Analyst Note| Ioannis Pontikis, CFA |
Danone reported second-quarter results with like-for-like sales up 6.6%, ahead of company-compiled expectations (5.1%) driven by value (mix/pricing), which was up 4.7% (versus 2.2% consensus) and volumes up 1.8% (versus 2.5% for consensus). Essential dairy and plant-based was up 4.8% on a like-for-like basis with specialized nutrition and water rebounding up 2.8% (down 3.1% in the fourth quarter) and 19.5% (down 15.6% in the fourth quarter), respectively, due to primarily easy comparables. Danone reiterated guidance to be back to profitable growth in the second half of 2021 with margins broadly in line with 2020 (at 14%, in line with consensus). Longer-term targets include over 15% margin for 2022 and midterm ambitions of 3%-5% like-for-like sales growth and mid- to high-teens operating margin (versus 2.9% and 15% by 2024 in our model), but Danone did not comment on those.