Danone reported first-quarter sales growth of 2.7 per cent, above expectations but sharply slower than the previous quarter, as a baby-formula recall across Europe and supply disruptions linked to the Iran war weighed on its specialised nutrition business.
The French food group, whose brands include Activia yoghurt, Aptamil formula and Evian water, said that in an environment that remained “volatile and uncertain”, its health-focused and science-based portfolio provides some resilience.
Danone also kept its full-year guidance intact.
Danone makes formula under the Aptamil, Nutrilion and Cow & Gate at plants in Wexford and Macroom, Co Cork. The company employs around 750 people in Ireland. Results for the Irish business are consolidated in the group figures.
First-quarter sales totalled €6.708 billion, representing like-for-like growth of 2.7 per cent, compared with analysts’ expectations for a 2.6 per cent increase. That marked a slowdown from 4.7 per cent growth in the fourth quarter of 2025.
Danone reiterated its 2026 guidance in line with its midterm aims of like-for-like sales growth of 3-5 per cent, with recurring operating income growing faster than sales.
Staff at the company’s Wexford Nutricia plant earlier this week agreed a 9 per cent pay rise over two years to end-2027 in a deal that will also see workers receive vouchers of €900 each year and free annual medical statements.
Separately, the Labour Court in February recommended a 16.25 per cent pay increase for workers at the company’s Macroom plan over four years dating back to 2024 and out to include next year.
The war in Iran has disrupted supply chains, including shipments of baby formula imported from Europe that transit through the Middle East. Danone’s overall business in the region accounts for around 2 per cent to 3 per cent of net sales.
The baby formula recall has hit companies including Danone and Nestlé in the first quarter due to possible contamination with the toxin cereulide, with investors keen to understand the extent of the financial and reputational impact.
Danone, which has recalled infant formula products across Europe and the Middle East, said its focus was to restore trust in the infant formula category as the recall situation was “going back to normal”.
The group is particularly exposed to the formula recall as around 17 per cent of total profits come from infant formula in China, compared with less than 2 per cent for Nestle, Jefferies analysts say.
The group reported an overall price increase of about 1.2 per cent in the first quarter, while volume-led growth was 1.5 per cent.
However, Danone said its coffee creamers business, which has underperformed in the competitive US market, was showing gradual improvement, helped by new product launches. – Reuters
