Vending

Danone 2020 sales fall, earnings rise

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February 19, 2021

Danone S.A. reported a 9.8% decline in sales on a reported basis from €6.24 billion ($7.57 billion) for the 2019 fourth quarter to €5.62 billion ($6.82 billion) for the 2020 fourth quarter ending Dec. 31, 2020, according to an earnings release.

For fiscal 2020, consolidated sales fell from €25.2 billion ($30.57 billion) stood at €23.6 billion ($28.63 billion), down 6.6% on a reported basis and down 1.5% on a like-for-like basis, reflecting negative category and country mix, especially in waters and specialized nutrition.

Sales declines were mainly driven by the negative impact of exchange rates that resulted from currencies devaluation against the Euro in the U.S., Latin America, Indonesia and Russia.

Earnings per share rose from €2.95 ($3.85) for fiscal 2019 to €2.99 ($3.63) for fiscal 2020.

After a sequential improvement in Q3, out-of-home channels sales declined by approximately 25% in Q4, penalized by new waves of restrictions and lockdown measures related to COVID-19, especially in Europe.

Like-for-like sales growth in Europe and North America was broadly in line with the previous quarter, moving from a 1.1% decline to 1.0% decline in Q4.

In Europe, good essential dairy and plant-based performance and specialized nutrition improvement offset the deterioration in waters, while North America continued to see solid momentum.

Essential dairy and plant-based posted net sales growth of 3.4% in 2020 on a like-for-like basis, sustained by both essential dairy, up low-single digit, and plant-based sales that grew at 15% and reached €2.2billion ($2.67 billion) of in 2020, up from €1.9 billion ($2.32 billion) in 2019.

In the fourth quarter, net sales were up 3.6% on a like-for-like basis, reflecting a 3.7% increase in volume and 0.1% decline in value. This growth was led by Europe and North America, that sustained their mid-single-digit performance.

In North America growth was supported by dairy and plant-based continued momentum.

Yogurt and coffee creamers both grew in retail channels, low-single digit and double-digit, respectively, but continued to be penalized by their exposure to away-from-home channels.

Waters sales declined by 16.8% in 2020 on a like-for-like basis and recurring operating margin decreased to 7.0%, severely impacted by COVID-related restrictions to mobility that disrupted Danone's ability to serve consumers in out-of-home and impulse channels and ultimately translated in negative volume, product and format mix.

In the fourth quarter, net sales for water were down 15.6% on a like-for-like basis, with a decrease in volume of 9.3% and 6.3% in value. The period was very volatile, marked by stop and go in restrictions across geographies.

After a sequential improvement in the third quarter, Europe performance was penalized by new waves of lockdowns and restrictions to mobility, notably in France, Germany and the U.K.. These channel-related headwinds were partially offset by market shares gains in these countries.

"On the business front, as COVID became a pandemic throughout 2020, we faced material specific short-term challenges in a number of our key categories and geographies but also clearly uncovered significant long-term opportunities, whose existence directly lies in the strategic framework and choice of category portfolio that we made over the last several years," Emmanuel Faber, chairman and CEO, said in the press release.

"After making 2020 a year of both delivery and progress under serious challenging conditions, we know Q1 2021 is going to be heading tough comparables in particular in our SN Chinese operations and that governmental health strategies around the world will continue to create uncertainties on the speed of recovery of mobility in indexes that will weigh a bit longer on our water business performance."

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