Danone‘s shares climbed despite the French food giant reporting lower half-year margins as the company’s sales beat analyst forecasts.

The dairy and baby food group booked a “solid” increase in sales during the first half, although profit growth trailed as margins came under pressure.

Like-for-like sales grew 6% to EUR11.05bn (US$14.68bn) in the six months to the end of June. LFL sales were up 6.5% in the second quarter, beating the consensus forecast among analysts of a rise of 5.7%.

In Europe, excluding CIS countries, Danone said half-year sales were down 4% year-on-year. However, its North American and CIS sales were up 9.3%, while the group’s Asia-Pacific, Latin America, Middle East and Africa region saw revenues increase 15.9%.

Operating profit rose 2.3% to EUR1.47bn as operating margins dropped 49 basis points to 13.34%. Danone said the lower sales in Europe cut “significantly” into profits, but emphasised the company is improving margins elsewhere.

Underlying net profit fell 1.3% on a like-for-like basis and 4.2% on a reported basis to EUR873m.

Danone reaffirmed its outlook for full-year LFL sales growth of “at least” 5%. The company said it expected operating margin to decline by 30-50 basis points and added free cash-flow is expected to total around EUR2bn.

Shares in Danone were up 3.22% at EUR59.31 at 11:54 CET.

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