Danone’s Q1 meets expectations, but doesn’t exceed them

18-Apr-2019 - Last updated on 18-Apr-2019 at 08:15 GMT

Danone completed the sale of organic salad brand Earthbound Farm this quarter. Pic: Getty/arto_canon

First quarter results are in for Danone, showing slight sales growth and a steady performance despite a rocky 2018.

Danone’s consolidated sales were up by 0.9% this quarter, with a total of €6.138bn ($6.9bn) compared to €6.085bn ($6.85bn) in Q1 2018. All entities of the company contributed to the growth “despite tough comparisons and calendar phasing.”

Emmanuel Faber, chairman and CEO of Danone, said, “The first quarter showed a start of the year in line with expectations and further progress in our transformation journey.

“This performance has coincided with continued action to deliver sustainable profitable value growth, including the sale of Earthbound Farm, alongside the roll-out of value-added innovations across businesses and geographies to make our portfolio more local, more appealing to younger generations, and better suited to fast-changing consumer trends.”

Danone’s largest business sectors all experienced growth, including Essential Dairy and Plant-Based (0.4%), Specialized Nutrition (0.9%) and Waters (2.7%).

Essential Dairy and Plant-Based was impacted by ‘phasing effects’ in the first quarter, where volume growth dropped by 3.8%. But Danone expects it to rebound in Q2. The Silk and So Delicious brands are growing strongly in North America, and Alpro is growing with double digits in Europe.

In Specialized Nutrition, the Advanced Medical Nutrition brand saw solid growth in Europe and China, but Early Life Nutrition decreased in China against tough competitors. A new plant also opened in the Netherlands to meet growing global demand.

Positive consumer health trends drove growth in Waters, led in Indonesia, Turkey and North America. But Waters saw its smallest sales growth margin in Q1 2019 (3.9%) since Q1 2018 (also 3.9%).

Danone is still dealing with the fallout from a consumer boycott in Morocco, impacting sales growth in the region. It also completed the sale of the Earthbound Farm brand this month in the US. Danone said it will lead to a non-recurring loss of net income of around $100m, to be fully recognized in the first half of 2019.

“We are pleased with the momentum of the business, which will become increasingly visible from the second quarter. This gives us every confidence that we will meet our full-year guidance,” Faber said.

“We also remain totally committed to creating a company aligned with the food revolution, harnessing the collective voice of our 100,000 Danoners and realizing the vision of One Planet. One Health.”