Danone Reports Q3 2024 Sales Growth

Danone shares rose on Thursday after the company reported Q3 2024 sales of €6.83 billion, marking a 4.2% increase on a like-for-like basis. This performance exceeded analyst expectations and was primarily driven by strong sales in North America and China.

Citi and Jefferies analysts emphasized the unexpected volume growth, suggesting that such results might bolster Danone's stock performance in the near term.

Sales Breakdown

• Volume and Mix Growth: Contributed 3.6%
• Pricing Impact: Contributed 0.7%

Danone confirmed its 2024 guidance for 3-5% like-for-like sales growth.

Regional Performance

• North America: Sales increased by 5.8% like-for-like, buoyed by double-digit growth in Coffee Creations and heightened demand for yogurt and bottled water.
• China, North Asia & Oceania: Experienced an 8% sales surge, fueled by increased sales in specialized nutrition and signs of recovery in the infant milk formula market.

CEO Insights

CEO Antoine de Saint-Affrique reiterated the company's commitment to sustaining profitable growth despite challenging conditions, stating, "We continue to deliver broad-based quality growth, with both volume/mix and price positive in all categories." He also emphasized Danone's dedication to innovation for competitive advantage.

Market Challenges

Jefferies highlighted that while Danone's U.S. creamers business has been growing in double digits, there are potential pricing pressures from competitors like Nestlé. Nevertheless, analysts perceive the recovering infant formula sector in China positively for future growth.

Waters Segment

Despite overall solid performance, the Waters segment fell short of some expectations, experiencing growth of only 3.2% due to adverse weather conditions in Europe and Mexico, below the consensus estimate of 4.1%.

Analysts' Outlook

Citi applauded Danone's Q3 performance, stating that the results "confirm the positive narrative" heading into the year's end. Improvements in the U.S. dairy segment and in China are expected to offset challenges in other regions. Both Citi and Jefferies predict that Danone will maintain its defensive strategy while focusing on profitability in the future.