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Danone has registered a strong end to its financial year as a recovery in bottled water and higher prices pushed up sales, but inflation squeezed margins.
Net sales in the final quarter of 2021 jumped 6.7% to €6.2bn (£5.2bn) on a like-for-like basis, with volumes just 0.4% higher as the French group leaned on pricing and mix management.
The performance helped full-year like-for-like revenues climb 3.4% to €24.3bn (£20.2bn), with volumes down 0.6%, and saw Danone return to profitable growth in the second half.
Recurring operating profits for 2021 increased 2.8% on a like-for-like basis to €3.4bn (£2.8bn), but margins declined by nine basis points to 13.7% as top-line acceleration was not able to fully offset input cost inflation.
CEO Antoine de Saint-Affrique said the group ended the year on “a strong note”, with all categories contributing to a “solid” performance.
“We delivered on our commitment to return to profitable growth in H2, with recurring operating margin at 13.7% in 2021,” he added.
“This was enabled by a strong focus on execution and a step-up in productivity, a pro-active approach to pricing and the disciplined implementation of ‘Local First’.
“I am grateful to all Danone employees, who have brought in these results in unprecedented and challenging circumstances. Their passion and commitment are, together with the strength of our brands and the relevance of our purpose, at the heart of our resilience.”
In Europe and North America, Danone recorded like-for-like sales growth of 4.3% in the fourth quarter and 2.9% for the year, driven by a recovery in its water category as consumers emerged from lockdowns. In the rest of the world, the group grew sales by 10% in the final three months of 2021 and 4.1% for the year, led by an expected sequential improvement in the specialised nutrition division.
Waters led the way in terms of growth, surging 17.3% in the fourth quarter and 7.2% overall, while specialised nutrition increased 6.4% and 1% respectively and essential dairy and plant-based products (EDP) rose 4.3% and 3.7%.
Danone said its dairy portfolio delivered sustained solid growth, while the plant-based portfolio registered solid mid-single-digit growth amid supply challenges. However, it added, that the plant-based, probiotics and protein brands, such as Alpro, Actimel and Yopro, all continued to deliver “exceptional” growth in Europe.
The group did not provide any growth forecasts for 2022, which are expected to be delivered at an upcoming capital markets day on 8 March.
Saint-Affrique said: “We have, over the last months, moved forward with determination on our transformation agenda, deploying ‘Local First’ pragmatically and strengthening key capabilities, with the addition of globally recognized professionals in HR, operations and R&I to Danone’s leadership team.
“We still have much more to do, and I look forward to our CMD on March 8 when we will be in a position to share more on the next steps in our growth and renewal journey.”
Shares in the group leapt 3.6% to €56.54 this morning.
Morning update
It was quiet elsewhere on the markets this morning, with the FTSE up 0.4% to 7,525.96pts.
Early risers included Hotel Chocolat Group, up 2.3% to 399p, Bakkavor Group, up 0.8% to 122p, and C&C Group, up 1.7% to 215.6p.
McColl’s Retail Group, McBride, Virgin Wines UK and Naked Wines were among the early fallers, down 3.4% to 7.3p, 3.3% to 44.5p, 1.6% to 148.6p and 1.2% to 401p respectively.
Yesterday in the City
The FTSE 100 dragged itself back into positive territory yesterday as markets continued to worry about Russia’s activity in Ukraine. The blue-chip index ended the day 0.1% higher at 7,494.21pts.
After an early morning rebound, THG shares sank closer to the 100p mark despite a statement by the company trying to reassure investors that media claims about beauty availability were unfounded. Shares in the business fell another 1.8% to 101.5p.
Shares in McBride sank another 4.2% to 46p after it fell to a first-half loss on falling sales as a result of “the most extreme inflationary cost environment to ever hit the sector”.
Coca-Cola HBC also slumped 5.5% to 2,187p despite showing a strong recovery to above pre-pandemic levels as it warned over continued commodity cost inflation in 2022.
Other fallers included Hotel Chocolat Group, down 3.5% to 398p, AG Barr, down 1.7% to 486p, and Bakkavor Group, down 1.6% to 121p.
Risers included HelloFresh, Delivery Hero, WH Smith and Finsbury Food Group, up 6.9% to €47.60, 3.5% to €45.64, 2.1% to 1,575p and 2.1% to 87.3p respectively.
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