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PARIS (Reuters) -French food group Danone on Thursday raised its 2022 revenue growth forecast after its third-quarter sales beat analysts’ estimates as the firm was able to raise prices to counter soaring costs.
The consumer goods giant and owner of Evian and Badoit water and Activia yoghurt said it now expected like-for-like sales growth to reach 7%-8% this year compared with a previous forecast of 5-6% the company had already lifted in July.
It said it expects a recurring operating margin above 12%, down from 13.7% last year.
Danone posted a 9.5% rise in third-quarter like-for-like sales to 7.334 billion euros ($7.35 billion), beating analysts’ expectations for a 6.9% rise in a poll compiled by the company.
This also marked a sequential acceleration from 7.7% sales growth achieved in the second quarter and reflected strength in all the group’s businesses, notably in baby food in China and in bottled waters.
CEO Antoine de Saint-Affrique, who took over in September 2021, must conduct a revival plan amid mounting input costs, coupled with further uncertainties caused by Russia’s invasion of Ukraine, which led the group to unveil plans to shed control of its dairy food business in Russia.
Price increases contributed 10.9% to third-quarter revenue growth.
“We continue to implement pricing actions in a responsible and disciplined manner, while focusing on the quality of our execution and reinvesting behind our brands and capabilities,” Saint-Affrique said in a statement.
“This shows in the performance of our Specialized Nutrition business, led by Aptamil, in Waters (NYSE:WAT), where our Evian, Bonafont and Aqua brands continue to perform strongly in the marketplace, but also in Essential Dairy and Plant-based (EDP), with the resilience of the portfolio, notably in the United States, Canada and Japan,” he added.
Rival Unilever (NYSE:UL) Plc also on Thursday raised its full-year sales forecast as it lifted prices to counter costs.
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