PARIS — Effective pricing and volume/mix gains carried Danone SA to an earnings increase of 11.5% in the first half of the fiscal year, which saw headwinds in foreign exchange and the effects of deconsolidating its Essential Dairy and Plant-based (EDP) business in Russia.

Net income of €1.22 billion ($1.32 billion), equal to €1.89 ($2.04) per share on the common stock, was up from €1.09 billion, or €1.70 per share, in the first half of the previous year. Net sales dropped 2.9% to €13.78 billion ($14.86 billion) from €14.17 billion, but like-for-like sales increased 4%.

“As we have said before, volume/mix is key for the resilience of a value creation model, and this semester, we have stepped up this contribution to plus 2.1%, showing progress for the fourth consecutive quarter,” said Antoine de Saint-Affrique, chief executive officer, in a July 31 earnings call. “Price contributed plus 1.9% to net sales growth in H1, normalizing as anticipated, with inflation slowing down.”

Added chief financial officer Juergen Esser: “Outside of the like-for-like, ForEx (foreign exchange) had a negative effect of minus 2.4% as a result of a number of currencies depreciating against the euro, but this was partially offset by the impact of hyperinflation. And finally, scope effect had a negative contribution of minus 7.2% due to the deconsolidation of EDP Russia, Horizon Organic and the Michel & Augustin business. The deconsolidation effect of Russia is, with the closing of this first semester 2024, behind us, meaning we will report a significantly lower scope impact for the second half of the year.”

In Danone’s Essential Dairy and Plant-based Protein business, sales fell 9.6% to €6.79 billion ($7.33 billion) from €7.50 billion, but like-for-like sales increased 3.1%. In Specialized Nutrition, sales increased 3.9% to €4.41 billion from €4.25 billion, and like-for-like sales increased 4.3%. Market share gains in Specialized Nutrition came across the globe, including in China and Europe, Esser said. In Waters, sales rose 6% to €2.56 billion from €2.41 billion, and like-for-like sales increased 6% as well. Momentum continued for the Mizone brand in China, and growth in Waters came in Europe despite poor weather conditions, Esser said.

In Danone’s North America region, first-half sales declined 2.5% to €3.33 billion from €3.42 billion, but like-for-like sales increased 3.7%. Volume/mix, up 2.9%, and resilient pricing led the growth in North America, Esser said.

“The growth in North America was notably led by our yogurt business with another stellar performance of the high-protein range under the Oikos brand,” he said. “In parallel, our Coffee Creations business is posting again a strong growth in this (second) quarter with continued market share gains for both brands International Delight as well as Stōk. At the same moment, we can report a similar competitive momentum also for our Waters business with our Evian brand enjoying a strong momentum in this (second) quarter.”

De Saint-Affrique added, “In the US, we are making progress with turning around our plant-based beverage business. We took some pricing actions earlier in the year and are starting to see some green shoots of regaining competitiveness.”

Paris-based Danone maintained its outlook of like-for-like sales growth between 3% and 5% for the fiscal year.

“Important to acknowledge that we were in this first semester benefiting from some final carryover effects of pricing from last year, which has given the gross margin even more momentum for the last period,” Esser said. “With pricing normalizing in the coming quarters, the effect on gross margin will not repeat with the same magnitude in the coming second half.”