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Price hikes propel Danone’s fourth quarter sales above estimates

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© Reuters.

By Scott Kanowsky 

Investing.com — Shares in Danone SA (EPA:) rose on Wednesday after the French food products group reported better-than-expected fourth quarter sales that were fueled by higher prices.

Total sales during the three months to the end of December jumped by 12% on a reported basis to €7.01B (€1 = $1.0644), mainly driven by stronger pricing and positive foreign exchange effects that helped offset a decline in volumes. Bloomberg consensus forecasts had seen the number at €6.96B.

Danone’s move to make items more expensive comes as the maker of brands like Activia yogurts and Font Vella water faces a steep recent uptick in input costs. The elevated expenses weighed on recurring operating income in 2022, but the figure still inched up by 1.2% year-on-year to €3.38B, beating estimates.

“While 2022 was a year of unprecedented external challenges and volatility, for Danone it has also been a year of deep transformation and solid delivery,” said chief executive Antoine de Saint-Affrique in a statement.

Analysts at RBC Capital Markets noted that Danone’s 2023 guidance was in line with expectations despite being a cause of nervousness ahead of the company’s latest results. Like-for-like sales growth is seen at between 3% to 5% this year, while recurring operating margin is projected to show “moderate” improvement.

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