The value of the day in Paris – Danone supported by speculation

(AOF) – Danone jumped 7.9% to 56.78 euros. The agri-food group unveiled this morning a quarterly turnover higher than expected and confirmed its annual objectives. However, the title seems somewhat backed by speculation. According to La Lettre A, Lactalis is considering an offer for all or part of Danone. All options would be on the table. A spokesperson for Danone reacted by assuring that its group had no intention of selling its three categories of assets (dairy and plant products, waters, specialized nutrition).

At first glance, the operation seems complex. First, it would pose competition problems in milk. Lactalis and Danone share the titles of world number one for products (bottled milk, fresh yogurt, organic, etc.).

Furthermore, Danone’s free float is high (63.8%) and in the capital there are several investment funds and management companies (Artisan Partners, BlackRock, etc.). You will have to convince them.

Danone’s market capitalization exceeds 39 billion euros this morning for a 2021 turnover of 24.3 billion euros.

Lactalis is not listed on the stock exchange. The financial information provided is therefore much less. In 2020, its turnover stood at 21 billion euros with brands such as Lactel, President or Galbani. The group is led by Emmanuel Besnier, grandson of the founder, André Besnier.

Earlier this morning, Danone confirmed its annual targets following the release of solid quarterly revenue. The agri-food group achieved a turnover of 6,236 billion euros in the first quarter of 2022, up by 10.2%. Organic growth was 7.1%. The multinational owner of Danao or Evian welcomed a “growth of all geographies in comparable data”.

Business in Europe increased by 5.7% and in North America by 5.5%. Sales increased 15.3% in China and North Asia, led by Specialized Nutrition.

Business grew 7% in the Rest of the World, driven by Dairy and Plant Products (EDP) and Waters.

However, Danone acknowledges that the operating environment will remain very volatile, characterized by supply difficulties and generalized inflation forecast at around 15% in 2022.

Furthermore, despite this good start to the year, the group preferred to confirm the revenue growth target of between +3 and + 5% on a like-for-like basis, driven by the price effect. The current operating margin is expected to exceed 12%.

Jefferies remains Buy on Danone with a target price of € 58.5. Quarterly sales were above expectations, supported by Specialized Nutrition. “A leap to the beginning of the year” acknowledges the broker.

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