Analyst Note| Ioannis Pontikis, CFA |
Danone reported first-quarter results with like-for-like sales down 3.3%, largely in line with Visible Alpha consensus expectations. Essential dairy and plant-based was up 1.6% on a like-for-like basis (plant-based growing double digits like for like versus 15% in the last quarter) while specialized nutrition and water were down 7.7% (down 3.1% in the fourth quarter) and 11.6% (down 15.6% in the fourth quarter), respectively, due to the effect of coronavirus lockdowns, with channel logistics issues in China for the former and a change in the channel and format mix for the latter. 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.