Danone raises 2023 sales outlook after price hikes boost Q1

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PARIS (Reuters) -Danone raised its 2023 sales growth outlook after it reported higher-than-expected first-quarter revenue on Wednesday, as the world’s largest yoghurt maker was able to raise prices in the face of high raw materials and energy costs.

Danone, maker of Activia yoghurt, Evian water and Aptamil infant milk said it expected like-for-like 2023 sales growth of between 4% and 6%, having previously forecast 3-5% growth.

Danone, which expects a gradual slowdown in inflation this year as well as productivity gains, reiterated its forecast for a moderate improvement in recurring operating margin for the year.

Danone said sales rose 10.5% like-for-like to 6.96 billion euros in the first quarter, beating expectations for 7.3% growth in a company-compiled consensus of 18 analysts. This was its fastest quarterly growth rate in a decade.

All three businesses — Essential Dairy and Plant-based, Specialised Nutrition and Waters (NYSE:WAT) — made a contribution to growth, it said.

“While this is encouraging progress, there is still much to be done. We remain fully focused on delivering on our Renew Danone agenda, setting a solid base for long-term sustainable value creation.” Chief Executive Antoine de Saint-Affrique said in a statement.

Danone, like its rivals Nestle and Unilever (NYSE:UL), has increased prices to cope with surging commodities and supply chain costs but faces a challenge when it comes to the extent of price hikes before even affluent shoppers decide enough is enough.

Danone increased its prices by 10.3% during the quarter while sales volume remained positive, up 0.2%.