Danone gains from impressive results in North America
PARIS: In the first half of 2022, Danone’s yogurt, milk substitute, and coffee creamer brands in North America did well. During the period, regional sales increased by 16% to €3.1 billion ($3.2 billion), driven by the company’s International Delight and Silk brands continuing to gain share and the successful restoration of the Oikos and Activia brands.
During a July 27 conference call to discuss the results, Juergen Esser, chief financial, technology, and data officer of Danone, stated, “We delivered another strong quarter, driven by both countries, the US and Canada.” “Just like in Q1, price, mix, and volumes all made good contributions to this performance in Q2 as well. The sustained momentum across brands and categories was the main driver of this robust increase. Coffee creamers, yogurts, and plant-based dairy products all saw strong single-digit competitive growth in EDP (Essential Dairy and Plant-Based). Particularly, the Oikos PRO and Oikos Triple Zero product lines kept up their strong competitive growth, helped along by improvements to our packs, formulations, and marketing strategy, as well as a strong share execution.
“Activia growth was robust this quarter, trailing only Oikos in terms of growth. This was fueled by outstanding execution, a successful A to Z campaign, and the ongoing consumer interest in immune benefits. Our International Delight and SToK brands continued their strong competitive growth in the coffee market for another quarter.
Although the company is headed in the right path, CEO Antoine Bernard de Saint-Affrique pointed out that there are still areas of the business in North America and other regions that require improvement.
He remarked, “You heard me talking about how important execution is and how we need to improve on that front.” Our service levels are still below my ideal level, notwithstanding recent improvements. Our media assets continue to be inconsistent in quality, and we have not fully utilized them across national borders, which is a source of inefficiency in terms of both capital and resources.
Lastly, we continue to have inconsistent shelf execution. Expect us to gradually get better on that front as we are investing in capabilities and exchanging best practices.
In the first half of 2022, Danone’s net income was €737 million ($749 million), or €1.53 ($1.55) per share, a 31% decrease from the same period in 2021.Sales rose 12.6% to €13.3 billion ($13.5 billion).
According to Mr. Bernard de Saint-Affrique, “We closed a strong first half of the year with like-for-like revenue up 7.4% and a broad-based growth across geographies and categories.” Significantly, volume and mix increased by 1.3% this semester over last, showing continued resilience. Despite disruptions to the global supply chain, we were able to maintain solid business continuity and product availability because we had a firm emphasis on execution and delivery.
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Danone achieved 5% efficiency gains to counteract the effects of inflation, and Mr. Esser stated he anticipates further benefits in the second half of the year.Additionally, we greatly increased the pace at which we passed price increases in all categories and regions—albeit at varying degrees and using locally appropriate tactics that were always competitive.Initial half-price pricing totaled 6.1%, according to the company.Danone raised its expectations for like-for-like sales from 3% to 5% to 6% in its revised sales guide.
“While moving forward, staying consistent with our midterm guidance of 3% to 5% in an environment which remains highly volatile and uncertain, this updated guidance for the year does reflect the good dynamics of the first six months,” Mr. Esser stated. “We are confirming our full-year recurring operating margin above 12% for the year 2022 at this same moment.”