Danone continues to raise prices sharply - sales outlook raised

28-Apr-2023 - France

French food group Danone <FR0000120644> has also raised prices sharply at the start of the year. As a result, sales in the first three months climbed more than experts had expected. Danone CEO Antoine de Saint-Affrique took the results published Wednesday as an opportunity to raise its growth forecast for the full year. However, the environment in Europe remained characterized by a decline in sales due to high inflation.

The strongest growth driver was business in China thanks to successes with baby food. Danone shares rose slightly against the weak trend.

The stock rose one percent to 61.01 euros in the top group of the EuroStoxx 50 <EU0009658145> leading euro zone index. The share price had already recovered noticeably in recent months from its lows in the fall at well below 50 euros in some cases.

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JPMorgan analyst Celine Pannuti now expects rising market estimates for the French. The Group performed better than expected in all regions and divisions.

Overall, first-quarter revenue rose 11.6 percent year over year to 6.96 billion euros, Danone said in Paris. On a comparable basis, this was a plus of 10.5 percent. Analysts had only expected an increase of just under 7 percent here. "Although this is encouraging progress, there is still much to be done," de Saint-Affrique said of the results.

The growth came almost entirely from higher selling prices. Management raised its guidance range for expected full-year comparable sales growth to 4 to 6 percent. Previously, it had calculated a 3 to 5 percent increase. Adjusted operating margin is still expected to recover slightly.

In Europe, volumes sold continued to decline, although less sharply than in the previous quarter. Only China, North Asia and Oceania saw noticeable growth in sales volumes - although price increases were also lowest in this region. Overall, sales volumes for the Group as a whole grew by 0.2 percent. Analysts, however, had expected a slowdown in volumes.

As is customary in France, Danone did not provide key earnings figures for the first quarter./men/jsl/mis (dpa)

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