Danone has said it is starting this year with confidence after delivering 2023 sales growth at the top end of its forecast.
The operating margin for 2023 rose to 12.6% of sales, surpassing analysts’ estimates of 12.5%. It was also an improvement on 2022, when it rose by 12.2%.
The French food group also improved its profit margin as higher prices offset lower volumes.
Antoine de Saint-Affrique, the chief executive of the brand, said in a statement, “Building on the positive momentum of 2023, we are starting this financial year with confidence in our Renew strategy.”
Saint-Affrique cited the “visible progress” of the Essential Dairy and Plant-based (EDP) business in Europe as a factor in the encouraging growth.
He also mentioned group sales volumes that turned positive in the fourth quarter as pricing eased.
Forecast
For 2024, Danone has said its forecast is in line with its mid-term ambition of like-for-like sales growth of 3%-5%.
It also expects a moderate improvement in its recurring operating margin.
The owner of Evian water and Activia yoghurt reported 2023 sales of €27.619 billion.
This represented a like-for-like rise of 7%, which is at the top end of its 6%-7% sales growth guidance and in line with analysts’ expectations.
For the fourth quarter, sales grew by 5.1%, slightly above market estimates of 5%.
Price Hikes
Danone, like rivals Nestlé and Unilever, has increased prices to cope with higher commodity and supply chain costs.
This has raised concerns that companies are pushing prices too far during a cost-of-living crisis, which has seen retailers’ private label brands stealing market share.
Nestlé today revealed that it had missed its sales estimates due in part to these price hikes.
With a record cash flow of €2.6 billion, Danone said it would give a 5% dividend hike to €2.10.
Read More: Danone Plans To Sell Russian Operations To Chechnya-Linked Businessman
