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    BN   FR0000120644

DANONE

(BN)
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Real-time Quote. Real-time Euronext Paris - 11/26 11:35:26 am
54.33 EUR   -3.14%
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Inflation trade? Nestle reaps benefits from higher prices

10/20/2021 | 09:55am EST
Nestle logo is pictured on the door of the supermarket of Nestle headquarters in Vevey

ZURICH (Reuters) - Nestle raised its full-year sales target on Wednesday after the world's largest food group reaped the benefits of price hikes on its products ranging from pet food to bottled water with a forecast-beating third quarter.

The Switzerland-based firm, whose shares rose more than 3%, has moved ahead of other consumer companies in passing on higher input costs to consumers, leveraging the strength of its brands such as Purina pet food and Perrier water.

The maker of KitKat bars and Nescafe will increase prices further in the final quarter and in 2022 when input costs are expected to increase even more than the 4% rise seen in 2021, Chief Financial Officer Francois-Xavier Roger told investors.

Its rivals are set to follow. Procter & Gamble, has said it will raise prices in the United States and Danone has warned of price pressures next year, adding to a global inflationary threat testing the resolve of central banks.

Unilever gives a trading update on Thursday.

"Our industry, in general, is not an industry that is in normal times pinched by inflation," Chief Executive Mark Schneider said, adding the industry should be able to maintain its financial performance even if the inflationary cycle extended beyond 2022.

Like its peers, Nestle is grappling with supply chain constraints as the world economy roars out of a COVID-19 slump. The company said in a statement price increases should help keep its margin steady at about 17.5% this year, followed by a moderate margin improvement in the mid term.

But Schneider played down prospects for an improvement as early as next year, citing rising input costs since the summer. "There is no guidance or commitment for 2022 to increase margins," he said.

Nestle raised its full-year organic growth guidance to 6%-7% from 5%-6% previously, after organic sales rose 6.5% in the third quarter, composed of 2.1% price hikes and 4.4% volume growth, and beating forecasts https://www.nestle.com/investors/analysts-consensus.

Roger said volume growth was expected to slow somewhat as the pandemic-related boost to at-home consumption waned.

Nestle shares, up 8% this year, climbed 3.2% by 1318 GMT, exceeding the 1.6% rise across the European food sector.

"The company knocked it out of the park for the third quarter," Kepler Cheuvreux analyst Jon Cox said, saying price rises for Nestle products were the highest since 2015.

"Most companies with strong brands will be able to pass on prices and I think the market still does not get that," he said.

Nestle said growth at its Purina petcare business was fuelled by its higher priced premium ranges and veterinary products. Vontobel analyst Jean-Philippe Bertschy said Purina was Nestle's "star performer".

Bernstein's Bruno Monteyne said the benefits of higher volumes and pricing would only fully show in 2022.

Strong coffee sales were also a driver for Nestle, with its Starbucks-branded products posting 15.5% growth in the first nine months. Out-of-home consumption of food and drinks, which took a hit during the pandemic, recovered further, Nestle said.

(Reporting by Silke Koltrowitz; Editing by John Revill and Edmund Blair)

By Silke Koltrowitz


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
DANONE -3.14% 54.33 Real-time Quote.1.06%
NESTLÉ S.A. -1.26% 120.5 Delayed Quote.15.58%
STARBUCKS CORPORATION -2.90% 110.66 Delayed Quote.3.44%
UNILEVER PLC -0.42% 3957.5 Delayed Quote.-10.03%
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Analyst Recommendations on DANONE
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Financials
Sales 2021 23 918 M 27 015 M 27 015 M
Net income 2021 1 950 M 2 202 M 2 202 M
Net Debt 2021 11 048 M 12 478 M 12 478 M
P/E ratio 2021 17,2x
Yield 2021 3,57%
Capitalization 35 361 M 40 014 M 39 938 M
EV / Sales 2021 1,94x
EV / Sales 2022 1,83x
Nbr of Employees 100 383
Free-Float 92,0%
Chart DANONE
Duration : Period :
Danone Technical Analysis Chart | BN | FR0000120644 | MarketScreener
Technical analysis trends DANONE
Short TermMid-TermLong Term
TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 26
Last Close Price 54,33 €
Average target price 61,52 €
Spread / Average Target 13,2%
EPS Revisions
Managers and Directors
Antoine Bernard de Saint-Affrique Chief Executive Officer
Juergen Esser Chief Financial, Technology & Data Officer
Gilles Schnepp Non-Executive Chairman
Domitille Doat-Le Bigot Chief Digital Officer
Jean-Michel SÚvÚrino Lead Independent Director
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1st jan.Capi. (M$)
DANONE1.06%40 014
NESTLÉ S.A.15.58%359 083
MONDELEZ INTERNATIONAL, INC.3.04%84 047
YIHAI KERRY ARAWANA HOLDINGS CO., LTD-43.25%52 139
THE KRAFT HEINZ COMPANY0.49%42 633
GENERAL MILLS, INC.6.73%38 013