Danone (BN.PA) on Wednesday upheld its 2026 guidance even as the recall of its infant milk formula in Europe and the conflict in the Middle East dragged reported sales down 2% year over year in the first quarter.
Sales of the French food products company declined to 6.71 billion euros in the three months ended March 31, from 6.84 billion euros a year earlier, as the positive impact of scope and hyperinflation was offset by foreign exchange headwinds. Analysts polled by FactSet were expecting 6.69 billion euros in sales.
On a like-for-like basis, however, sales gained 2.7% thanks to a 1.5% rise in volume/mix and a 1.2% uptick in price. Amid the challenging market dynamics, Danone said the performance in Europe, Middle East and Africa remained "resilient" with a 0.6% increase in LFL sales.
Growth in the Americas improved 3.4% as the US began to regain momentum amid continued strong performance in Latin America. In Asia Pacific, LFL sales climbed 6%, driven by the demand for specialized nutrition in China and essential dairy and plant-based, or EDP, products in Japan. By category, EDP sales rose 3.4%, while those of specialized nutrition and waters increased 1.9% and 2.3%, respectively.
"Our winning platforms continued to perform strongly, notably in dairy with high protein, skyr and kefir, in Waters with evian and Mizone, as well as in medical nutrition around the globe," Chief Executive Officer Antoine de Saint-Affrique said. "We are confident in our science based, and consumer and patient centric approach and confirm our full year guidance."
In line with mid-term ambition, the company reiterated its 2026 outlook for 3% to 5% annual growth in LFL sales, with recurring operating income expanding faster than sales.
"Organic sales growth of 2.7% was in line with consensus, albeit below full-year guidance of 3-5%. Specialised nutrition came in 75 [basis points] below consensus, impacted by the IMF recall in Europe, though EMEA overall came in ahead of expectations thanks to good performance from EDP," RBC Capital Markets said. "We are confident that Danone can accelerate category growth and will deliver consistently in line with 3-5% organic sales growth guidance."
Danone shares gained 3% in Paris on Wednesday midday.