Danone reports strong sales growth in Q2 2022.
- Net sales of €13,325m in H1 2022, up +7.4% on a like-for-like (LFL) basis and +12.6% on a reported basis.
- Strong sales growth in Q2 at +7.7% LFL, led by price up +6.8% and volume/mix up +0.9%.
- Continued good momentum across categories and geographies:
- +8.9% in North America driven by coffee creamers, yogurts and plant-based.
- +5.1% in Europe led by Specialized Nutrition and Waters.
- +3.3% in China, North Asia & Oceania led by Specialized Nutrition, while Mizone was penalized by Covid-related restrictions and lockdowns.
- +12.3% in Rest of the World with all categories contributing.
- Recurring operating margin at 12.1%: focus on revenue growth management and productivity efforts, reinvestment journey kickstarted.
- Recurring EPS at €1.63, +7.2% from last year; €0.7bn free cash flow.
- 2022 guidance updated: LFL net sales growth now expected between +5 and +6%, recurring operating margin above 12% confirmed.
CEO Antoine de Saint-Affrique, stated in the announcement: “This strong first half, with broad based progress despite an unprecedented external environment, is a testimony to the resilience, the focus and the engagement of all Danoners. We started deploying our Renew Danone agenda with discipline and consistency, further accelerating our growth in Q2: we show good momentum across many facets of the business from Aptamil to Waters or North America, to name a few. While the quality of our first half delivery is encouraging and leads us to now expect a +5 to +6% like-for-like sales growth for the full year, this is only the start of our Renew journey: we believe there is still much we can do to bring Danone where we want it to be and deliver on both our purpose and our business ambition.
Second quarter and half-year sales
In the first half of 2022, consolidated sales stood at €13.3 bn, up +7.4% on a like-for-like basis, with a +6.1% contribution from price and +1.3% contribution from volume/mix. On a reported basis, sales increased by +12.6%, benefiting from a positive forex impact of +4.2%, notably reflecting the appreciation of the US dollar, the British pound and various Asian and Latin American currencies against the Euro. Reported sales were also impacted by a positive organic contribution of hyperinflation geographies to growth of +0.9%, as well as a slightly negative scope effect of -0.4%, resulting from the combined impacts of the integration of Follow Your Heart and the disposal of Vega.
In the second quarter, sales increased by +7.7% on a like-for-like basis, with a +6.8% contribution from price and +0.9% contribution from volume/mix. On a reported basis, sales increased by +14.5%, benefiting from a positive forex impact of +6.0% and a positive organic contribution of hyperinflation countries to growth of +0.8%, while the scope effect was slightly negative (-0.5%).
Performance by geographical zone
North America
North America posted +7.2% sales growth in H1 2022 on a like-for-like basis and recurring operating margin decreased by -235 bps to 8.1%.
In the second quarter, sales increased by +8.9% on a like-for-like basis, driven by +6.8% growth in price and +2.0% growth in volume/mix. In the US, this strong growth was driven by continued momentum across categories and brands. In EDP, coffee creamers, yogurts and plant-based posted high single-digit competitive growth, driven by International Delight, Oikos, Activia, Danimals and Silk. In Specialized Nutrition, Danone stepped up exports of Neocate specialized formula and Aptamil baby formula to help address baby formula shortages. In Canada, growth was led by Activia, Silk and Oikos.
2022 guidance
Price-led like-for-like sales growth now expected between +5 and +6%, versus +3 to +5% previously; recurring operating margin expected above 12%.
