High costs put pressure on margins at Danone

Growth but higher than expected

24-Feb-2022 - France

The Danone food group closed the past year with an unexpectedly strong final spurt. However, like many other companies, the French company is struggling with exploding costs for logistics and raw materials.

Danone therefore increased prices sharply in 2021, but was unable to fully offset the burdens, as the EuroStoxx 50-listed group announced in Paris on Wednesday.

At 13.7 percent, the operating margin adjusted for special effects was slightly below the previous year's level and was thus lower than at any time since 2015. However, analysts had already expected this.

Revenue climbed by 2.8 percent to 24.3 billion euros. On a comparable basis - i.e. before the effects of acquisitions and divestments and the impact of currency translation - sales increased by 3.4 percent. This growth exceeded analysts' expectations.

At the bottom line, profit decreased by just under two percent to around 1.9 billion euros. The dividend is to remain unchanged at 1.94 euros per share.

The Group has already been struggling with the burdens of the pandemic for two years. In 2020, the water business in particular had slumped due to restaurant closures. Last year, however, Danone was able to gradually recover from this after a weak start to the year, with the final quarter being the strongest with an increase in sales of almost eleven percent. The water business recorded particularly high growth rates in that quarter, but the dairy products and specialty foods businesses also continued the previous recovery.

For the time being, management has not yet provided an outlook. This is expected to be given at a capital market day scheduled for March 8. Danone will then provide information on its further steps on "our path to growth and renewal," said Group CEO Antoine de Saint-Affrique, according to the statement./tav/zb/mis (dpa)

Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.

https://www.yumda.com/en/news/1174943/high-costs-put-pressure-on-margins-at-danone.html