Danone: Strong start to the year; Consistently delivering on Renew
Danone
2023
First-Quarter
SalesPress release – Paris, April
26, 2023
Strong start to the
yearConsistently delivering
on Renew Danone
-
Net sales of
€6,962m
in the first
quarter, up
+11.6% on a reported basis
and +10.5% on a
like-for-like (LFL) basis, with price up +10.3% and
volume/mix up +0.2%; proforma volume/mix up +1.1% excluding EDP
Russia
-
Strong start to the year,
with all geographies and
categories contributing
to LFL sales growth:
-
+6.2% in Europe driven by France, UK and Poland; further progress
on EDP portfolio transformation
-
+11.8% in North America led by a continued strong and balanced
momentum across segments
-
+16.0% in China, North Asia & Oceania with double-digit growth
in all three categories
-
+12.6% in Latin America, led by Mexico and Brazil with resilient
volumes
-
+11.8% in Rest of the World, notably supported by favorable
calendar effects
-
2023 guidance
upgrade: like-for-like sales growth now expected
between +4 and +6%; moderate improvement in recurring operating
margin confirmed
|
Antoine de Saint-Affrique –
CEO
statement
“This first quarter showed a strong start to
year 2023, with sales up +10.5% on a like-for-like basis, supported
by strong pricing and resilient volume/mix, up +0.2% compared to
last year. This performance was driven by all our categories and
geographies, and notably the North America and CNAO zones, but also
supported by favorable phasing.
This quarter again, we consistently delivered
against the pillars of our Renew Danone strategy, further improving
the quality of our execution, and investing behind our winning
brands and platforms, while continuing to streamline and improve
our portfolio.
While this is encouraging progress, there is
still much to be done. We remain fully focused on delivering on our
Renew Danone agenda, setting a solid base for long term sustainable
value creation.”
€ millionexcept % |
Q12022 |
Q12023 |
Reported change |
LFL sales
growth |
Volume/mix
growth |
BY GEOGRAPHICAL ZONE |
|
|
|
|
|
Europe |
2,142 |
2,248 |
+4.9% |
+6.2% |
-4.0% |
North America 1 |
1,477 |
1,714 |
+16.0% |
+11.8% |
+0.8% |
China, North Asia & Oceania 2 |
735 |
824 |
+12.1% |
+16.0% |
+14.3% |
Latin America 3 |
602 |
689 |
+14.6% |
+12.6% |
-0.1% |
Rest of the World |
1,280 |
1,486 |
+16.2% |
+11.8% |
-1.1% |
BY CATEGORY |
|
|
|
|
|
EDP |
3,365 |
3,768 |
+12.0% |
+9.3% |
-3.2% |
Specialized Nutrition |
1,919 |
2,143 |
+11.6% |
+12.0% |
+5.4% |
Waters |
951 |
1,051 |
+10.5% |
+12.0% |
+2.5% |
|
|
|
|
|
|
TOTAL |
6,236 |
6,962 |
+11.6% |
+10.5% |
+0.2% |
I. 2023
FIRST-QUARTER
SALES
In the first quarter of 2023, consolidated sales
stood at €6,962m, up +10.5% on a like-for-like basis, with a +10.3%
contribution from price and a +0.2% contribution from volume/mix.
On a reported basis, sales increased by +11.6%, benefiting notably
from a slightly positive Forex impact of +0.7%, and a positive
effect of +1.4% coming from the contribution of hyperinflation.
Reported sales were also impacted by a negative scope impact of
-0.6%, resulting from the deconsolidation of the Waters business in
Argentina.
Performance by
operating segment
All geographies contributed to the strong start
to the year. In Europe, sales
were up +6.2% sale on a like-for-like basis, driven by +10.2%
growth in price and -4.0% in volume/mix. Growth was led by France,
UK and Poland, and by the good performance of Danone, Actimel,
Alpro, evian and Aptamil. In parallel, European countries continued
to progress on the transformation of the EDP portfolio. In
North America, the strong and balanced growth
momentum continued, supported by consistent investments and
execution: sales were up +11.8% on a like-for-like basis, driven by
+11.0% growth in price and +0.8% growth in volume/mix, led by Oikos
and Activia in Yogurt, and by International Delight and Stok in
Coffee creations, while Plant-based delivered moderate growth on a
high base. China, North Asia & Oceania posted
sales growth of +16.0% on a like-for-like basis, led by +1.7%
growth in price and +14.3% growth in volume/mix. In China, Infant
Nutrition experienced a strong start to the year fueled by higher
shipments, while Adult and Pediatric Specialties both grew well
into double digits. In Waters, Mizone showed an encouraging start
to the year, amid improving operating conditions, while in EDP,
Japan delivered another quarter of double-digit growth, led by
Oikos and Danone. Latin America posted sales
growth of +12.6% on a like-for-like basis, led by Mexico and
Brazil, with a +12.7% increase in price and a -0.1% decline in
volume/mix. Dairy performance was sustained by Danone, Activia,
Danette and YoPro brands, while Waters growth was driven by the
good momentum of Bonafont, especially in small formats and
Aquadrinks. Rest of the World registered sales
growth of +11.8%, with price up +12.9% and volume/mix down -1.1%.
Volume/mix growth was positive in the quarter excluding EDP Russia,
benefitting notably from calendar effects. South-East Asia
delivered mid-teens growth on a low base, sustained by both Waters
and Specialized Nutrition.
Performance by
geography and category
Q1 2023 |
Europe |
North America |
China/North Asia/Oceania |
AMEA, CIS & Latin America |
Total |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
|
|
|
|
|
|
|
|
|
|
|
EDP |
1,067 |
+5.3% |
1,567 |
+11.8% |
85 |
+19.5% |
1,049 |
+8.6% |
3,768 |
+9.3% |
Specialized Nutrition |
752 |
+2.5% |
86 |
+6.7% |
609 |
+15.2% |
696 |
+22.1% |
2,143 |
+12.0% |
Waters |
429 |
+16.1% |
61 |
+19.2% |
131 |
+17.4% |
430 |
+6.0% |
1,051 |
+12.0% |
Total Company |
2,248 |
+6.2% |
1,714 |
+11.8% |
824 |
+16.0% |
2,176 |
+12.0% |
6,962 |
+10.5% |
II.
2023 GUIDANCE
UPGRADE
Like-for-like sales growth now expected between
+4 and +6%, versus +3 to +5% previously, with moderate recurring
operating margin improvement confirmed.
III.
MAJOR DEVELOPMENTS OVER THE PERIOD
- March 15,
2023: Danone announced that Sanjiv Mehta
has been proposed as an independent member of Danone’s Board of
Directors. If approved at Danone’s Shareholders’ Meeting on April
27, 2023, the appointment will mark the full renewal of the Board.
Mehta is currently CEO and Managing Director of Hindustan Unilever
Limited (HUL), a role he will leave on June 26, 2023. If approved,
he will join Danone’s Board effective July 1, 2023.
- April 24, 2023:
Danone announced its intention to call its redemption option for
the outstanding €750m of its hybrid bond issued in 2017. The
redemption date is set for June 23, 2023.
VI.
NEW FINANCIAL DISCLOSURE
Financial disclosure
Danone’s external reporting has been adjusted to
reflect the organizational changes. Starting from Q1 2023, the
company reports its key indicators (net sales, like-for-like sales
growth, recurring operating income and recurring operating margin)
along five adjusted operating segments:
- Europe, which
includes Ukraine (was previously part of Rest of the World
zone);
- North America,
which includes the United States and Canada (unchanged);
- China, North
Asia, Oceania (unchanged);
- Latin America
(was previously part of Rest of the World zone);
- Rest of the
World, which includes AMEA (Asia, Middle East including Turkey,
Africa) and CIS.
The global category reporting remains unchanged,
and Danone continues to report performance, on both net sales and
recurring operating income and margin, for EDP, Specialized
Nutrition and Waters.Like-For-Like
definition
All countries with hyperinflationary economies
are now included in our like-for-like changes. However, in order to
limit the distorting effect of hyperinflation, net sales growth in
excess of around 26% per year are excluded from like-for-like net
sales growth calculation in hyperinflationary economies. Indeed, a
three-year average at 26% would generally trigger hyperinflation as
defined by IFRS rules.
2022 figures restated by new operating segments
and new LFL methodology
|
First quarter
2022 |
Second quarter
2022 |
Third quarter
2022 |
Fourth quarter
2022 |
Full Year
2022 |
|
|
Like-for-like change |
Volume/mix change |
Like-for-like change |
Volume/mix change |
Like-for-like change |
Volume/mix change |
Like-for-like change |
Volume/mix change |
Like-for-like change |
Volume/mix change |
|
BY GEOGRAPHICAL ZONE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
+5.2% |
+2.4% |
+4.2% |
-0.7% |
+5.4% |
-2.7% |
+3.6% |
-6.4% |
+4.6% |
-1.9% |
North America |
+5.5% |
+1.3% |
+8.9% |
+2.0% |
+11.2% |
+1.0% |
+9.7% |
-2.1% |
+8.9% |
+0.5% |
China, North Asia & Oceania |
+15.3% |
+13.2% |
+3.3% |
+4.3% |
+6.8% |
+5.2% |
+3.4% |
2.1% |
+6.7% |
+4.9% |
Latin America |
+9.7% |
+1.4% |
+15.7% |
+1.2% |
+18.1% |
+4.0% |
+15.1% |
-4.4% |
+14.7% |
+0.5% |
Rest of the World |
+5.5% |
-1.4% |
+8.5% |
+0.4% |
+8.1% |
-6.7% |
+4.8% |
-5.5% |
+6.7% |
-3.3% |
BY CATEGORY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
+3.8% |
-1.5% |
+5.6% |
-2.1% |
+6.1% |
-4.8% |
+7.5% |
-6.9% |
+5.8% |
-3.9% |
Specialized Nutrition |
+9.0% |
+5.2% |
+10.4% |
+8.0% |
+11.5% |
+1.7% |
+6.5% |
+1.3% |
+9.3% |
+3.6% |
Waters |
+14.1% |
+11.5% |
+5.1% |
-1.6% |
+10.8% |
+5.3% |
+0.9% |
-4.5% |
+7.5% |
+2.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
+6.8% |
+2.4% |
+6.9% |
+1.0% |
+8.5% |
-1.0% |
+6.2% |
-4.0% |
+7.1% |
-0.6% |
Q1 2022 |
Europe |
North America |
China/North Asia/Oceania |
AMEA, CIS & Latin America |
Total |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
1,041 |
-0.3% |
1,351 |
+5.1% |
77 |
+4.0% |
896 |
+6.9% |
3,365 |
+3.8% |
Specialized Nutrition |
743 |
+9.6% |
77 |
+4.7% |
543 |
+21.5% |
557 |
-0.7% |
1,919 |
+9.0% |
Waters |
358 |
+14,4% |
49 |
+17.7% |
115 |
-1.2% |
429 |
+18.5% |
951 |
+14.1% |
Total Company |
2,142 |
+5.2% |
1,477 |
+5.5% |
735 |
+15.3% |
1,881 |
+6.7% |
6,236 |
+6.8% |
Q2 2022 |
Europe |
North America |
China/North Asia/Oceania |
AMEA, CIS & Latin America |
Total |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
1,046 |
-0.2% |
1,500 |
+7.7% |
89 |
+14.3% |
1,049 |
+8.8% |
3,684 |
+5.6% |
Specialized Nutrition |
742 |
+7.3% |
97 |
+23.0% |
617 |
+9.7% |
649 |
+13.4% |
2,106 |
+10.4% |
Waters |
501 |
+9.4% |
65 |
+18.8% |
230 |
-13.6% |
482 |
+10.5% |
1,277 |
+5.1% |
Total Company |
2,289 |
+4.2% |
1,662 |
+8.9% |
936 |
+3.3% |
2,180 |
+10.5% |
7,067 |
+6.9% |
Q3 2022 |
Europe |
North America |
China/North Asia/Oceania |
AMEA, CIS & Latin America |
Total |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
1,016 |
+1.2% |
1,610 |
+8.3% |
89 |
+14.7% |
1,147 |
+7.8% |
3,862 |
+6.1% |
Specialized Nutrition |
738 |
+8.9% |
130 |
+52.2% |
611 |
+5.3% |
655 |
+15.4% |
2,134 |
+11.5% |
Waters |
516 |
+9.2% |
73 |
+26.3% |
239 |
+7.6% |
510 |
+12.5% |
1,338 |
+10.8% |
Total Company |
2,270 |
+5.4% |
1,813 |
+11.2% |
940 |
+6.8% |
2,311 |
+11.0% |
7,334 |
+8.5% |
Q4 2022 |
Europe |
North America |
China/North Asia/Oceania |
AMEA, CIS & Latin America |
Total |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
1,034 |
+1.5% |
1,624 |
+11.1% |
85 |
+15.5% |
1,144 |
+8.5% |
3,887 |
+7.5% |
Specialized Nutrition |
753 |
+7.7% |
72 |
-17.6% |
659 |
+3.7% |
664 |
+11.7% |
2,147 |
+6.5% |
Waters |
382 |
+1.5% |
64 |
+12.8% |
72 |
-10.3% |
454 |
+1.1% |
972 |
+0.9% |
Total Company |
2,169 |
+3.6% |
1,759 |
+9.7% |
817 |
+3.4% |
2,261 |
+7.8% |
7,007 |
+6.2% |
FY 2022 |
Europe |
North America |
China/North Asia/Oceania |
AMEA, CIS & Latin America |
Total |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
Net sales (€m) |
LFL sales growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EDP |
4,137 |
+0.6% |
6,085 |
+8.1% |
340 |
+12.4% |
4,237 |
+8.0% |
14,799 |
+5.8% |
Specialized Nutrition |
2,977 |
+8.3% |
376 |
+15.6% |
2,431 |
+9.3% |
2,535 |
+9.7% |
8,319 |
+9.3% |
Waters |
1,757 |
+8.5% |
251 |
+19.0% |
656 |
-4.4% |
1,879 |
+10.2% |
4,543 |
+7.5% |
Total Company |
8,871 |
+4.6% |
6,712 |
+8.9% |
3,428 |
+6.7% |
8,651 |
+9.0% |
27,661 |
+7.1% |
VII. IFRS
STANDARDS AND FINANCIAL INDICATORS NOT DEFINED IN
IFRS
IAS 29: impact on reported
data
All necessary conditions have been reached
(including 3-year cumulative rate of inflation for consumer prices
exceeding the 100% threshold reached during the first half 2022) to
now consider Turkey as “hyperinflationary” as defined by IFRS rules
and therefore that IAS 29 rule related to Financial Reporting in
Hyperinflationary Economies becomes applicable to the country.
Consequently, Danone applies IAS 29 in Turkey with an effective
date of January 1st, 2022.
Adoption of IAS 29 in hyperinflationary
countries requires its non-monetary assets and liabilities and its
income statement to be restated to reflect the changes in the
general pricing power of its functional currency, leading to a gain
or loss on the net monetary position included in the net income.
Moreover, its financial statements are converted into euros using
the closing exchange rate of the relevant period.
IAS29: impact on reported data €
million except % |
Q1 2023 |
Sales |
-6.4 |
Sales growth (%) |
-0.09% |
Financial indicators not defined in
IFRS
Due to rounding, the sum of values presented may
differ from totals as reported. Such differences are not
material.
Like-for-like changes in sales,
recurring operating income and recurring operating margin reflect
Danone's organic performance and essentially exclude the impact
of:
- changes in
consolidation scope, with indicators related to a given fiscal year
calculated on the basis of previous-year scope;
- changes in
applicable accounting principles;
- changes in
exchange rates with both previous-year and current-year indicators
calculated using the same exchange rates (the exchange rate used is
a projected annual rate determined by Danone for the current year
and applied to both previous and current years).
All countries with hyperinflationary economies
are included in the like-for-like changes as follows: the net sales
growth of those hyperinflationary countries in excess of around 26%
per year (a three-year average at 26% would generally trigger
hyperinflation as defined by IFRS rules) are excluded from
like-for-like net sales growth calculation for those countries.
Bridge from reported data to like-for-like
data
(€ million except %) |
Q1 2022 |
Like-for-like change |
Impact of changesin scope of
consolidation |
Impact of changes in exchange rates
& others
incl.
IAS 29 |
Hyperinflation
contribution |
Reported change |
Q1 2023 |
|
|
|
|
|
|
|
|
Sales |
6,236 |
+10.5% |
-0.6% |
+0.4% |
+1.4% |
+11.6% |
6,962 |
Recurring operating income is
defined as Danone’s operating income excluding Other operating
income and expenses. Other operating income and expenses comprise
items that, because of their significant or unusual nature, cannot
be viewed as inherent to Danone’s recurring activity and have
limited predictive value, thus distorting the assessment of its
recurring operating performance and its evolution. These mainly
include:
- capital gains
and losses on disposals of fully consolidated companies;
- impairment
charges on intangible assets with indefinite useful lives;
- costs related
to strategic restructurings or transformation plans;
- costs related
to major external growth transactions;
- costs related
to major crisis and major litigations;
- in connection
with IFRS 3 (Revised) and IAS 27 (Revised) relating to business
combinations, (i) acquisition costs related to business
combinations, (ii) revaluation profit or loss accounted for
following a loss of control, and (iii) changes in earn-outs
relating to business combinations and subsequent to acquisition
date.
Recurring operating margin is
defined as Recurring operating income over Sales ratio.
o o O o o
FORWARD-LOOKING STATEMENTS
This press release contains certain
forward-looking statements concerning Danone. In some cases, you
can identify these forward-looking statements by forward-looking
words, such as “estimate”, “expect”, “anticipate”, “project”,
“plan”, “intend”, “objective”, “believe”, “forecast”, “guidance”,
“foresee”, “likely”, “may”, “should”, “goal”, “target”, “might”,
“will”, “could”, “predict”, “continue”, “convinced” and
“confident,” the negative or plural of these words and other
comparable terminology. Forward looking statements in this document
include, but are not limited to, predictions of future activities,
operations, direction, performance and results of Danone.
Although Danone believes its expectations are
based on reasonable assumptions, these forward-looking statements
are subject to numerous risks and uncertainties, which could cause
actual results to differ materially from those anticipated in these
forward-looking statements. For a detailed description of these
risks and uncertainties, please refer to the “Risk Factor” section
of Danone’s Universal Registration Document (the current version of
which is available at www.danone.com).
Subject to regulatory requirements, Danone does
not undertake to publicly update or revise any of these
forward-looking statements. This document does not constitute an
offer to sell, or a solicitation of an offer to buy Danone
securities.
The
presentation to analysts and investors will be
broadcast live today from
8:30
a.m. (Paris time) on
Danone’s website
(www.danone.com).
Related slides will also be available on the website in the
Investors section.
1United States and Canada; 2China, Japan, Australia and New
Zealand; 3Mexico, Brazil, Argentina and UruguayAll references in
this document to Like-for-like (LFL) changes, Recurring operating
income and margin and Recurring net income correspond to financial
indicators not defined in IFRS. Their definitions, as well as their
reconciliation with financial statements, are listed on page 5
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