Danone Sales Beat Estimates But Caution Ensues On China Dominance

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Danone’s like-for-like income grew 4.8% to €6.88bn ($8bn) successful what analysts astatine Barclays applauded arsenic a sixteenth consecutive 4th supra nan 4% marker moreover though statement estimates were for 4.3%.

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“We deliberation nan adjacent limb of nan communicative is an EPS inflection,” nan Barclays’ team, led by Warren Ackermann, wrote successful a follow-up investigation note. “With China maturation beardown double-digits and pinch margins successful China that are double nan group average, location should beryllium important operational gearing.”

The CNAO region posted a like-for-like (LFL) income maturation people of 13.8%, pinch volume/mix up 15.1%, outpacing nan group consequence of 3.2%.

Within CNAO, China was, however, singled retired arsenic a interest by analysts astatine Jefferies fixed nan 17% LFL income capacity for Danone’s specialised nutrition business, including babe formula, successful nan state and fluctuations successful China’s commencement rates.

As Jefferies’ expert David Hayes besides welcomed nan accordant income maturation supra 4%, he besides offered immoderate caution.

“The skew/reliance connected awesome occurrence successful China specialised nutrition could commencement to interest investors. That is accentuated by a notable miss successful US volumes. Execution present remains beardown but China babe look will suffer dragon babe roll-off successful 2026 that needs to beryllium made up elsewhere.”

Volume/mix successful North America grew conscionable 0.3% based connected LFL income of 1.5%. Volume maturation was beneath statement of 1.8%.

Commenting connected North America, Danone warned of softness successful nan plant-based class wherever it plays successful drinks pinch varieties of nan Silk and Alpro brands.

“Momentum remained beardown successful precocious protein, pinch caller innovations launched during nan quarter. Coffee creamers are progressively regaining competitiveness. Plant-based remains activity successful progress.”

CEO de Saint-Affrique gave his return successful nan results connection coming (28 October).
“We continued to present consistent, value maturation this quarter, pinch volume/mix being nan superior maturation driver crossed our categories, confirming nan spot and nan relevance of our health-focused portfolio.

“We are peculiarly pleased pinch nan step-by-step betterment successful Europe, wherever volume/mix has now been affirmative for 8 consecutive quarters, while CNAO delivered different outstanding capacity crossed each categories.”

However, he added: “At nan aforesaid time, we recognise that our translator travel is not complete and that immoderate areas require further progress.”

Europe registered LFL income maturation of 2.6% pinch volume/mix up 2.1%. For Latam, nan respective results were 4.3% and minus 2.3%. In nan Asia, Middle East and Africa region, Danone posted LFL of 6.8% and a 2.6% summation successful volume/mix.

By division, Danone’s largest income portion – basal dairy and plant-based (EDP) – posted a LFL income summation of 3.5% to €3.28bn and affirmative volume/mix maturation of 1.7%.

Specialised nutrition arsenic a full delivered LFL of 8.3% and volume/mix of 6.5%. For waters, nan respective capacity was 2.3% and 1.3%.

Meanwhile, Danone kept its full-year LFL maturation guidance successful nan 3-5% range.

Analysts astatine RBC Capital Markets, led by James Edwardes Jones, wrote: “Danone’s bully Q3 results, pinch integrated income maturation of 4.8%, springiness america a grade of assurance that nan user staples exemplary isn’t broken.

“Consistent finance successful nan merchandise offer, attraction connected execution and realistic guidance of expectations still carnivore fruit, notwithstanding class vulnerability that a fewer years agone seemed catastrophic.”