Danone aims for positive second half, following weak Q1 results

Danone has recorded a 3.3% drop in first-quarter sales on a like-for-like (LFL) basis, but has reiterated its goal of returning to growth in Q2.

The world’s largest yogurt maker posted €5.66 billion in Q1 sales, representing a 9.4% decline on a reported basis – driven by the negative impact of exchange rates, according to Danone.

The results landed in line with Danone’s expectations, as Q1 2021 continues to be impacted by Covid-19 and compares to a strong-performing Q1 2020, which was marked by panic buying and pantry loading.

Danone says it is the last quarter of decline before returning to like-for-like growth in Q2. The French group maintained its goal of returning to profitable growth in H2, relying on the gradual reopening of economies as vaccination programmes are rolled out.

Sales rose by 1.6% LFL to €3.15 billion for Danone’s Essential Dairy and Plant-based (EDP) division. However, this was largely offset by a 7.7% drop in its Specialized Nutrition unit and an 11.6% decline in water sales.

Within its EDP unit, Europe and North America delivered solid growth thanks to probiotics, protein and plant-based. Danone’s plant-based portfolio grew well into double digits in Europe; while essential dairy saw broad-based market share gains led by Actimel, Danette and YoPro.

The company’s Specialized Nutrition unit net sales fell 7.7% on a LFL basis to €1.72 billion. Adult medical nutrition remained strong, particularly in China; however, infant nutrition continued to be affected by pandemic-related channel disruptions in China with cross-border channels sales down around 45%.

Danone’s Waters division continued to be impacted by out-of-home trends, but showed sequential improvement compared to previous quarters, especially in Europe.

The company has been under increasing pressure by investors over the last year, leading to former Danone CEO and chairman Emmanuel Faber stepping down from both roles.

While a search is underway for a replacement, Véronique Penchienati-Bosetta and Shane Grant have took on the role of interim co-CEOs.

“We have now experienced over a year of Covid and the pandemic continues to impact our markets. Though this resulted in an overall decline in sales, -3.3% on a like-for-like basis, this first quarter has confirmed many of Danone’s strengths and ability to win in key areas,” they said.

“Our focus is on delivery and execution, and so it is to our highly motivated and engaged Danoners that we send our thanks for their resilience and hard work during these unprecedented times. Through them, together, we will drive Danone back to profitable growth and winning in the market.”