By Maitane Sardon

Danone ended last year on a high note, with reported fourth-quarter revenue growth beating market expectations amid increasing demand for its products in North America.

The French food company behind Activia yogurt and Evian water posted sales growth on a like-for-like basis of 4.7% for the fourth quarter. Analysts were expecting growth of 4.2%, according to a poll of estimates compiled by the company.

Danone said the sales increase was mainly driven by higher volumes, which were up 4.2%, while prices contributed with a 0.6% increase.

The company said it continued to benefit from strong momentum in North America, notably in its high protein, coffee creations and waters units.

Danone's fourth-quarter organic sales growth accelerated slightly from the 4.2% delivered in the third quarter, when volumes were up 3.6% and prices contributed with a 1% increase.

Fourth-quarter sales on a reported basis fell to 6.72 billion euros ($7.07 billion) from 6.83 billion euros in the year prior, beating market expectations of 6.59 billion euros.

For the year as a whole, Danone posted a recurring net profit--which excludes exceptional items--of 2.35 billion euros compared with 2.28 billion euros a year earlier. Reported sales fell to 27.37 billion euros from 27.62 billion euros.

The company-compiled consensus had recurring net profit at 2.29 billion euros on sales of 27.17 billion euros.

Recurring operating income rose 2% to 3.56 billion euros in 2024, with the margin up to 13% from 12.6%.

"Our focus on value creation and return-oriented capital allocation led to a significant improvement of our return on invested capital, now back into double-digit territory" Chief Executive Antoine de Saint-Affrique said. "We believe that the food industry is at a tipping point...we can seize this long-term market opportunity.

Danone proposed a dividend of 2.15 euros a share for 2024, up 2.4% from the previous year.

Looking ahead, the company said it expects like-for-like sales growth of between 3% and 5% in 2025, with recurring operating income growing faster than sales.

Danone's results come as European food producers face increasingly tough comparatives, with pricing normalizing after years of post-pandemic inflation. Investors have been looking for signs that recent volume growth can be sustained into 2025 and beyond.

Consumer goods giant Unilever earlier this month said it expected pricing to make up more of its growth this year as it passes higher costs for cocoa, dairy and palm oil on to consumers. The maker of Dove soap and Hellmann's mayonnaise, which this week ousted Chief Executive Officer Hein Schumacher as it seeks to speed up its turnaround efforts, reported a 4% rise in underlying sales growth for the fourth quarter, with a 2.7% increase in the volume of products sold and pricing up 1.3% on year.

Meanwhile, Nestle has warned of pressures on its margins this year after reporting its weakest annual organic sales growth in more than two decades, attributing the performance to soft consumer demand and a challenging economic environment.

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

February 26, 2025 02:05 ET (07:05 GMT)

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