Danone SA :DNN-IT: Earnings Analysis: For the six months ended June 30, 2016 : August 4, 2016

Danone SA reports financial results for the half-year ended June 30, 2016.

We analyze the earnings along side the following peers of Danone SA – Unilever NV Cert. of shs (UNA-NL) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of EUR 11052 million, Net Earnings of EUR 880 million.
  • Gross margins widened from 49.34% to 51.16% compared to the same period last year, operating (EBITDA) margins now 18.79% from 20.87%.
  • Year-on-year change in operating cash flow of 18.45% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2014-06-30 2014-12-31 2015-06-30 2015-12-31 2016-06-30
Relevant Numbers (Semi-Annual)
Revenues 10467 10677 11392 11020 11052
Revenue Growth (YOY) -5.34 4.27 8.84 3.21 -2.98
Earnings 608 511 416 866 880
Earnings Growth (YOY) -37.45 13.56 -31.58 69.47 111.54
Net Margin 5.81 4.79 3.65 7.86 7.96
EPS 1.03 0.85 0.69 1.41 1.43
Return on Equity 11.16 8.96 6.78 13.61 14.28
Return on Assets 3.9 3.23 2.52 5.18 5.37

Access our Ratings and Scores for Danone SA


Market Share Versus Profits

Revenues History
Earnings History

DNN-IT‘s change in revenue this period compared to the same period last year of -2.98% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that DNN-IT is holding onto its market share. Also, for comparison purposes, revenues changed by 0.29% and earnings by 1.62% compared to the immediate last period.

Revenues Growth Versus Earnings Growth


Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 49.34% to 51.16%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin


Cash Versus Earnings – Sustainable Performance?

DNN-IT‘s change in operating cash flow of 18.45% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth


Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 14.04% to 15.14% and (2) one-time items. The company’s pretax margins are now 12.34% compared to 6.30% for the same period last year.

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Danone SA


Company Profile

Danone SA engages in the food processing industry. The company operates through the following divisions: Fresh Dairy Products, Waters, Early life Nutrition, and Medical Nutrition. The Fresh Dairy Products division produces and markets yogurts, fermented fresh dairy products, and other specialized fresh dairy products. The Waters division comprises the natural waters business along with aqua drinks. The Early Life Nutrition division focuses on specialized foods for babies and young children to complement breast-feeding while always complying with the World Health Organization Code and local laws. The Medical Nutrition division focuses mainly on people receiving medical treatment, babies afflicted with certain illnesses and frail elderly people. The division’s products are designed primarily to treat disease-related malnutrition by satisfying special food needs. Danone was founded on February 2, 1899 and is headquartered in Paris, France.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of DNN-IT.