Danone quarterly sales beat estimate with inflation in focus

Food group produces stronger-than-expected sales growth amid price growth challenge

Danone delivered a stronger-than-expected sales growth in the last quarter of 2021 amid a challenging environment marked by inflationary risks, even as the yoghurt maker's new chief said much remained to be done to turn the company around. Antoine de Saint-Affrique, who took over as the chief executive officer in September, said on Wednesday investors would have to wait until the March 8th capital market day to get clues on his strategy and outlook for 2022 and the mid-term. While Danone "ended the year on a strong note ... We still have much more to do, and I look forward to our CME on March 8th when we will be in a position to share more on the next steps in our growth and renewal journey," Mr Saint-Affrique said in a statement.

Former Danone boss Emmanuel Faber was abruptly ousted as chairman and chief executive last year following clashes with some board members over strategy and calls from activist funds for him to resign over the group's lackluster returns compared with some rivals. The main challenge for Mr Saint-Affrique is to boost profit margins and sales across the group's three businesses - dairy and plant-based products, infant formula and bottled water - while facing mounting input costs, with the further stress of a conflict in Ukraine.

Danone, which is the world’s largest yoghurt maker, reported that its 2021 like-for-like sales rose 3.4 per cent, slightly above analysts’ estimates in a company-compiled consensus for a 3 per cent rise.

Danone said this reflected an acceleration in the fourth quarter to 6.7 per cent sales growth, above market expectations of 5.5 per cent growth, with all three businesses contributing to growth. The 2021 operating margin declined by 30 basis points to 13.7 per cent of sales, in line with company's outlook and analysts' expectations of 13.7 per cent , as accelerating sales growth and strong productivity helped partly offset inflationary pressure. Consumer goods companies are grappling with surging costs for commodities, energy, transport and labour, prompting rival Unilever earlier this month to warn of a drop in margins as it struggles to lift prices enough to offset the extra expenses. - Reuters