PARIS – Danone’s North American coffee creamer, yogurt and milk alternative brands performed well during the first half of 2022. Regional sales rose 16% during the period to €3.1 billion ($3.2 billion) as the successful renovation of the Oikos and Activia brands took hold and as the company’s International Delight and Silk brands continued to gain share.
“We delivered another strong quarter, driven by both countries, the US and Canada,” said Juergen Esser, Danone’s chief financial, technology and data officer, during a July 27 conference call to discuss the results. “In Q2 as in Q1, this performance was achieved with positive contribution from all aspects, price, mix as well as volumes. This strong growth was driven by continued momentum across categories and brands. In EDP (Essential Dairy and Plant-Based), coffee creamers, yogurts, and plant-based posted high single-digit competitive growth. In particular, the Oikos PRO and Oikos Triple Zero ranges continued to deliver strong competitive growth, supported by the upgrade of our formulas, our packs and the marketing mix and a solid share execution.
“Next to Oikos, Activia growth remained strong this quarter, building on the continued consumer interest in immunity benefit and building on core portfolio renovation, a successful A to Z campaign and strong execution. In the coffee space, our International Delight and SToK brands delivered another quarter of strong competitive growth.”
While the business is trending in the right direction, Antoine Bernard de Saint-Affrique, chief executive officer, noted that North America as well as other regions still have parts of the business that need improvement.
“You heard me talking about the importance of execution and about how we need to improve on that front,” he said. “Although improving recently, our service levels are not still where I’d like them to be. The quality of our media asset is still uneven, and we have still not leveraged them enough from one country to another, a source of both capital and resource inefficiency.
“Finally, our shelf execution is still irregular. We are sharing best practices and we are investing in capabilities, so expect us to improve step by step on that front.”
Danone’s net income for the first half of 2022 was €737 million ($749 million), equal to €1.53 ($1.55) per share, and down 31% from the first half of 2021.
Sales rose 12.6% to €13.3 billion ($13.5 billion).
“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,” Mr. Bernard de Saint-Affrique said. “Importantly, volume and mix remained resilient this semester, up plus 1.3% versus last year. We clearly focused on execution and delivery, which allowed us to maintain good continuity of business and product availability amid global supply chain disruptions.”
To offset the impact of inflation, Danone achieved efficiency gains of 5% and Mr. Esser said he expects more gains to be reached in the second half of the year.
“We also significantly stepped up our pricing actions, passing increases in all categories and regions, although with different levels and locally relevant strategies always in a competitive way.”
First-half pricing totaled 6.1%, according to the company.
Danone updated its sales guidance, saying it now expects like-for-like sales to be in a range of 5% to 6%, up from 3% to 5%.“This updated guidance for the year does reflect the good dynamics of the first six months, while moving forward, staying consistent with our midterm guidance of 3% to 5% in an environment which remains highly volatile and uncertain,” Mr. Esser said. “At the same moment, we are confirming our full-year recurring operating margin above 12% for year 2022.”