Danone keeps its guidance as Q2 sales beat expectations

By Dominique Vidalon

PARIS, July 29 (Reuters) - Danone expressed confidence about the second half of 2026 after its second-quarter sales beat forecasts, due to a recovery at its specialised nutrition unit that had been hit by a recall of European baby formula products and supply disruptions related to the Iran war. 

The French consumer goods group, whose brands include Evian and Badoit water and Activia yoghurt, said second-quarter sales rose 4.2% on a like-for-like basis, beating expectations for a 3.7% rise in a company-provided analysts' consensus.

Growth was led by a 4.5% rise in specialised nutrition sales and a 4.7% rise in the water business, which benefited from a hot summer — notably in Europe — that boosted Volvic sales.

Danone reported overall prices rose about 2.3% in the second quarter, while volumes climbed 1.9%.

Danone's recurring operating income for the first half of 2026 was €1.854 billion ($2.11 billion), with a margin of 13.3%, versus 13.2% a year ago.

That was slightly above expectations for a 13.25% margin and reflected strong productivity gains that offset pressure from the baby formula recall in Europe and the initial effects of inflation, the earnings statement said.

The first-half performance showed broad-based growth across categories and geographies, with strong demand for high-protein, medical nutrition and plant-based products.

Danone remained focused on driving a gradual and sustainable improvement in Essential Dairy Products in North America, CEO Antoine de Saint-Affrique said.

"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, aligned with our value creation model and mid-term ambitions," he said.

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.

"We expect that these results will meet a slightly mixed reception this morning, with consensus estimates likely to rise 1-2% pts, but questions likely to be asked about the

lacklustre volume growth, and U.S. Essential Dairy Products growth in particular," Bernstein analysts said.

($1 = 0.8771 euros)

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Sonali Paul)