• Danone: Continued strong momentum in Q3; Consistently delivering quality growth

    Source: Nasdaq GlobeNewswire / 24 Oct 2024 00:30:37   America/Chicago

    2024 Third-Quarter Sales
    Press release – Paris, October 24, 2024

    Continued strong momentum in Q3
    Consistently delivering quality growth

    • Sales reached €6,826m in Q3 2024, up +4.2% on a like-for-like (LFL) basis
    • Strong volume/mix, up +3.6%, and price up +0.7%; volume/mix and price positive in all categories
    • Continued strong performance in North America driven by High Protein, Coffee Creations and Waters
    • Further acceleration in Europe volume/mix, driven by EDP
    • Another quarter of strong competitive momentum in China, North Asia & Oceania, led by all categories
    • 2024 guidance confirmed: like-for-like sales growth expected between +3% and +5%, with moderate improvement in recurring operating margin

    3

    € million except %Q3
    2023    		Q3
    2024    		Reported changeLFL sales
    growth    		Volume/mix growth9M
    2023    		9M
    2024    		Reported changeLFL sales
    growth    		Volume/mix
    growth    		 
    BY GEOGRAPHICAL ZONE          
    Europe2,3922,427+1.5%+1.4%+2.4%7,0697,210+2.0%+1.6%+0.9% 
    North America1,7471,611-7.7%+5.8%+4.9%5,1644,943-4.3%+4.4%+3.5% 
    China, North Asia & Oceania896967+7.9%+8.0%+10.2%2,6742,808+5.0%+8.4%+8.9% 
    Latin America771706-8.5%+2.7%-0.7%2,2332,265+1.4%+4.0%-0.4% 
    Rest of the World1,1001,115+1.4%+6.0%+1.2%3,9773,350-15.8%+5.8%+1.4% 
    BY CATEGORY          
    EDP3,4743,283-5.5%+4.1%+3.8%10,97310,066-8.3%+3.5%+2.4% 
    Specialized Nutrition2,0702,189+5.7%+5.2%+4.1%6,3696,599+3.6%+4.6%+2.7% 
    Waters1,3621,354-0.6%+3.2%+2.3%3,7753,910+3.6%+5.0%+2.9% 
               
    TOTAL6,9066,826-1.2%+4.2%+3.6%21,11820,575-2.6%+4.1%+2.6% 

    1

    Antoine de Saint-Affrique: CEO statement

    With like-for-like sales growth of +4.2% in Q3, driven by +3.6% volume/mix, we continue to deliver broad-based quality growth, with both volume/mix and price positive in all categories.

    Our consistent focus on science based and consumer and patient centric innovation, combined with strong in-market execution keeps paying off, as demonstrated by the continued good performance of our winning platforms such as High Protein, Coffee Creations and Medical Nutrition. We have also improved competitiveness within our Core portfolio across many geographies.

    In what remains a challenging environment, we view our future with confidence, further leveraging the fundamentals we reestablished with Renew Danone.

    I. THIRD QUARTER SALES

    In Q3 2024, consolidated sales stood at €6,826m, up +4.2% on a like-for-like basis, led by an increase of +3.6% from volume/mix and +0.7% from price. On a reported basis, sales decreased by -1.2%, notably due to the negative impact from scope (-3.1%), resulting predominantly from the deconsolidation of Horizon Organic and Wallaby. Reported sales were also negatively impacted by forex (-3.2%), reflecting the depreciation of several currencies against the euro, notably the Argentine Peso, the Mexican Peso, the Brazilian Real and the Turkish Lira. In addition, hyperinflation contributed positively to reported sales (+1.5%).

    Sales by operating segment

    In the third quarter, Europe sales were up +1.4% on a like-for-like basis, led by further acceleration of volume/mix, up +2.4%, while price stood at -1.0%. EDP made additional progress in its transformation, notably led by the strong competitive performance of YoPro, Actimel and Alpro, while Waters posted solid growth, despite adverse weather conditions in the region.

    In North America, sales were up +5.8% on a like-for-like basis, led by strong volume/mix, up +4.9%, while price was resilient at +0.9%. The strong performance was driven by Coffee Creations, growing double-digits, Yogurt, accelerating in a very dynamic category, and Waters, with evian posting strong performance and continued market share gains.

    China, North Asia & Oceania delivered +8.0% like-for-like sales growth, with volume/mix accelerating to +10.2% and price down -2.2%. In Specialized Nutrition, Infant Milk Formula posted solid competitive growth, in a category showing first signs of growth recovery, and Medical Nutrition sustained its good momentum. In Waters, Mizone pursued its strong performance, while EDP delivered another quarter of strong growth in Japan.

    In Latin America, sales were up +2.7% on a like-for-like basis, with volume/mix slightly down -0.7% and price up +3.5%. While the performance was impacted by the licensing out of milk business in Brazil and poor weather conditions in Mexico, Aptamil, Danone and YoPro brands pursued their solid momentum.

    In the Rest of the World, sales increased by +6.0% on a like-for-like basis, with volume/mix up +1.2% and price up +4.7%, notably led by the strong performance of Specialized Nutrition across the region, and the solid growth of Africa, where the dairy portfolio transformation starts to yield results.

    Sales by geography by category

    Q3 2024

    		EuropeNorth AmericaChina/North Asia/OceaniaAMEA, CIS &
    Latin America    		Total
    Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)
               
    EDP1,069+0.9%1,438+6.2%95+9.3%683+4.1%3,283+4.1%
    Specialized Nutrition7700.0%96-2.6%620+7.7%704+10.3%2,189+5.2%
    Waters589+4.3%78+9.6%252+8.3%435-1.7%1,354+3.2%
    Total Company2,427+1.4%1,611+5.8%967+8.0%1,821+4.8%6,826+4.2%


    9M 2024

    		EuropeNorth AmericaChina/North Asia/OceaniaAMEA, CIS &
    Latin America    		Total
    Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)Sales (€m)LFL sales growth (%)
               
    EDP3,243+1.2%4,448+4.6%278+12.8%2,097+3.3%10,066+3.5%
    Specialized Nutrition2,335+1.2%263-4.8%1,857+6.2%2,144+8.5%6,599+4.6%
    Waters1,632+3.1%231+10.5%673+12.9%1,374+2.9%3,910+5.0%
    Total Company7,210+1.6%4,943+4.4%2,808+8.4%5,615+5.1%20,575+4.1%

    II. 2024 GUIDANCE

    2024 guidance confirmed: Like-for-like sales growth between +3% and +5% with moderate improvement in recurring operating margin.

    III. MAJOR DEVELOPMENTS OVER THE PERIOD

    • September 5, 2024: Danone successfully issued a €700 million bond with a 7-year maturity and a 3.20% coupon. The settlement took place on September 12, 2024 and the bonds are listed on Euronext Paris.

    IV. ALTERNATIVE PERFORMANCE MEASURES NOT DEFINED BY IFRS

    IAS 29: impact on reported data

    Danone has applied IAS 29 in hyperinflation countries, as defined in IFRS. Adoption of IAS 29 in hyperinflationary countries requires their non-monetary assets and liabilities and their income statement to be restated to reflect the changes in the general purchasing power of their functional currency, leading to a gain or loss on the net monetary position, recorded in net income. Moreover, their financial statements are converted into euros using the closing exchange rate of the relevant period.

    IAS 29: impact on reported dataQ3 2024
    Sales (€ million)-5.0
    Sales growth (%)-0.07%

    Breakdown by quarter of 9M 2024 sales after application of IAS 29
    9M 2024 sales correspond to the addition of:

    • Q3 2024 reported sales;
    • Q1 and Q2 2024 sales resulting from the application of IAS 29 until September 30, 2024, to sales of entities in hyperinflation countries (application of the inflation rate until September 30, 2024, and translation into euros using the September 30, 2024, closing rate) and provided in the table below for information (unaudited data)
    Sales after application of IAS 29 (€ million)Q1 20241Q2 20242Q3 20249M 2024
    BY GEOGRAPHICAL ZONE    
    Europe2,3362,4472,4277,210
    North America1,7371,5951,6114,943
    China, North Asia & Oceania8401,0019672,808
    Latin America7468127062,265
    Rest of the World1,1561,0791,1153,350


    BY CATEGORY    		    
    EDP3,4893,2943,28310,066
    Specialized Nutrition2,1932,2172,1896,599
    Waters1,1331,4231,3543,910
         
    Total6,8156,9346,82620,575

    1Results from the application of IAS 29 until September 30, 2024, to Q1 sales of entities of hyperinflation countries.
    2Results from the application of IAS 29 until September 30, 2024, to Q2 sales of entities of hyperinflation countries.

    Definitions of geographical zones

    Europe refers to European countries including Ukraine.

    North America refers to United States and Canada.

    China, North Asia & Oceania refers to China, Japan, Australia and New-Zealand.

    Latin America refers to Mexico, Brazil, Argentina and Uruguay.

    Rest of the World refers to Asia, Middle East including Turkey, Africa and CIS.

    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 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 the previous year's scope;
    • Changes in applicable accounting principles;
    • Changes in exchange rates, with both previous-year and current-year indicators calculated using the same exchange rate (the exchange rate used is a projected annual rate determined by Danone for the current year and applied to both previous and current years).

    Since January 1, 2023, all countries with hyperinflationary economies are taken into account in like-for-like changes as follows: sales growth in excess of around 26% per year (a three-year average at 26% would generally trigger the application of hyperinflationary accounting as defined in IFRS) is now excluded from the like-for-like sales growth calculation.

    Bridge from like-for-like data to reported data

    (€ million except %)2023 salesLike-for-like changeImpact of changes
    in scope of consolidation     		Impact of changes in exchange rates & others incl. IAS 29Contribution of hyperinflationReported change2024 sales
            
    Q36,906+4.2%-3.1%-3.8%+1.5%-1.2%6,826
    9M21,118+4.1%-5.2%-3.1%+1.6%-2.6%20,575

    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 businesses and fully consolidated companies;
    • Impairment charges on intangible assets with indefinite useful lives;
    • Costs related to strategic restructuring operations or transformation plans;
    • Costs related to major external growth transactions;
    • Costs related to crises and major disputes;
    • In connection with IFRS 3 and IFRS 10, (i) acquisition costs related to acquisitions of companies resulting in control, (ii) revaluation gains or losses accounted for following a loss of control, and (iii) changes in earn-outs subsequent to acquisitions resulting in control.

    Recurring operating margin is defined as the 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 8:15 a.m. (Paris time)
    on Danone’s website (www.danone.com).
    Related slides will also be available on the website in the Investors section.

    APPENDIX – Sales by geographical zone and by category (in € million)

     First quarter Second quarterThird quarter
     202320242023202420232024


    BY GEOGRAPHICAL ZONE    		           
    Europe2,2482,3362,4292,4472,3922,427
    North America1,7141,7371,7041,5951,7471,611
    China, North Asia & Oceania8248409541,001896967
    Latin America689727779810771706
    Rest of the World1,4861,1501,3691,0841,1001,115


    BY CATEGORY    		          
    EDP3,7683,4743,7313,2983,4743,283
    Specialized Nutrition2,1432,1832,1422,2132,0702,189
    Waters1,0511,1321,3621,4261,3621,354
               
    TOTAL6,9626,7897,2356,9386,9066,826


     First quarter 2024Second quarter 2024Third quarter 2024
     Reported changeLFL changeReported changeLFL changeReported changeLFL change


    BY GEOGRAPHICAL ZONE    		         
    Europe+3.9%+2.8%+0.7%+0.7%+1.5%+1.4%
    North America+1.3%+2.5%-6.4%+5.0%-7.7%+5.8%
    China, North Asia & Oceania+1.9%+8.9%+5.0%+8.4%+7.9%+8.0%
    Latin America+5.4%+4.1%+4.0%+5.0%-8.5%+2.7%
    Rest of the World-22.7%+6.0%-20.8%+5.3%+1.4%+6.0%


    BY CATEGORY    		      
    EDP-7.8%+3.0%-11.6%+3.3%-5.5%+4.1%
    Specialized Nutrition+1.9%+3.8%+3.3%+4.7%+5.7%+5.2%
    Waters+7.6%+8.1%+4.7%+4.4%-0.6%+3.2%
           
    TOTAL-2.5%+4.1%-4.1%+4.0%-1.2%+4.2%


    All references in this document to Like-for-like (LFL) changes, and Recurring operating income and margin, correspond to alternative performance measures not defined by IFRS. Their definitions and their reconciliation with financial statements, as well as the definitions of geographical zones, are listed on pages 3 and 4.

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