Danone’s like-for-like sales growth beat market expectations in the third quarter as the China, North Asia and Oceania (CNAO) region led gains.
CNAO outperformed the wider Danone group and the other individual geographical areas in terms of sales increases and the advance in volume/mix, which CEO Antoine de Saint-Affrique said helped to deliver “strong and consistent” growth.
Danone’s like-for-like sales grew 4.8% to €6.88bn ($8bn) in what analysts at Barclays applauded as a sixteenth straight quarter above the 4% marker even though consensus estimates were for 4.3%.
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“We think the next leg of the story is an EPS inflection,” the Barclays’ team, led by Warren Ackermann, wrote in a follow-up research note. “With China growth strong double-digits and with margins in China that are double the group average, there should be significant operational gearing.”
The CNAO region posted a like-for-like (LFL) sales growth print of 13.8%, with volume/mix up 15.1%, outpacing the group result of 3.2%.
Within CNAO, China was, however, singled out as a concern by analysts at Jefferies given the 17% LFL sales performance for Danone’s specialised nutrition business, including infant formula, in the country and fluctuations in China’s birth rates.
As Jefferies’ analyst David Hayes also welcomed the consistent sales growth above 4%, he also offered some caution.
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By GlobalData“The skew/reliance on impressive success in China specialised nutrition could start to worry investors. That is accentuated by a notable miss in US volumes. Execution here remains strong but China infant formula will suffer dragon baby roll-off in 2026 that needs to be made up elsewhere.”
Volume/mix in North America grew just 0.3% based on LFL sales of 1.5%. Volume growth was below consensus of 1.8%.
Commenting on North America, Danone warned of softness in the plant-based category where it plays in drinks with varieties of the Silk and Alpro brands.
“Momentum remained strong in high protein, with new innovations launched during the quarter. Coffee creamers are progressively regaining competitiveness. Plant-based remains work in progress.”
CEO de Saint-Affrique gave his take in the results statement today (28 October).
“We continued to deliver consistent, quality growth this quarter, with volume/mix being the primary growth driver across our categories, confirming the strength and the relevance of our health-focused portfolio.
“We are particularly pleased with the step-by-step improvement in Europe, where volume/mix has now been positive for eight consecutive quarters, while CNAO delivered another outstanding performance across all categories.”
However, he added: “At the same time, we recognise that our transformation journey is not over and that some areas require further progress.”
Europe registered LFL sales growth of 2.6% with volume/mix up 2.1%. For Latam, the respective results were 4.3% and minus 2.3%. In the Asia, Middle East and Africa region, Danone posted LFL of 6.8% and a 2.6% gain in volume/mix.
By division, Danone’s largest sales unit – essential dairy and plant-based (EDP) – posted a LFL sales increase of 3.5% to €3.28bn and positive volume/mix growth of 1.7%.
Specialised nutrition as a whole delivered LFL of 8.3% and volume/mix of 6.5%. For waters, the respective performance was 2.3% and 1.3%.
Meanwhile, Danone kept its full-year LFL growth guidance in the 3-5% range.
Analysts at RBC Capital Markets, led by James Edwardes Jones, wrote: “Danone’s good Q3 results, with organic sales growth of 4.8%, give us a degree of confidence that the consumer staples model isn’t broken.
“Consistent investment in the product offer, concentration on execution and realistic management of expectations still bear fruit, notwithstanding category exposure that a few years ago seemed catastrophic.”
