Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Danone SA (DANOY, Financial) reported a strong first half of 2024 with like-for-like revenue up 4%, driven by broad-based growth across geographies and categories.
- The company achieved an improved margin from operations, up by 157 basis points, reflecting higher quality growth combined with consistent productivity and efficiency.
- Danone SA (DANOY) delivered EUR1.2 billion in cash in H1 2024, an 11% improvement over the same period in 2023.
- The Specialized Nutrition category sustained competitive and broad-based growth at 4.7%, with strong performance in both adult and pediatric segments.
- The Waters category delivered another quarter of solid growth at 4.4%, with continued momentum from the Mizone brand in China and resumed growth in Europe.
Negative Points
- Retailer negotiations in Europe resulted in short-term delivery disruptions, impacting reported results for the quarter.
- The company faced a negative foreign exchange effect of -2.4% due to currency depreciation against the euro.
- Scope effects had a negative contribution of -7.2% due to the deconsolidation of EDP Russia, Horizon Organic, and the Michel and Evista business.
- The recurring operating margin for Latin America was negatively impacted by hyperinflation and currency effects from the Argentinian peso.
- Despite strong overall performance, the plant-based beverage business in the US is still in the process of turning around, with only initial signs of regaining competitiveness.
Q & A Highlights
Q: What is your pricing outlook for the second half of the year?
A: Pricing will stay positive in the second half of the year. We approach pricing to ensure consumer-led pricing with strong brands and innovation. We will continue to see positive pricing, although the level may vary depending on market conditions. (Antioine de Saint-Affrique, CEO; Jurgen Esser, Group Deputy CEO in Charge of Finance, Technology and Data)
Q: Can you provide more details on the strong performance of Specialized Nutrition and its future trajectory?
A: Specialized Nutrition has shown consistent quality growth. While it is a core business, we also value our other categories. We will continue to look at acquisitions through strategic fit and financial responsibility. We are confident in the trajectory of Specialized Nutrition and its potential for future growth. (Antioine de Saint-Affrique, CEO)
Q: Can you explain the margin dynamics in North America and how you are addressing down-trading and private label competition?
A: North America's performance is driven by a mix of strong core segments and innovation. We are focusing on quality execution and maintaining competitiveness. We are also working on improving our entry-level brands and addressing down-trading through differentiation and innovation. (Antioine de Saint-Affrique, CEO)
Q: What are the drivers behind the strong volume mix improvement in Q2, and should we expect this trend to continue?
A: The volume mix improvement is a result of our efforts over the past two years. We will continue to manage our portfolio and maximize opportunities across regions. While the environment remains volatile, we are confident in our growth momentum and will continue to invest in our brands and capabilities. (Jurgen Esser, Group Deputy CEO in Charge of Finance, Technology and Data)
Q: Can you provide more details on the product launches in China, particularly in IMF and Specialized Nutrition?
A: In China, we have launched several innovations in IMF and Specialized Nutrition. We are focusing on building credibility with healthcare professionals and expanding our reach in hospitals. Our systematic approach and consistent execution have yielded strong results, and we will continue to invest in innovation and market expansion. (Antioine de Saint-Affrique, CEO; Jurgen Esser, Group Deputy CEO in Charge of Finance, Technology and Data)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
