By Dominique Vidalon
PARIS, April 22 (Reuters) – Danone on Wednesday said it beat first-quarter sales growth expectations, though a European baby formula recall and supply disruptions related to the Iran war weighed on its specialised nutrition business.
The company’s shares rose nearly 3% in the wake of the French food group’s report.
The company, whose brands include Activia yoghurt, Aptamil formula and Evian water, also kept its full-year guidance intact. Juergen Esser, the company’s finance chief, said Danone’s baby formula business would undergo a “normalisation” through the year, though he did not quantify how things might improve in the second quarter.
Analysts said the company’s underperforming U.S. coffee creamer business improved in the first quarter.
First-quarter sales totalled 6.708 billion euros ($7.88 billion), representing like-for-like growth of 2.7%, compared with analysts’ expectations for a 2.6% increase. In the fourth quarter of 2025, growth was 4.7%.
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.
The U.S.-Israeli war on Iran has disrupted supply chains, including shipments of baby formula imported from Europe that move through the Middle East. Danone’s overall business in the region accounts for around 2% to 3% of net sales.
The baby formula recall hit companies including Danone and Nestle in the first quarter due to possible contamination with the toxin cereulide and investors are eager to understand the extent of the financial and reputational impact.
Danone, which recalled infant formula products across Europe and the Middle East, said its focus was to restore trust in the infant formula business as the recall situation was “going back to normal.”
The company is particularly exposed to the recall as around 17% of its total profits come from infant formula sold in China, compared with less than 2% for Nestle, Jefferies analysts said.
Danone reported an overall price increase of about 1.2% in the first quarter, while volume-led growth was 1.5%.
“Overall, management displayed confidence in a recovery through the year as the results showcase the resilience of Danone’s volumes,” JPMorgan analysts said in a note.
“Yet, the lack of assertive comments on North America recovery and the lingering impact of the (infant formula) recall make us wary that expectations for 4% like-for-like in Q2 may need to be trimmed, along with a more moderate margin improvement for FY26 (vs consensus +20bps).”
($1 = 0.8517 euros)
(Reporting by Dominique Vidalon; Dominique Patton, Editing by Sudip Kar-Gupta, Louise Heavens and Thomas Derpinghaus)
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