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Danone's 2020 Earnings Are Largely in Line; Market Awaits March Update — Earnings Review

By Giulia Petroni

 

Danone SA posted full-year results for 2020 earlier on Friday. Here's what you need to know:

 

SALES: The French food company's sales came in at 23.62 billion euros ($28.6 billion), down from EUR25.29 billion in 2019 and broadly in line with a company-compiled consensus that had forecast the figure at EUR23.69 billion.

 

RECURRING NET INCOME: The figure, which excludes exceptional items, was down 13% on year at EUR2.19 billion. A consensus of analyst forecasts, provided by Danone, had projected EUR2.14 billion.

 

WHAT WE WATCHED:

 

--FOURTH QUARTER: Danone reported a 1.4% drop in like-for-like sales for the fourth quarter, 30 basis points above consensus, marking a sequential improvement compared with the previous quarters. The quarter was characterized by contrasting performances across channels, with out-of-home down due to new restrictive measures while e-commerce grew significantly, by approximately 45%.

--DIVIDEND: The company will propose a dividend of EUR1.94 a share in cash, an 8% reduction from the previous year. This implies a payout ratio of 58%. "The first cut in well over a decade," Bernstein says. "A sensible signal that cash needs to be preserved," the brokerage says.

--INVESTOR UPDATE: Danone said it will share more details about how it plans to return to sales growth at the company's investor update event on March 25, which is seen by the market as a potential catalyst for change following shareholders criticism over governance and strategic direction. "A lot of the stock reaction will thus now depend on what Danone's CEO communicates around the need for change," Citi says.

 

Write to Giulia Petroni at giulia.petroni@wsj.com

 

(END) Dow Jones Newswires

February 19, 2021 07:16 ET (12:16 GMT)

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