French food group Danone said on Wednesday that it would use some of its record cash for acquisitions as it further expands into health and medical nutrition, having delivered 2024 sales slightly above analysts’ expectations.
The consumer goods giant – whose brands include Evian and Badiot water, as well as Activia yoghurt – also improved its profit margin last year thanks to higher volumes as price hikes slowed.
CEO of the company Antoine de Saint-Affrique said, “Danone is now stronger, more resilient. The company is ready for more challenges.”
When asked how Danone would use some of the €3 billion in cash it said it generated last year, Saint-Affrique told analysts: “We wat to move to the front foot on acquisitions.”
Saint-Affrique cited specialised nutrition and products where “science can make a difference” for consumers as targets.
Results
Danone reported 2024 sales of €27.376 billion, a like-for-like rise of 4.3% compared with analysts’ expectations of 4.2% in a company-provided consensus.
The performance reflected sustained demand for medical nutrition and baby food in China as well as coffee creamers and high-protein products in North America.
The recurring operating margin for 2024 rose to 13% of sales from 12.6% in 2023, in line with expectations of 13%.
For 2025, Danone said its forecast was in line with its mid-term ambition of like-for-like sales growth of 3% to 5% with recurring operating income growing faster than sales.
Saint-Affrique declined to provide analysts with forecasts for the first quarter, saying Danone does not give quarterly guidance.
Its shares were up by 0.8% in early morning trade.
In a note, Jefferies analysts said, “Share price could see a limited outperformance to peers on the headline sales beat but after a strong year to date performance, we see nothing new here to support further rerate.”
The analysts cited “an uninspiring outlook for now.”
With record cash flow of €3 billion in 2024, which came above analysts’ expectations of €2.45 billion, Danone also plans to raise its dividend by 2.4% to €2.15 per share.
Ups And Downs
Danone – like rivals Unilever and Nestlé – has slowed price hikes after three years of steep increases following the Covid-19 pandemic to win back shoppers who had turned to cheaper brands during a surge in inflation.
Chief financial officer of Danone Juergen Esser said, “We foresee for 2025 what I would call an almost back to normal level of inflation remaining within a reasonable corridor.
“From what we know today this inflation will be driven mainly by milk, milk ingredients, and a few components of packaging.”
Esser also noted that some price swings were possible, saying, “We are living in a volatile world, and so there could be some ups and downs… which could come from energy, ups and downs which could come from potential custom duties.”
For the fourth quarter alone, sales grew 4.7% – beating analysts’ estimates of 4.2% with contributions from all three businesses – Essential Dairy Products (EDP), Specialised Nutrition, and Water.
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