The French food group Danone has stated that this year is viewed with confidence after registering sales growth in 2023 at the upper end of the forecast and improving its profit margin, as higher prices offset lower volumes.

Positive momentum

"Building on the positive momentum from 2023, we start this financial year with confidence in our Renew strategy," said CEO Antoine de Saint-Affrique, in a statement issued by Danone quoted by European Supermarket Magazine.

Against the backdrop of encouraging signs at the world's largest yogurt producer, Saint-Affrique cited the "visible progress" of the Essential Dairy and Plant-based (EDP) business in Europe and group sales volumes turning positive in the fourth quarter, as prices decreased.

Medium-term ambition

For 2024, Danone stated that its forecast aligns with its medium-term ambition of 3%-5% like-for-like sales growth, with a moderate improvement in recurring operating margin.

The consumer goods giant, which owns brands such as Evian and Badoit water and Activia yogurt, reported sales in 2023 of EUR 27.619 billion, a similar increase of 7%, at the upper end of its sales growth guidance of 6% to 7% and in line with analysts' expectations.

The group's operating margin for the full year 2023 rose to 12.6% of sales from 12.2% in 2022, compared with analysts' average estimates of 12.5%.

For the fourth quarter ended December 31, sales grew by 5.1%, slightly above market estimates of 5%, with contributions from all three of its businesses - EDP, Specialized Nutrition, and Waters.

Price increases

Danone, like its rivals Nestlé and Unilever, raised prices to cope with higher commodity costs and the supply chain.

But this has raised concerns that companies are pushing prices too far, amid a cost of living crisis seeing retailer private-label brands stealing market share.

With a record cash flow of EUR 2.6 billion in 2023, Danone said it will offer a 5% dividend increase to EUR 2.10.