Danone Targets Sales, Profit Growth in the Next Four Years — Update

By Pierre Bertrand

Danone aims to increase sales and earnings through 2028, aided by an expansion of its footprint and a focus on health and nutrition, as the company moves ahead with the strategic overhaul it put in place more than two years ago.

The new goals continue Danone's efforts to turn around its performance in the past two years, which the company saw as lagging behind peers, and come at a time consumers in many places around the world are ditching big brands in favor of private-label products after years of inflation.

The French food company, which houses brands such as Activia yogurt and Evian water, said Thursday that it is targeting like-for-like sales growth of between 3% and 5% for the 2025 to 2028 period, with recurring operating income rising at a faster pace than sales.

The company's sales target for 2025-28 is in line with the sales growth it projects for this year. In 2024, Danone also expects a moderate improvement to its recurring operating margin from the 12.6% it reported for last year.

Danone said it is seeking to sharpen its focus on health and nutrition. The company is targeting an acceleration in away-from-home and medical nutrition products and an expansion of its geographical footprint, it said.

The food industry, is at a tipping point, Danone Chief Executive Antoine de Saint-Affrique said, adding that the role food plays in health will be more critical than ever.

At a capital markets day, Danone said it is opening a new phase in a turnaround plan it launched in March 2022, dubbed Renew Danone, designed to foster growth and address what it said was a lack of focus on its core portfolio, sluggish innovation, inconsistent execution and low investments.

At the time, the company said a quarter of its portfolio was underperforming and would need to be divested or fixed. It shed biscuit and snack brand Michel & Augustin in February and dairy brands Horizon Organic and Wallaby in the U.S. in April. In May, Danone completed the sale of its Essential Dairy and Plant-based business in Russia.

The company is moving ahead in its overhaul push at a time consumer-goods companies are increasingly competing against more affordable non-branded products after a rise in living costs placed prices at the to of consumers' minds. In the U.S., the proportion of consumers' income spent on food is at a three-decade high, according to U.S. Agriculture Department data.

More than half of retailers expect private labels to drive growth this year, according to NielsenIQ, a market research firm.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

June 20, 2024 03:05 ET (07:05 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.