French company Danone reported stronger-than-expected first quarter sales on Thursday.
The company said consumers would see “very little” change in prices of its products on shelves in stores in North America and Europe as cost inflation eases.
The maker of Activia yoghurt and Aptamil kept its goals for like-for-like 2024 sales growth between 3% and 5%. It included a moderate improvement in recurring operating margin.
Price Hikes
Danone increased prices by 2.9% during the first quarter, above analyst’s expectations of 2.7%.
In the previous quarter, the company had raised its prices by 4.3%.
Like Nestlé, Danone is one of a number of consumer goods firms which have sharply raised prices over the past two years.
Price hikes have been carried out by a number of companies to manage high input costs, often resulting in tense talks with grocers like Carrefour and Tesco.
Earlier this year, Carrefour removed Pepsi products from its shelves due to price increases.
‘Very Little Price Movement’
Shares in Danone were up 1.2% on Thursday morning.
The company’s finance chief Juergen Esser told Reuters, “On the shelves there will be very little price movement.
“I think what we will see is, in some instances, a bit more promotional activity.”
Elsewhere, Esser said prices would continue to grow in Latin America where inflation remains higher.
He said however that places such as China would not see the same increases as “inflation remains very low.”
Cost pressures increased with Covid-19 and unusual weather patterns have hurt agricultural commodifies.
These pressures have worsened since Russia’s invasion of Ukraine in February 2022.
Danone’s like-for-like sales rose 4.1% to €6.79 billion in the first quarter. This bear expectations for 3.4% growth in a company-compiled consensus of 17 analysts.
Despite investor concerns that price hikes could lead to private label brands capturing market share, Danone’s first quarter sales volumes held up, rising 1.2%.
This was ahead of analysts’ expectations of 0.8%.
Shares in Danone have fallen 3.3% since the start of the year.
Read More: Danone Confident About 2024 Sales After Strong 2023 Performance
