French food group Danone raises sales goal as Q3 beats forecasts

By Dominique Vidalon

PARIS, Oct 26 (Reuters) - French food group Danone DANO.PA raised its 2023 revenue growth forecast after its third-quarter sales beat analysts' estimates, as higher prices helped offset lower volumes.

The consumer goods giant, whose brands include Evian and Badoit water and Activia yoghurt, said it now expected like-for-like sales growth to reach 6%-7% this year compared with a previous forecast of 4-6%.

"We continue to view our future with confidence, despite a challenging environment," Chief Executive Antoine de Saint-Affrique said in a statement.

THe world's largest yoghurt maker kept its guidance for a moderate improvement in recurring operating margin this year from 12.2% last year.

Danone posted a 6.2% rise in third quarter like-for-like sales to 6.906 billion euros ($7.28 billion), above analysts' expectations for a 4.7% rise in a poll compiled by the company.

All of Danone's businesses contributed to growth, with the transformation of the Essential Dairy and Plant-based products business in Europe starting to deliver results, giving the company confidence for the next quarters, the company said.

Overall, Danone increased its prices by 6.6% during the quarter while sales volume declined 0.3%, a sequential improvement led by Essential Dairy and Plant-based.

Danone, like its rivals Nestle NESN.S and Unilever ULVR.L, has increased prices to cope with higher commodities and supply chain costs.

Investors and analysts have, however, raised concerns that companies are pushing price rises too far, amid a cost of living crisis that is seeing retailers' private label brands stealing market share.

Last week, Nestle NESN.S posted lower-than-expected nine-month sales growth as higher product prices made shoppers balk.

($1 = 0.9483 euros)

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Jacqueline Wong)