Danone withdraws 2020 guidance for producers – but first-quarter sales rise

On 21 April, French dairy giant Danone withdrew its financial guidance for 2020 due to disruption from the coronavirus pandemic.
calendar icon 21 April 2020
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However, the group posted higher first-quarter sales as shoppers purchased more dairy to consume at home.

Reuters reports that quarterly like-for-like sales rose 3.7 percent to €6.242 billion, beating previous forecasts.

Increased stockpiling and at-home consumption in North America and Europe due to stay-at-home orders to contain coronavirus lifted demand for staple dairy products by 4.6 percent.

Finance Chief Cecile Cabanis told journalists that consumers were opting for "indulgence and bigger formats" in dairy and plant-based goods, while brands like Actimel yoghurt - with immune system support claims - were in strong demand in Europe.

"Second quarter demand and supply conditions will be broadly and deeply impacted by a global lockdown. Beyond the initial pantry loading trends we observed in March, we are unable to predict how the lockdown may affect both supply and demand," CEO Emmanuel Faber said in a statement.

"Our board of directors therefore has decided to withdraw our financial guidance for the year, while we are managing with a view to protect and leverage our strong cash liquidity situation," he added.

For 2020, Danone had been targeting like-for-like sales growth of 2-4 percent and an operating margin above 15 percent. These goals had already been revised down in February.

Danone, however, said it remained confident of delivering its 2030 goals, accelerating topline growth, continuing to maximise efficiencies and allocating capital with discipline.

Faber's strategy has centred on diversifying the group's portfolio into fast-growing products featuring probiotics, protein and plant-based ingredients to mitigate slower growth in dairy.

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