Danone has become the latest consumer goods manufacturer to report a better-than-expected rise in sales as firms continue to benefit from increased prices to make up for rising costs.
The water and yogurt giant’s like-for-like sales climbed 8.4% in the first half of 2023, with price increases of 9.4% only resulting in a 1.1% decline in volumes.
However, sales growth weakened to 6.4% in the second quarter, with volumes slipping 2.3% as some shoppers switched to cheaper alternatives.
During the half year, sales growth was strongest in its Waters unit, up 10.6%. Specialised Nutrition grew 8.3%, whilst its Essential Dairy and Plant-based (EDP) portfolio saw an increase of 7.7%.
“In an environment that remains volatile and challenging, we further built our track record of delivery with a solid first half of the year,” said CEO Antoine de Saint-Affrique.
He highlighted progress with the group’s business improvement plans, with “green shoots of success across the portfolio” alongside increasing margins and healthier free cash flows.
De Saint-Affrique added: “While a lot remains to be done, this makes us look at the future with confidence: this year, we expect to deliver a like-for-like sales growth in the upper end of our +4 and +6% guidance, underpinned by sequential volume/mix improvement in the second half, and moderate recurring operating margin improvement.”
Danone also revealed today that it would book a further €200m writedown on its Russia business after it was effectively taken over by the state, taking the overall writedown on its Russian operations to around €700m.
The Russian state this month took control of Danone’s Essential Dairy and Plant-based (EDP) subsidiary, along with Carlsberg’s stake in a local brewer.
“Danone will continue to investigate the situation to understand the implications of the decisions of the Russian authorities on the ongoing EDP operations of Danone in Russia, as well as on the ongoing sale process,” Danone said in a statement today.
The company had previously been seeking a buyer for its business in Russia due to the war in Ukraine.
