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Danone published a solid set of Q3 results, above the market expectations and driven by pricing. Although the volume contribution was still negative, an improvement has been seen since the last quarter and Danone is expecting a positive volume-mix by the end of the year. As we had expected, the FY 2023 guidance was raised.
Companies: Danone (BN:EPA)Danone SA (BN:PAR)
AlphaValue
The H1 results were solid, exceeding consensus expectations, but they were not so exceptionally outstanding to surprise the market positively (as Unilever did yesterday). The results were mainly driven by price/mix dynamics. However, the progress made towards the “Renew Danone” strategy and another successful quarter of delivery instill confidence and trust in the company.
A positive volume/mix (despite accelerated pricing) and an upgrade to the FY23 sales outlook confirmed that consumer demand has so far remained resilient. Given the significant discount to Nestle (16.3x FY23 P/E vs. 24.0x) and the positive momentum, the stock is becoming increasingly attractive.
A satisfactory year. Q4 volumes were inevitably light, but nothing worrying in the current environment. The FY23 guidance is in line with the consensus. Nothing very glorious, but enough to be happy about on a Danone scale.
A copy/paste of what we had previously seen from other consumer staples companies: a beat on price, lower-than-expected volume elasticity and a revenue guidance upgrade maintaining the margin target unchanged.
The trend for consumer companies finally looks good so far. Danone beat expectations from the top to the bottom-line with reassuring volume metrics. FY sales guidance upgraded, and EBIT guidance reiterated.
Danone shares are flying (+8% at mid day), well beyond what might have been expected following the sound/reassuring Q1 numbers. The main reason is Lactalis.
The Q1 sales beat, with growth across all segments and geographies, secures the FY22 guidance for now. Normalization of the figures expected looking forward.
Reinvestment has been the watchword of the CMD. While it could be the key for fundamental changes, this adds more pressure on margins in the current inflationary context. FY22 will therefore be challenging, but, looking forward, Antoine de Saint Affrique was able to convince us in part that things could move in the right direction. The mid-term guidance is not fantastic either, but given Danone’s historical tendency to lower its targets as time goes on, this caution is probably better.
The reiteration of the FY21 margin guidance is reassuring and proves that Danone is dealing with cost inflation (roughly) as well as its peers. Apart from this, we don’t see other major catalysts before Saint-Affrique’s announcements expected during the CMD in March 2022.
A mix of good operational and governance news, which is very welcome after Danone’s underperformance. However, we remain cautious on margin development given the weaknesses announced by peers.
No major surprise in the Q1 results, nor stunning news about a new CEO/strategy. The group, currently on a “break”, is attempting first to recover from the pandemic gradually and the guidance suggests that this will be the case.
Danone finally bows to investor pressure to split the Chairman and CEO roles. This is a good start, but we hope that the group will accompany this decision with strategic choices to relaunch growth.
The FY20 figures were roughly in line with the expectations. The FY21 outlook seems quite conservative, but positive comments about the potential split of Faber’s roles, divestments or buy-backs were welcomed. More information to come at the next CME on 25 March.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Danone. We currently have 71 research reports from 4 professional analysts.
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