Danone beats Q2 sales estimates as nutrition unit recovers

Danone reported second-quarter like-for-like sales growth of 4.2%, topping analyst expectations of 3.7%.

"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," Chief Executive Officer Antoine de Saint-Affrique said.

The sales beat was led by a 4.5% rise in specialized nutrition — recovering from a European baby formula recall and Iran war-related supply disruptions that hit the first quarter — and a 4.7% gain in the water business, where a hot European summer boosted Volvic sales. Overall prices rose 2.3% while volumes climbed 1.9%. China sales growth slowed to 3.6% from 10.3% in the prior quarter, which Danone attributed to "normalizing" competition in infant formula.

Danone's first-half recurring operating income reached €1.854 billion, with a margin of 13.3% versus 13.2% a year ago, slightly above the 13.25% consensus. The company reiterated its 2026 guidance for like-for-like sales growth of 3% to 5%, with recurring operating income growing faster than sales. Shares fell about 4% in Paris trading as the China slowdown tempered investor enthusiasm.

The results showed broad-based growth across categories and regions, with productivity gains offsetting pressure from the baby formula recall and initial inflation effects, the company said. In North America, Danone's essential dairy and plant-based business remained a focus, with de Saint-Affrique noting a stabilization in coffee creamers in the short term.

Bernstein analysts said in a note that consensus estimates would likely rise 1 to 2 percentage points, but questions would persist about lackluster volume growth and U.S. essential dairy performance. The results come a day after peer Mondelēz International reported second-quarter net revenue growth of 4.1%, with organic revenue up 2.2%, underscoring a mixed picture for global packaged food companies navigating uneven consumer demand and input cost pressures.

The guidance reaffirmation points to management's view that the nutrition recovery will sustain through year-end, even as China headwinds persist. Investors will watch third-quarter trends in specialized nutrition and North American dairy for signs of continued momentum.

This article is for informational purposes only and does not constitute investment advice.