Once more unto the breach

  • Sectors : Foods
  • Companies : Danone

Ratings and price correct at time of issue.

  • Danone

    Closing Price: 6326c

  • RATING 18/06/19

  • PREVIOUS RATING 09/02/17



We believe the key medium-term debate for Danone will centre on the interplay between price/mix growth and margin – whether it can expand margin in an environment where recessionary forces are shaping consumer behaviour and with growing risks of negative mix effects. In a resource-constrained environment, we believe larger consumer packaged goods (CPG) players will be relatively advantaged following a decade of losing share to smaller competitors. For Danone, we model for a growth pivot towards volume with a more cautious stance on margin delivery due to deteriorating mix. We lower our FY20 and FY21 EPS forecasts by 9.5% and 7.2% respectively – capturing prudent margin assumptions and FX. We retain our ‘Outperform’ rating based on valuation (16x FY21 P/E).

Download full report with analyst certification and important disclosures

May 5 2020, 06:30 IST/BST