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Investing.com -- Danone (EPA:DANO) shares jumped over 6% after the company reported stronger-than-expected like-for-like sales (LFL) growth in the second quarter, supported by broad-based volume gains across most regions and product categories. The specialized nutrition category performed particularly well.
Comparable sales rose 4.1% in Q2, ahead of the 3.8% increase forecast by analysts surveyed by the company.
Volume growth contributed 3.2 percentage points, while pricing added 1%. Analysts had expected 2.5% growth from volume and 1.4% from price increases.
For the first half of the year, like-for-like sales rose 4.2%, with a 2.6% increase in volume.
However, on a reported basis, second-quarter sales slipped slightly to €6.91 billion ($7.98 billion) from €6.94 billion a year earlier, missing the consensus estimate of €6.92 billion. The decline was primarily attributed to currency effects.
By segment, the specialized nutrition division led the performance with an 8.7% rise in like-for-like sales. The essential dairy and plant-based segment grew 3%, while the waters unit posted a slight 0.5% decline.
Danone highlighted strong momentum in the China, North Asia, and Oceania (CNAO) region, where comparable sales surged 12.4%, driven by a 13.2% increase in volumes.
In the CNAO region, specialized nutrition delivered strong organic sales growth of 15.5%, well ahead of Jefferies’ 7% forecast. Analysts noted the outperformance was likely driven by later-stage infant formula, suggesting a resilient market and indicating that Feihe’s destocking issues are specific to that company.
"These are strong results, led by a significant beat in China Spec Nutrition," Jefferies analysts said.
"The notably strong beat in China Nutrition will quash worries that the category/competitiveness is less favorable. The other key focus units perform resiliently (ie. EU and U.S. Dairy)," they added.
Looking ahead, Danone reiterated its 2025 outlook, guiding for full-year organic sales growth of 3–5%, in line with Visible Alpha consensus of 4%.
The company expects operating profit to grow faster than revenue, implying moderate margin expansion. Consensus estimates see the operating margin at 13.3%, up from 13% last year.