Danone is rebounding after a strong first quarter and takeover rumours. The dairy giant Lactalis is said to be interested in buying part or even all of the FMCG manufacturer.
Soon Danette from La Laitière?
Will Danone get a new owner? French dairy producer Lactalis, known for the brands Président and La Laitière, would be in talks with Danone for a partial or even complete takeover. This is reported by the French site La Lettre A. It is doubtful whether this will actually happen, as the turnover of Lactalis is smaller than that of the Activia producer.
Remarkably, Danone does not deny wanting to sell assets. On the contrary, new CEO Antoine de Saint-Affrique has previously stated that the group’s three core divisions – dairy and plant-based products, infant nutrition and bottled water – are doing alright, but that it was time to clean up underperforming sub-brands. So perhaps Lactalis will go home with one or more separate brands or parts of its French competitor.
Ready for more price increases
The new CEO also called the company too slow and inconsistent, and that had to change quickly. His recovery plan ‘Renew Danone’ indeed already seems to be bearing the first fruit. In the first quarter of 2022, comparable turnover clocked in at 6.2 billion euros, 7.1% more than a year earlier and better than analysts expected. The growth is mainly due to strong price increases: prices contributed almost 5% to the increase in sales, while volumes accounted for 2.2%.
For the full year, the FMCG producer expects comparable sales growth between 3% and 5%, driven by price increases. Last year, Danone achieved a sales increase of 3.4%. The operating margin would be slightly lower, however, due to high commodity prices, inflation and volatility: at 12% compared to 13.7% in 2021. Danone is also ready for further price increases, if necessary.