Danone has announced plans to buy back €800 million worth of its shares in the second half of this year, following a strong performance in the second quarter.
The consumer goods giant, owner of Evian water and Activia yoghurt, stuck to its goal of returning to profitable growth in the second half of 2021 after posting a 6.6% rise in second quarter sales, beating analysts' expectations for a 5.1% increase, as its waters and baby food units returned to growth.
“We are pleased to report a return to growth across all our categories this quarter, thanks to the teams’ commitment and focus on execution and delivery," commented Véronique Penchienati-Bosetta and Shane Grant, interim co-CEOs at the business. "On a two-year basis, our like-for-like sales growth is also positive, on both Q2 and H1.
"We maintained strong momentum in our EDP business, led by growth in Dairy, and Plant-based reporting its sixth consecutive quarter of double-digit growth, and a solid performance in Europe and Noram."
Cost Inflation Weighs
Danone however said first-half 2021 recurring operating income slipped to €1.551 billion, a like-for-like decline of 4.2%, as higher input cost inflation weighed, highlighting the challenges facing new chief executive Antoine de Saint-Affrique, who is joining in September.
Group operating margin slipped to 13.1% of sales in the first-half of 2021 from 14% in the first half of 2020.
Danone nevertheless reiterated it expected its full year 2021 recurring operating margin to be broadly in line with the 14% achieved last year.
'Despite short-term uncertainties, a gradual reopening of economies is assumed to continue in the second half as vaccination programs are rolled out. Meanwhile, a broad-based acceleration of inflation in milk, ingredients, packaging and logistics is expected,' the statement said.
Former boss Emmanuel Faber was abruptly ousted as chairman and CEO in March following clashes with some board members over strategy and calls from activist funds for him to resign over the group's lacklustre returns compared with some rivals.
Saint-Affrique's main challenge at the helm of the world's largest yoghurt maker will be to boost lagging profit margins and sales.
As part of that transition Danone said it will renew its board, reducing member numbers to 12 from 13 now by the 2023 shareholders meeting.
Franck Riboud, former chairman and CEO and son of Danone's founder Antoine Riboud, is one of a number of directors who will not seek a new mandate when their term expires next April.
News by Reuters, additional reporting by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.