major bottled water brands including Evian, Volvic and Badoit, and net sales registered by the company’s waters unit fell 28% on a like-for-like basis in the second quarter, with volumes decreasing 12% and value falling 16.1%.

Danone claims that sales deteriorated across multiple markets as the pandemic expanded into regions that had been relatively unaffected before Q2. Out-of-home channels usually account for around 45% of quarterly water sales, but out-of-home sales fell almost 50% in the quarter, accounting for most of the division’s overall revenue decline.

The company’s overall second-quarter sales fell 5.7% year-on-year to €5.94 billion. For the first half of the year, like-for-like sales fell 3.6% to €12.18 billion, while the firm’s H1 operating income fell to €1.70 billion, an 8.7% decline when compared to last year’s €1.86 billion figure.

However, the company’s Essential Dairy and Plant-based (EDP) division recorded a 3.1% increase in like-for-like sales in the first half of the year, with “solid growth” in both the North American and European markets. The firm’s Specialized Nutrition business also experienced a 2.7% rise in sales during H1.

Danone claimed that it expects overall sales growth for the rest of 2020, and that the second quarter would represent its most “challenging quarter of the year”.

Danone’s chairman and CEO, Emmanuel Faber, said: “While it remains difficult to predict exactly how consumer habits and macroeconomic conditions will evolve for the balance of this year, in particular given the uncertainty around the easing of lockdown measures, we’re confident that Q2 was the most challenging quarter of the year and the back half of the year will show a sequential improvement in growth.

“As we adapt to the new Covid world, our compass remains to deliver superior sustainable profitable growth and to lead the way in creating and sharing sustainable value in a world where concerns about society, health and the planet are core to our business.”