Q3: Transition in China weighs on results
18 Oct 16
Q3 update: sales grew lfl +2.1% (cons. +2.4%) with -0.7% volume growth and +2.8% pricing. On reported figures, sales were down 1.8% (FX: -4.1%, scope of consolidation +0.2%). OG by division: Fresh Dairy +2.2% (cons. +2.5%), Waters -0.1% (cons. +1%), Early Life Nutrition +1.7% (cons. +2.5%), Medical Nutrition +9.7% (cons. +7%). Fresh dairy saw stronger pricing +4.2% on the back of negative volumes in the CIS and LatAm regions. Waters were impacted by the transition phase and floods in China (excluding China, the Waters performance is up mid single-digit). The Early Life Nutrition performance was impacted by tough comparables and the transition from an indirect to a direct sales model in China (excluding indirect sales, ELN was up mid single-digit in China). Medical Nutrition’s excellent performance was driven across all geographies. The company maintains its FY guidance: 3-5% organic top-line growth and 50-60bp lfl improvement in the operating margin, although the top-line is likely to be in the lower range of this.
Very solid Q2; on track to deliver its FY guidance
28 Jul 16
Danone released its Q2 and H1 update. In Q2, sales grew organically 4.1% (cons. +3.7%) with volumes up +1% and pricing +3.1%. On reported figures sales were down 3% (FX:-7.7% and net acquisitions: +0.6%). OG by division: Fresh Dairy +3% (cons +2.7%), Waters 2.7% (cons. +2.7%), Early Life Nutrition +7.2% (cons. +6.2%) Medical Nutrition 7.1% (cons. +6.5%). OG by geography: Europe -0.2%, CIS&North America +4.8%, ALMA +8%. Overall, in H1 sales grew organically by +3.8%, whereas the operating margin was up +93bp lfl and +125bp on reported figures. Waters was the only division where the margin lfl was down (due to inventory adjustments in China). The company confirmed its FY guidance: 3-5% organic top-line growth and 50-60bp lfl improvement in the operating margin.
Danone finally gets exciting!
07 Jul 16
Danone has announced the acquisition of WhiteWave Foods (the US-based, natural and health-focused food group) for $12.5bn in cash (including $2.1bn debt). The proposed price per share of $56.25 offers a premium of around 24% to WhiteWave’s average close price over the past month and represents a c. 21.2x EBITDA multiple. The deal is expected to close by the end of the year. It is subject to WhiteWave shareholders and regulatory approval.
Q1 as expected; FX weighs on reported figures
19 Apr 16
Danone released its Q1 trading statement. The OG stood at 3.5% (cons. 3.2%) driven by pricing of +2.7% and volumes of +0.8%. The FX impact was -7.2%. Net acquisitions showed an impact of +0.7%. OG by division: Fresh Dairy +2.3% (cons. 2%), Waters +3.9% (cons. 2.1%), Baby Food +4.8% (cons. +5.5%) and Medical Nutrition +6.6% (cons. 6.7%). OG by region: Europe +0%, CIS & North America +5.1%, ALMA +6.3%. The group maintains its FY guidance: 3-5% OG in sales and a solid improvement in the organic operating margin.
Fresh Dairy improves but the FY16 guidance leaves mixed impression
23 Feb 16
Danone released its Q4 and FY results. In Q4, sales grew organically +3.6% (cons +3.2%) with 1.3% in volume and +2.3% in value. Q4 OG by division: Fresh dairy +2.6% (cons +2%), Waters +1.9% (cons +3.9%), Baby Nutrition +6% (cons +3.4%), Medical Nutrition +6.8% (cons +7.7%). For the FY, the revenue grew organically +4.4% (0.9% in volumes, 3.5% in value) and +6% on reported figures. The operating margin increased +17bp organically (FD +24bp, Waters margin -192bp, Baby Food +142bp, Medical Nutrition +1bp) and +32bp on reported figures. Net income was up +5%. The proposed dividend stood at €1.6 per share. In FY16, Danone expects 3-5% OG in sales (on rising raw material prices, a sluggish economic environment and volatile currencies) and a solid improvement in the organic operating margin.
Q3 trading update: Fresh Dairy volumes remain negative, strong Baby food boosts results
19 Oct 15
Danone released its Q3 trading update. Q3 sales were up +4.6% LFL (consensus at 4.3% vs. 4.5% in Q2) with volume up 0.8% (consensus at 1.8%) and pricing up +3.8%. FX stood at -0.2% whereas net acquisitions were -0.2%. On reported figures, Q3 sales grew by +4.2% to €5.6bn. Growth LFL by division: Fresh Dairy +0.6% (consensus at +1%), Waters +6.8% (consensus at +7.7%), Baby nutrition +10.9% (consensus at +7.5%), Medical Nutrition +6.9% (consensus at +7%). Growth LFL by geographic area: Europe +5.1% (+1.8% in Q2), CIS&NORAM +3.2% (0.4% in Q2) and ALMA +4.7% (+9.4% in Q2). After 9M, the group's sales are up +4.6% LFL. Danone maintains its FY guidance: 4-5% LFL growth and slight growth in the trading operating margin.
Panmure Research - Consumer Staples 11-09-15
11 Sep 15
The consumer staples sector continues to trade on well above average historic and market average multiples despite a lack of earnings growth over 2014-15. This has been due to being perceived as ‘low risk' and cash generative with the ability to continue to pay and grow dividends. However cashflow cover of dividends has declined, and a further round of emerging market currency devaluations could have a severe impact on the ability to grow dividends unless they can grow earnings in the developed world. In the short term the performance of the sector is likely to be overshadowed by the potential interest rate increase in the US. We would have an in-line weighting in the UK consumer staples sector. Within that we remain positive on the tobacco subsector and Hilton Foods Group and retain the Sell rating on Associated British Foods. We move PZ Cussons from Sell to Hold
Good Q2, waiting for Fresh Dairy pick up
24 Jul 15
Q2 sales grew by 4.5% LFL (consensus at 4.3%) with volumes at 1.5% and pricing at 3%. The performance was driven by a strong Waters (10.2%, equally price- and volume-driven), Infant Nutrition (11.1%, with 7.3% volume growth) and Medical Nutrition (7.1% with 5% volume growth). Fresh dairy sales decreased by 1.1% LFL (-3.1% in volume and 2% in pricing). In H1, sales increased by 4.6% LFL (0.7% volume, 3.9% pricing) and by 8.8% on reported figures (FX at 4.6%). The trading operating margin progressed by 85bp on a reported basis (12.12%) with +135bp for Fresh Dairy (50bp LFL), 36bp for Waters (10bp LFL), -96bp for Infant Nutrition (20bp LFL) and flat Medical Nutrition (50bp LFL). Following the poor performance of Dumex (Danone had to revise its sales projections which resulted in an impairment loss of €398m) in China, Danone has reached a preliminary agreement with Mengniu and Yashili to merge Dumex in China with Yashili and to increase its shareholding in Mengniu. The deal should be closed at the end of this year. Danone confirmed its full-year guidance: 4-5% top-line growth and a slight progression in the trading operating margin on a LFL basis.