News Half-year figures
Russian taking-in practices blemish Danone's results
Danone can present excellent figures for the first half of 2023. Turnover, profit and profit margin show an increase. Yet the good numbers are overshadowed by the troubles in Russia, where Putin's government seized the activities of the French dairy giant in that country earlier this month.
Sales increased by 6,3% to €14,1 billion in the past six months. Below the line, net profit increased by no less than 48,2% to more than 1 billion. The cash flow also shows a substantial increase. Danone speaks of a solid result under challenging and volatile market conditions. The results show improvement in almost all markets where the French food group is active. However, sales volumes in Europe and the American market are under some pressure. More product was sold on the Asian market.
The profitability of the dairy division shows an increase, although sales volumes fell slightly. The baby food and mineral water divisions show both a higher profit margin and volume growth. In terms of outlook, Danone is positive with an expected turnover growth for the whole of 2023 between 4% and 6%, with an improved margin also being considered possible.
Russia
Despite the good figures, CEO Antoine de Saint-Affrique takes a depressed tone in the press release. A major blemish on the result is that the Russian government in mid-July took control of Danone's activities in that country. After the invasion of Ukraine, Danone decided to stop investing, but the Russian branch was kept in order not to dupe the population. Shortly after the announcement, the CEO was replaced by an oligarch friend of Putin.
This means that Danone no longer has control over Russian activities, but they still insist on being the rightful owner. The Russian future is very uncertain and therefore Danone has written off € 200 million as a precaution.
Russia is a fairly important market for Danone, accounting for approximately 5% of group sales. There are barely 8.500 Russian employees on the payroll.
Wouter Job
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