In the first half of 2021, Danone’s consolidated sales stood at €11.8 bn, up +1.6% on a like-for-like basis, led by +2.6% in value and -1.0% in volume. On a reported basis, sales were down -2.9%, mainly driven by the negative impact of exchange rates (-5.5%) that resulted from currencies’ depreciation against the euro in the United States, Latin America, Indonesia, Turkey and Russia.
On the other hand, reported sales benefited from a slightly positive scope effect (+0.5%), as well as the +0.4% organic contribution of hyperinflation geographies to growth.
In the second quarter, Danone sales increased by +6.6% on a like-for-like basis, with value up +4.7% and volumes +1.8%. Reported sales rose +3.6%, mainly impacted by a still strong negative effect of -4.0% from exchange rates.
In terms of regional dynamics, strong growth was broad-based in the second quarter. Europe and North America sales were up +6.4% on a like-for-like basis, led by the recovery in Waters, as well as sustained solid momentum for EDP, and a return to growth for Specialized Nutrition. Sales in the Rest of the World increased by +6.9% on a like-forlike basis, notably led by the softer basis of comparison in EDP and Waters.
Key Highlights:
- Danone net sales of €6,171m in the second quarter, up +6.6% on a like-for-like (LFL) basis, and +3.6% on a reported basis, leading H1 sales to grow +1.6% on a like-for-like basis
- Return to growth driven by focus on execution and delivery: core portfolio renovation and innovation, acceleration in strategic channels and selected investments in key battles
- Recurring operating margin at 13.1%: selective pricing initiatives, coupled with efficient product mix management and stepped-up productivity partially offsetting adverse category mix and higher inflation
- Reported EPS up +5.1% at €1.63 and recurring EPS down -9.3% at €1.53
- Continued disciplined cash management, with free cash flow reaching €1.0 bn in H1, and further progress on portfolio management with the disposal of Mengniu stake and sale of Vega
- Launch of a share buyback program of up to €800m in the second half of the year
- 2021 guidance reiterated: return to profitable growth in H2, and FY recurring operating margin broadly in line with 2020
Véronique Penchienati-Bosetta and Shane Grant: interim co-CEOs statement
“We are pleased to report a return to growth across all our categories this quarter, thanks to the teams’ commitment and focus on execution and delivery. On a two-year basis, our like-for-like sales growth is also positive, on both Q2 and H1.
We maintained strong momentum in our EDP business, led by growth in Dairy, and Plant-based reporting its 6th consecutive quarter of double-digit growth, and a solid performance in Europe and Noram.
Specialized Nutrition returned to growth in Q2, with notably a consistent high single-digit performance in Adult Nutrition and a positive growth in Infant Nutrition. Waters was also back to growth in Q2 as restrictions in some parts of Europe lifted and thanks to market share gains in the region, yet emerging geographies are still more impacted by the negative effect of covid-related restrictions on out-of-home trends.
Our continued focus on core portfolio renovation and innovation, supported by selective reinvestments and channel execution focus, has helped our leading brands such as Alpro, Actimel, Neocate, evian and Oikos grow market share, playing into global trends towards health and immunity.
Margin held up well despite an adverse category mix and accelerated inflation. Strong productivity delivery coupled with selective pricing and mix management allowed us to partially offset headwinds.
Looking ahead, we reiterate our guidance for the full year. Although the macro context is still uncertain, we have strong foundations across our categories, geographies and brands. Local First project is progressing according to plan. We will continue to adopt a disciplined approach to capital management and remain focused on delivering on our growth priorities and plans in the second half.”