Danone SA reported faster-than-expected revenue growth as price hikes compensated for a drop in the volume of products sold.
Sales rose 6.4% on a like-for-like basis in the second quarter, the French yogurt maker said Wednesday. Analysts expected an increase of 5.7%. The water business grew the fastest out of its three divisions, led by brands such as Evian.
The company said it expects full-year revenue growth in the upper end of its range of 4% to 6% as volumes improve throughout the year. Analysts are forecasting 5.9% growth.
Chief Executive Officer Antoine de Saint-Affrique is nearing the end of his second year leading the company. He’s been trying to turn around Danone by selling or discontinuing underperforming businesses and ramping up innovation. Like other consumer-goods companies, the yogurt maker has struggled with lower volumes as it passes on higher inflation to already stretched consumers.
The stock fell 2.5% in Paris trading. The beat wasn’t as impressive as that of Unilever Plc, which reported Tuesday, wrote Cedric Besnard, a Citi analyst. Danone needs to show in the third quarter that dairy and plant-based foods can keep pricing up without losing volume, he wrote.
That division, Danone’s largest, reported 6.2% like-for-like second-quarter sales growth, beating the analysts consensus. Volume fell 3.3%.
The company is taking an impairment of €200 million ($221 million) related to its Russian business, which it’s deconsolidating from results. That’s on top of a previous €500 million impairment.
Read more: Western Companies in Russia Fear More Asset Grabs by the Kremlin
Last week, Russia seized control of those assets under a decree aimed at companies from “unfriendly” countries. Danone had been trying to leave Russia, and now the business is under “temporary” management under a relative of Chechen leader Ramzan Kadyrov.
Danone said Wednesday while it no longer controls the assets, the French company is their legal owner.
(Updates with shares in fifth paragraph, analyst comment)
