Volume growth propels Danone's H1 2024 results

Danone’s shares bounced back to levels not seen since February as the company reported strong Q2 and H1 2024 results. 

In Q2, sales were up 4% at €6.9m driven by volumes (2.9%) and less so, price (1%). Reported sales were down 4.1% due to the de-consolidation of Danone’s Russian business​ and the sale of US dairy brands Horizon Organic and Wallaby​.

In H1, sales stood at €13.8m, up 4% on a like for like basis, driven by increases in both volume (2.1%) and pricing (2%). Inflation, currency exchange effects and scope impacted reported sales here too, which decreased 2.9%.

Danone’s recurring operating margin increased to 12.69%, up 45 basis points; with recurring operating income reaching €1.75m in H1.

By category, Waters and Specialized Nutrition delivered the strongest like-for-like growth in both Q2 and H1, with Essential Dairy and Plant-based (EDP) also contributing positively.

Regionally, high-protein dairy and coffee products – specifically Oikos yogurts, International Delight cold foams and Stok cold brew coffee – drove growth in North America during Q2 and H1.  

In Europe, water sales dipped 0.4% due to weather in Q2 but grew 2.4% over the entire H1; EDP sales – led by YoPro, Actimel and Alpro – were up throughout.

The highest sales growth in Q2 and H1 came from China, North Asia & Oceania where Specialized Nutrition continued its momentum – with double-digit growth in infant and medical nutrition - and sales of water brand Mizone grew by around 10% with continued market share gains. EDP also saw double-digit growth (13.5%) in Q2 led by Oikos and Activia, with high single-digit growth over H1.

Waters and Specialized Nutrition also fueled growth in Latin America, where like for like profit margin growth was otherwise offset by currency effects and hyperinflation.

'Faster than average' category growth

CEO Antoine de Saint-Affrique said growth across Danone's categories had been growing 'faster than the average' seen across the food and beverage space. 

"There is growth in our categories - as a matter of fact, they keep going faster than the average of foods and beverage," he said.

"Our renewed focus on an investment in science delivering strong product superiority and differentiating technology expressed in a consumer relevant way keeps paying off," he commented. "In high protein, we keep deploying a growth model with discipline through YoPro and our cores.

"While expanding our footprint, we keep a high pace in the markets where we are already present, leveraging our science around protein and nutrition, to more advanced variants, which further strengthen the claims we can make around performance and recovery.

"In medical nutrition, we have delivered very strong growth in both adults and pediatrics across the globe.

"We are playing at scale and driving our global science and formulas to further expand our reach such as in the post discharge space in China where adult oral is growing very fast, and coffee creations are sizeable, profitable and fast-growing platform in North America continues to win and to grow share."

Pricing to remain positive

Danone CFO Juergen Esser noted that the company’s gross margin in H1 had benefitted from ‘some final carryover effects of pricing from last year’ but with these effects ‘will not repeat with the same magnitude in H2’.

The company only lifted prices 1% in Q2 versus 2.9% in Q1. The CFO said pricing will remain positive in H2, however.

“There has been a reason why in some instances negotiation took a little bit longer than we would all have wished, because the way we are approaching it is to ensure that we do consumer-led pricing where we have strong brands, brands which bring innovations into the market, and where we feel that we have the right and the role to be a driver of the market world. But it means also increased price in certain instances.

“And there will be other occasions where we will invest into price in order to make sure that we get our fair share of the volume growth. But we see also positive pricing for the second semester moving forward.”