PARIS — Net sales rose 2.8% in the 2021 fiscal year at Danone SA, but company executives know that percentage could have been higher. Volume dipped 0.6% amid supply chain challenges.
“While short-term market shares are looking better, we continued to lose market shares in too many places,” said Antoine Bernard de Saint-Affrique, chief executive officer, in a Feb. 23 earnings call. “In other words, we do not fully capture the potentials of our markets.
“As for quality of execution, we are not yet where we should be. In the context where global supply chains are disrupted, we ensured overall business continuity, but we have suffered from service level issues that prevented us from serving customers and consumer demand in key geographies and categories, translating in revenue loss and sometimes market share erosion.”
Paris-based Danone achieved net income of €2.24 billion ($2.53 billion), or €3.31 per share on the common stock, which was down 1.3% from €2.26 billion, or €3.34 per share, in the previous fiscal year. Net sales of €24.28 billion ($27.53 billion) compared with €23.62 billion in fiscal 2020.
Within Danone’s Essential Dairy and Plant-based (EDP) segment, 2021 net sales of €13.09 billion ($14.84 billion) were up 2.1% from €12.82 billion. Volume declined 0.4% in the fourth quarter even though sales increased thanks to solid growth in dairy and mid-single-digit growth, despite supply challenges, in the plant-based portfolio.
“This (plant-based) segment is for us exposed to a strongly challenged supply chain, particularly in North America, but recently also in Europe, which has prevented us in some instances from servicing customer and consumer demand,” said Juergen Esser, chief financial, technology and data officer.
De Saint-Affrique added, “I was in the US a couple of weeks ago. You see holes in the shelves from about everybody as there is pressure on our transportation and availability of materials.”
In Danone’s Specialized Nutrition segment, net sales of €7.23 billion for the year were up 0.5% from €7.19 billion. Infant nutrition posted strong fourth-quarter growth through its performance in China and other international markets. In adult nutrition in the fourth quarter, inventory management and supply challenges, especially in Europe, had a negative impact.
Within the Waters segment, net sales jumped 10% to €3.96 billion from €3.61 billion. Danone brands in the fourth quarter gained market share in France, the United Kingdom, Germany, Spain and Poland.
Companywide in the fourth quarter, net sales rose 11% to €6.24 billion from €5.63 billion.
“We are very pleased with the strong finish of the year '21, very pleased with the plus 6.7% like-for-like net sales growth in Q4,” Esser said.
The second half of 2021 saw a further increase in prices for raw materials, logistics and transportation, Esser said, adding input cost inflation on a full-year basis was about 8%.
“Now looking forward to year 2022,” he said, “we see another year of challenge and disruptions, and expect input cost inflation to sequentially accelerate in the low to mid-teens range compared to the 8% we experienced in 2021. To navigate these headwinds, we will further step up our productivity and we will leverage broad-based pricing.”