Danone pointed to plans to “accelerate” investment in sustainability initiatives – and the possible impact of the coronavirus outbreak – as it lowered its 2020 guidance on key financial metrics this morning (26 February).
The Activia and Alpro maker is forecasting its like-for-like sales will grow by 2-4% in 2020, compared to previous guidance of a 4-5% increase.
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Danone is now predicting its recurring operating margin in 2010 will be greater than 15%, versus previous guidance of more than 16%.
For 2020, Danone is targeting growth in its “recurring earnings per share” at a mid-single-digit rate, reflecting the new guidance on like-for-like sales and recurring operation margin.
Danone said the new forecasts were a consequence of the company stepping up investment in areas including “climate action”. It also pointed to the need to factor in an assessment so far of the impact of the coronavirus outbreak on its business.
Beyond 2020, Danone said it is expecting its recurring EPS to grow at a “mid- to high-single-digit” in the “mid term”, with 3-5% sales growth on a like-for-like basis.
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By GlobalDataThe company, also home to brands such as Cow & Gate baby food and Evian bottled water, is planning to spend EUR2bn (US$2.17bn) over 2020 to 2022 on what it calls “the climate action of our brands” and on strengthening its “growth model”.
Danone will look to invest in areas such as agriculture, packaging, brands and “digitalisation”.
Emmanuel Faber, Danone’s chairman and CEO, said: “We are convinced that there is an urgent and significant opportunity to put climate actions even more at the core of our business model, truly joining people’s fight for climate and nature with the power of our brands.
“To this effect, we announce a EUR2bn climate acceleration plan today, which in the next three years will further transform our agriculture, energy and operations, packaging, and digital capabilities so that we will leverage fully our climate action to generate resilient growth models for our brands.”
In 2019, Danone’s sales stood at EUR25.29bn, an increase of 2.6% on both a reported on a like-for-like basis.
Sales from Danone’s EDP, or “essential dairy and plant-based” division, inched up 0.8% to EUR13.16bn, or 1.1% on a like-for-like basis.
The company’s specialised nutrition arm, which includes infant formula, saw its sales climb 6.2% to EUR7.56bn, or 5.8% on a like-for-like basis. Both divisions reported lower sales by volume.
Danone’s operating income reached EUR3.24bn in 2019, compared to EUR2.74bn a year earlier.
The company’s net income stood at EUR2.03bn, versus EUR2.44bn in 2018.
