Danone: Good start to the year with all geographies and categories
growing; 2022 guidance reiterated
2022 First-Quarter SalesPress
release – Paris, April 20, 2022
Good start to the year with all
geographies and categories growing 2022 guidance
reiterated
- Good start to the year, with net sales of €6,236m in
the first quarter, up +7.1% on a like-for-like (LFL)
basis, with price up +4.9% and volume/mix up +2.2%; net
sales up +10.2% on a reported basis
- Broad-based like-for-like sales growth
- +5.7% in Europe and +5.5% in North America driven by all
categories
- +15.3% in China and North Asia led by Specialized Nutrition
benefiting from a low base of comparison
- +7.0% in Rest of the World led by EDP and Waters
- The operating environment remains highly volatile, with
sustained supply disruptions and broad-based inflation around
mid-teens levels in 2022
- 2022 guidance reiterated, supported by pricing
actions, mix management and productivity efforts: price-led
like-for-like sales growth between +3 and +5% and a recurring
operating margin above 12%
|
€ millionexcept % |
Q12021 |
Q12022 |
Reported change |
LFL Sales Growth |
Volume/Mix Growth |
BY GEOGRAPHICAL ZONE |
|
|
|
|
|
Europe |
1,987 |
2,114 |
+6.4% |
+5.7% |
+3.1% |
North America 1 |
1,316 |
1,477 |
+12.2% |
+5.5% |
+1.3% |
China, North Asia & Oceania 2 |
598 |
735 |
+22.9% |
+15.3% |
+13.2% |
Rest of the World |
1,756 |
1,909 |
+8.7% |
+7.0% |
-2.3% |
BY CATEGORY |
|
|
|
|
|
EDP |
3,149 |
3,365 |
+6.9% |
+3.6% |
-1.8% |
Specialized Nutrition |
1,719 |
1,919 |
+11.7% |
+9.5% |
+5.6% |
Waters |
790 |
951 |
+20.5% |
+15.9% |
+10.8% |
|
|
|
|
|
|
TOTAL |
5,657 |
6,236 |
+10.2% |
+7.1% |
+2.2% |
Juergen Esser
– CFO statement
“Sales were up +7.1% on a like-for-like basis in
the first quarter, kicking-off a good start to 2022. Growth was
broad-based across geographies and categories, and benefited from a
positive contribution from both Price and Mix. Volumes held well
especially in North America and Europe as we continued to navigate
a highly volatile and inflationary environment.
We are actively pursuing the agenda set out at
our recent CME. In line with our Renew Danone approach, we are
putting greater focus on the quality of our execution, supported by
pricing and mix management as well as sustained productivity
efforts. As announced, we have now started our reinvestment program
with savings generated by Local First.
Our teams are mobilized to make 2022 the
foundational year it ought to be for Danone as we move towards
sustainable value creation for all. We reiterate our guidance for
the year, with price-led like-for-like sales growth in the +3 to
+5% range and recurring operating margin above 12%.”
I. 2022
FIRST-QUARTER SALES
In the first quarter of 2022,
consolidated sales stood at €6.2 bn, up +7.1% on a like-for-like
basis, led by +4.9% in price and +2.2% in volume/mix. On a reported
basis, sales increased by +10.2%, benefiting from a positive forex
impact of +2.2%, notably reflecting the appreciation of the British
Pound, the US Dollar and other Asian and Latin American currencies
against the Euro. Reported sales also benefited from a positive
organic contribution of hyperinflation geographies to growth
(+1.0%), as well as a slightly negative scope effect of -0.2%,
resulting from the combined effects of the integration of Follow
Your Heart and the disposal of Vega.
Performance by geographical
zone
Europe posted sales growth of
+5.7% on a like-for-like basis, driven by +3.1% growth in
volume/mix and +2.6% in price. In a context of supply challenges,
this strong performance was led by Specialized Nutrition, which
registered high-single digit growth on last year’s low base, and
Waters, which posted double-digit growth, while EDP delivered a
soft quarter, with Plant-based growing low single-digit and Dairy
posting flat growth. From a country perspective, France delivered a
solid quarter, led by double-digit growth in Actimel, Alpro, and
HiPro in EDP, but also Aptamil and evian. The United Kingdom posted
strong growth, driven by Aptamil and Fortimel in Specialized
Nutrition, Activia, Actimel and Volvic. Finally, the performance
was softer in Spain, with the good momentum in Specialized
Nutrition, Waters and Plant-based being offset by the weak
performance of Dairy.
North America sales increased
by +5.5% on a like-for-like basis, benefiting from a positive
contribution of +1.3% from volume/mix and +4.2% from price. Growth
was driven by all categories, despite sustained supply challenges,
with a continued strong momentum in Yogurt led by Oikos, Two Good,
Activia and Danimals, and a particularly strong quarter in Coffee
Creamers, led by International Delight. Plant-based grew mid-single
digits, with Beverages showing good momentum in growth and
competitiveness while Adjacencies delivered continued strong
growth.
- CHINA, NORTH ASIA & OCEANIA
China, North Asia & Oceania
sales increased by +15.3% on a like-for-like basis, led by +13.2%
in volume/mix and +2.1% in price. In China, Infant Milk Nutrition
posted mid-teens growth, benefiting from a low base of comparison,
with good market share performance on both Domestic and
International labels. By channel, domestic channels selling Chinese
Labels grew mid-teens; International Labels sold in cross-border
eCommerce platforms delivered very strong growth, largely
offsetting the further decline of International Labels in Indirect
channels (Daigous, Friends & Family). Special Pediatric
solutions and Adult Nutrition delivered strong double-digit growth,
while Mizone registered a slight decline in the quarter, penalized
by city-lockdowns recently implemented. Beyond China, Japan
delivered solid growth in EDP, while Oceania platforms showed a
strong momentum in Specialized Nutrition.
Rest of the World sales
increased by +7.0% on a like-for-like basis, with volume/mix down
-2.3% and price up +9.3%. Indonesia delivered high-single digit
growth, led by the recovery in mobility that benefited the Aqua
brand, while Specialized Nutrition posted a negative quarter, on
the very high base of last year. Latin America posted mid-single
digit growth, led by Mexico, where EDP delivered strong mid-single
digit growth and Waters double-digit growth. Africa and Middle East
delivered mid-single digit growth with a strong contribution from
EDP, growing high-single digit, while Specialized Nutrition
registered a soft quarter on the high base of last year. Finally,
CIS and Turkey delivered strong growth, entirely driven by price
while volumes were declining, in a very challenging context.
II. RUSSIA –
REMINDER OF DANONE’S POSITION
Danone condemns the ongoing war in Ukraine with
no ambiguity.
Danone has decided to significantly adapt its
operations in Russia, by:
- Refocusing its portfolio on essential dairy products, infant
and medical nutrition, and ceasing all imports of evian and Alpro
products;
- Stopping all new investments, including advertising, brand
activations and consumer promotions.
Danone does not take cash, dividends or profits
from Russia, and will donate any profits made in the country to
humanitarian relief organizations.
III. 2022
OUTLOOK AND GUIDANCE
Following the presentation of its new strategic
priorities and Renew Danone plan, Danone expects 2022 to be a
foundational year.
In 2022, the company continues to expect
price-led like-for-like sales growth between +3 and +5% and a
recurring operating margin above 12%, assuming the reinvestment of
100% of Local First savings, a productivity higher than last year
and a mid-teens level of input cost inflation (based on current
macro-economic assumptions).
IV. MAJOR
DEVELOPMENTS OVER THE PERIOD
- February 24, 2022: Danone announced another
step in its Board renewal, and will propose 3 new independent
directors for election at the 2022 Shareholder’s Meeting, in
addition to Valérie Chapoulaud-Floquet and Antoine de
Saint-Affrique: Patrice Louvet, currently President and Chief
Executive Officer of Ralph Lauren, Géraldine Picaud, currently
Chief Financial Officer of Holcim, and Susan Roberts, PhD,
professor of nutrition at Tufts University and co-director of the
Tufts Institute for Global Obesity Research.
- March 8, 2022: New CEO Antoine de
Saint-Affrique, together with a strengthened leadership team,
presented Danone’s new strategic plan “Renew Danone” at a Capital
Market Event (CME). The plan will enable Danone to reconnect with a
sustainable profitable growth model. The delivery of the plan will
be facilitated by a greater alignment between purpose and
performance.
V. IFRS
STANDARDS AND FINANCIAL INDICATORS NOT DEFINED IN IFRS
IAS29: impact on reported
data
Danone has been applying IAS 29 in
hyperinflation countries as defined in IFRS. Adoption of IAS 29 in
these hyperinflationary countries requires its non-monetary assets
and liabilities and its income statement to be restated to reflect
the changes in the general pricing power of its functional
currency, leading to a gain or loss on the net monetary position
included in the net income. Moreover, its financial statements are
converted into euros using the closing exchange rate of the
relevant period.
IAS29: impact on reported data €
million except % |
Q1 2022 |
Sales |
+3.2 |
Sales growth (%) |
+0.1% |
Financial
indicators not defined in IFRS
Due to rounding, the sum of values presented may
differ from totals as reported. Such differences are not
material.
Like-for-like changes in sales,
recurring operating income and recurring operating margin reflect
Danone's organic performance and essentially exclude the impact
of:
- changes in consolidation scope, with indicators related to a
given fiscal year calculated on the basis of previous-year scope,
both previous-year and current-year scopes excluding entities in
countries under hyperinflation according to IAS 29 during the
previous year (as for Argentinian entities since January 1st,
2019);
- changes in applicable accounting principles;
- changes in exchange rates with both previous-year and
current-year indicators calculated using the same exchange rates
(the exchange rate used is a projected annual rate determined by
Danone for the current year and applied to both previous and
current years).
Bridge from reported data to
like-for-like data
(€ million except %) |
Q1 2021 |
Impact of changesin scope of
consolidation |
Impact of changes in exchange rates and others, including
IAS29 |
Organic contribution from hyperinflation
countries |
Like-for-like growth |
Q1 2022 |
|
|
|
|
|
|
|
Sales |
5,657 |
-0.2% |
+2.4% |
+1.0% |
+7.1% |
6,236 |
Recurring operating income is
defined as Danone’s operating income excluding Other operating
income and expenses. Other operating income and expenses comprise
items that, because of their significant or unusual nature, cannot
be viewed as inherent to Danone’s recurring activity and have
limited predictive value, thus distorting the assessment of its
recurring operating performance and its evolution. These mainly
include:
- capital gains and losses on disposals of fully consolidated
companies;
- impairment charges on intangible assets with indefinite useful
lives;
- costs related to strategic restructurings or transformation
plans;
- costs related to major external growth transactions;
- costs related to major crisis and major litigations;
- in connection with of IFRS 3 (Revised) and IAS 27 (Revised)
relating to business combinations, (i) acquisition costs related to
business combinations, (ii) revaluation profit or loss accounted
for following a loss of control, and (iii) changes in earn-outs
relating to business combinations and subsequent to acquisition
date.
Recurring operating margin is
defined as Recurring operating income over Sales ratio.
o o O o o
FORWARD-LOOKING STATEMENTS
This press release contains certain
forward-looking statements concerning Danone. In some cases, you
can identify these forward-looking statements by forward-looking
words, such as “estimate”, “expect”, “anticipate”, “project”,
“plan”, “intend”, “objective”, “believe”, “forecast”, “guidance”,
“foresee”, “likely”, “may”, “should”, “goal”, “target”, “might”,
“will”, “could”, “predict”, “continue”, “convinced” and
“confident,” the negative or plural of these words and other
comparable terminology. Forward looking statements in this document
include, but are not limited to, predictions of future activities,
operations, direction, performance and results of Danone.
Although Danone believes its expectations are
based on reasonable assumptions, these forward-looking statements
are subject to numerous risks and uncertainties, which could cause
actual results to differ materially from those anticipated in these
forward-looking statements. For a detailed description of these
risks and uncertainties, please refer to the “Risk Factor” section
of Danone’s Universal Registration Document (the current version of
which is available at www.danone.com).
Subject to regulatory requirements, Danone does
not undertake to publicly update or revise any of these
forward-looking statements. This document does not constitute an
offer to sell, or a solicitation of an offer to buy Danone
securities.
The
presentation to analysts and investors will be broadcast live today
from 9:00 a.m. (Paris time) on Danone’s website
(www.danone.com).
Related slides will also be available on the website in the
Investors section.
1United States and Canada; 2China, Japan, Australia and New
Zealand
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