By Dominique Vidalon
PARIS (Reuters) -French food group Danone kept its financial goals for 2022 after it delivered a stronger-than-expected 7.1% sales growth in the first quarter amid higher input costs and uncertainties linked to the war in Ukraine.
The robust start to the year, Danone’s strongest like-for-like sales growth since the fourth quarter of 2014, was broad-based across geographies and the three businesses – dairy and plant-based products, infant formula and bottled water.
It reflected favourable year-ago comparables, price increases, stronger demand for China baby products formula, and a post-COVID improvement regarding the consumption of its water products outside of the home environment.
“Our teams are set to make 2022 the foundational year it ought to be for Danone as we move towards sustainable value creation for all,” Finance Chief Juergen Esser said in a statement.
Danone, which is the world’s largest yoghurt maker, said its like-for-like sales rose to 6.236 billion euros ($6.74 billion) in the first quarter, compared with expectations for a 5.5% rise in a company-compiled consensus of 19 analysts.
Danone’s new chief Antoine de Saint-Affrique is conducting a revival plan amid mounting input costs, coupled with further uncertainties caused by Russia’s invasion of Ukraine, which has forced Danone to suspend investments in Russia.
The group reiterated it expected a 2022 operating margin above 12% against 13.7% in 2021, with price-led like-for-like sales growth in a range of 3% to 5% against 3.4% in 2021.
This assumed the reinvestment of 100% of its Local First savings, a productivity higher than last year and a mid-teens level of input cost inflation.
($1 = 0.9246 euros)
(Reporting by Dominique Vidalon; Editing by Reuters Paris and Muralikumar Anantharaman)
