Danone does not anticipate any tightening of regulations in the wake of the infant-formula recalls as the dairy giant pointed to a negligible impact on sales.
As the maker of Aptamil baby formula reported its full-year results on Friday (20 February), Danone said the “current financial impacts identified are not material”, although it added an “impact assessment will be finalised once the recalls have been completed”.
Nonetheless, as CEO Antoine de Saint-Affrique and CFO Jürgen Esser addressed analysts on a follow-up call, a financial impact was quantified for the first quarter of 2026.
“We expect that supply disruption to have a one-off impact on our Q1 performance, and we estimate this one-off impact to be between 0.5-1% of net sales in the first quarter,” Esser said.
Taking Danone's sales of €6.84bn ($8.06bn) in the first quarter of 2025 as a yardstick, that would equate to around €68.4m. Danone’s specialised nutrition division, which houses the infant-formula business, generated €2.31bn in those three months.
Nestlé kicked off a recall around mid-December due to the presence of the Bacillus cereus bacteria in a brand of baby milk powders. Danone joined the recall in January - when its new fiscal year had already started - as notices expanded globally linked to the cereulide toxin, found by a number of manufacturers in an ingredient from a same supplier in China.
Providing its own annual results last week, Nestlé said it expected a one-off first-quarter impact of SFr200m ($257.6m) on sales from “customer returns and stock shortages” but noted any “additional impact is uncertain”.
A loss of reputation and trust has been a key point raised by analysts for all companies involved in the recall and the potential impact on formula sales.
Pressed on Friday’s Q&A session with analysts, de Saint-Affrique said: “We don’t see at this stage any major brand or brand equity impact on IMF [infant milk formula].
“There is obviously a disturbance on the shelf. But from a pure brand and or category standpoint, we haven’t seen anything major at this stage. Too early to say, we obviously look at it very, very carefully, but I wouldn’t be definitive one way or the other.”
CFO Esser added: “Our ambition is to win back trust and credibility because it is extremely important in that category. And it’s obviously very early days. We need to monitor the situation very closely but the few data points that we have on market shares are rather reassuring.”
Esser said Danone expects the recall “situation to normalise” during March in Europe and the Middle East where the company has pulled back products. China has been unaffected, he noted.
Meanwhile, de Saint-Affrique was dismissive of any regulatory tightening that might potentially emanate from the recalls although authorities in France and the wider EU have already lowered the permitted threshold for cereulide.
“We don’t see anything major but it’s very, very early,” he said. “IMF is a very, very regulated category. I think in our factories we have over 300 checkpoints when it comes to quality. There are rules in every country that are extremely, extremely strict. Do we expect a further strengthening of the regulation? Not in any major and significant way.”
The CEO added: “We are confident in the safety and quality of our products, which are supported by extensive scientific evidence and rigorous testing.
“The entire focus of the organisation is fundamentally about two things: making sure that the products are back on shelf, and making sure that we do reassure our consumers and the healthcare professionals who are extremely active, both on the internet and in our care line.”
