Danone shares down as China slowdown clouds second-quarter sales beat
Danone shares down as China slowdown clouds second-quarter sales beat
By Dominique Vidalon Wed, July 29, 2026 at 8:56 AM UTC
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By Dominique Vidalon
PARIS, July 29 (Reuters) - Danone shares fell around 4% on Wednesday as a sharp slowdown in the key Chinese market overshadowed forecast-beating second-quarter group sales and a recovery at the specialised nutrition unit.
Specialised Nutrition had been hit in the first quarter by a recall of European baby formula products and supply disruptions related to the Iran war.
The French consumer goods group, whose brands include Evian and Badoit water and Activia yoghurt, said second-quarter sales rose 4.2% on a like-for-like basis, beating expectations for a 3.7% rise in a company-provided analysts' consensus.
The sales beat was led by a 4.5% rise in specialised nutrition sales and a 4.7% rise in the water business, which benefited from a hot summer — notably in Europe — that boosted Volvic sales.
China sales growth was however just 3.6%, against 10.3% in the first quarter, which Jefferies analysts said was "a notable slowdown" and which Danone tied to competitive pressure in the Infant Formula category which it said it was "normalizing".
Danone reported overall prices rose about 2.3% in the second quarter, while volumes climbed 1.9%.
Danone's recurring operating income for the first half was €1.854 billion ($2.11 billion), with a margin of 13.3% versus 13.2% a year ago.
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That was slightly above expectations for a 13.25% margin and reflected strong productivity gains that offset pressure from the baby formula recall in Europe and the initial effects of inflation, the company said.
The first-half performance showed broad-based growth across categories and regions.
Danone remained focused on driving a gradual and sustainable improvement in Essential Dairy Products in North America, and in the short term was happy to see a stabilisation in coffee creamers, CEO Antoine de Saint-Affrique said.
"While some areas still require further progress and the environment remains unstable, we enter the second half of the year with confidence that 2026 will be another year of delivery," he said.
Danone reiterated its 2026 guidance in line with its mid-term aims of like-for-like sales growth of 3% to 5%, with recurring operating income growing faster than sales.
"We expect that these results will meet a slightly mixed reception this morning, with consensus estimates likely to rise 1-2 (percentage points), but questions likely to be asked about the lacklustre volume growth, and U.S. Essential Dairy Products growth in particular," Bernstein analysts said.
($1 = 0.8771 euros)
(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta, Sonali Paul and Jan Harvey)
Source: “AOL Money”
