23 April 2025

3 minute read

By: Global Ag Media

Europe

Danone said it was confident about its prospects for 2025 after it beat first-quarter sales expectations on Wednesday, as strong demand in China for infant milk formula and medical nutrition products outpaced weakness in coffee creamers in a competitive US market, reported Reuters. 

The French consumer goods group, whose brands include Evian and Badoit water and Activia yoghurt, said first-quarter sales rose 4.3% on a like-for-like basis, compared with expectations of 3.8% in a company-provided analysts' consensus.

"With a 4.3% like-for-like sales growth in Q1, we have delivered a strong start to the year, across all categories, demonstrating the strength of our execution and the relevance of our health-focused portfolio," CEO Antoine de Saint-Affrique said in a statement.

The company's shares opened down 0.5% before erasing its losses. By 0812 GMT, shares were up 0.4% at 74.06 euros.

Danone posted a "solid set of numbers", said Bernstein analysts in a note, defying recent fears after some data had pointed to slowing growth.

The analysts highlighted how the higher prices Danone charged for its products contributed 2.4% of the 4.3% sales growth, up from a 0.6% contribution in the fourth quarter of 2024, and those higher prices would help profits this year at a time of higher dairy costs.

Sales for the three months ended March 31 totalled 6.844 billion euros ($7.79 billion).

Danone's growing focus on health and science makes it more resilient in an environment marked by US tariff uncertainty and weak consumer sentiment, De Saint-Affrique said.

Finance Chief Juergen Esser said he was confident Danone and its "very solid balance sheet", would "mitigate headwinds and turn them into opportunities" as he reiterated the group was looking for acquisitions.

Overall, the food sector has remained relatively insulated from the fallout of US tariffs though it is not immune from inflation, notably from input costs.

Esser said Danone anticipated a "normal" level of inflation this year, driven by higher milk and logistics costs. Tariffs were "not a major concern" as Danone produced locally.

China was the "star performer" for the company, said analysts at Barclays, with Danone gaining market share in infant formula, helped by its premium Essensis product. It is also seeing strong demand for medical nutrition products and the Mizone water drink.

Danone was "very confident" growth momentum would hold up in China with the company continuing to win market share, Esser said.

Sales in North America were up 3.7% in the quarter, driven by demand for protein products such as the Oikos brand Greek yoghurt range, which helped offset a "soft start" for coffee creamers in the United States.

Danone also faced supply chain issues in the first quarter that were now solved. "We are confident we will capture back the growth of the category," Esser said when commenting about coffee creamers.

The company reiterated its full-year 2025 forecast was in line with its mid-term ambition of like-for-like sales growth of between 3% and 5%, with recurring operating income growing faster than sales.

($1 = 0.8783 euros)