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Danone reports first quarter sales gain, withdraws 2020 guidance due to coronavirus pandemic

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April 22, 2020

Danone reported a 3.7% increase in the first quarter with consolidated sales at €6.2 billion ($6.722 billion), with 2.9% growth in volume and 0.8% growth in value, according to a press release. Reported sales rose 1.7%, including a negative scope effect (-1.7%), mainly reflecting the deconsolidation from April 1, 2019 of Earthbound Farm, a negative impact of currencies (-0.9%), as well as a 0.5% organic contribution of Argentina to growth.

First-quarter like-for-like sales growth is ahead of the expectations set by the company earlier in the year at a time when the COVID-19 outbreak was impacting the Chinese market. It includes a sharp rise in sales in the month of March, at a high-single-digit rate, boosted by the short-term effects of both a shift to at-home consumption as well as pantry loading in Europe and North America.

Water sales were more impacted by foodservice channel closure as around 40% of the division's sales are normally consumed away from home.

In terms of regional dynamics, growth was driven by Europe and North America with both regions posting mid-single-digit sales growth on a like-for-like basis. In the rest of the world, sales grew at 2.6% on a like-for-like basis with slightly positive volumes but with different dynamics, including a sustained momentum in South East Asia and a slight improvement in Russia more than offsetting an expected sales decline in China.

Given the global nature of the COVID-19 pandemic, and the uncertainty around the severity, the duration, and the multitude of its impacts across different markets, the company decided it is not in a position to accurately assess its impact on its 2020 financial performance beyond the initial pantry loading trends observed in the month of March in Europe and North America. The current lack of consensus around how the pandemic will develop and when it will end, its mid-term macroeconomic consequences and its impact on people's behaviors and income adds further complexity to the prediction of the business.