After several difficult quarters, the tide seems to be turning for Danone. The French dairy giant recorded growth in all segments, although more expensive raw materials weighed down its profit margins.
Bottled water in demand again
Danone’s turnover rose in the second quarter like-for-like by 6.6 % to 6.2 billion euros. On a reported basis, growth was only 3.6 %, mainly due to negative currency effects.
All regions and product divisions improved, although the strong recovery of the bottled water division was particularly noticeable. Danone benefited from the reopening of the hospitality sector, which increased water sales by more than a fifth. The food giant was also able to gain market share in key markets such as France, Germany and the United Kingdom.
Essential Dairy & Plant-based also grew strongly: the division as a whole rose 4.8 % on a like-for-like basis, with the plant-based subdivision leading the way with its sixth consecutive quarter of double-digit growth.
Inflation
For the entire first half of the year, Danone posted sales of 11.8 billion euros, 1.6 % higher than last year on a comparable basis. However, operating profit fell from 1.7 to 1.55 billion euros, mainly due to higher raw materials prices.
Danone also expects that the prices of ingredients, packaging and logistics will rise further in the second half of the year. Nevertheless, the company expects the operating margin for the full financial year 2021 to be in line with that of 2020.
