The action Danone SA endorses this Monday the red lantern clothes of the CAC 40. On a Parisian index recovering 0.36% around 12 noon, the title fell by more than 3% to 61.52 €. The French specialist in dairy products is sanctioned on the stock exchange after negative forecasts for his 2e quarter shared at its last general meeting on Friday.
Danone sanctioned on the stock market after its profit warning
Danone reported a sharp drop in sales in Europe and North America between April and June – by around 50% – in particular in the specialized nutrition (around 30% of its turnover in 2019) and water (18% of its turnover in 2019) segments, as well as in Latin America, where the coronavirus pandemic has accelerated in recent weeks.
In addition, around 100 million euros in additional direct costs necessary for business continuity should weigh on its current operating margin at 1is semester, the results of which will be published on July 30.
Bryan Garnier and JPMorgan downgrade their projections
Against this backdrop, analysts have further downgraded the group’s outlook for the coming months. Reported by Reuters this morning, a note from Bryan Garnier considers Danone’s operating margin to drop 160 basis points in 1is half, an estimate much lower than the consensus which expects a decline of 80 to 90 basis points.
The investment bank anticipates a 5.5% contraction in organic sales in 2e quarter, there being even more pessimistic than the consensus which expects a less severe dropout of 1 to 2%.
Same negative sentiment at JPMorgan, whose analysts have also just revised their 2020 estimates for Danone: the latter expect annual turnover at -0.3% against 0.7% previously, with a 2e quarter dropping 6.3% against -3.9% previously.
Trade in a multitude of markets with the IG trading account
The storage effect and the expansion of the coronavirus impacted sales of the 2e trimester
The world number one in the food industry had crossed the 1is smooth quarter. With a 3.7% increase in sales on a like-for-like basis, Danone notably benefited from the storage effects in Europe and the United States over this period, which had compensated for the slowdown in its activity in China, the second largest market. most important of the group.
But the accumulation of these stocks in the Old Continent and across the Atlantic has created a boomerang effect for Danone : once the containment measures were lifted, consumers slowed down the level of their purchases to dispose of their supplies from the end of 1is quarter, while other markets of the group – in particular Latin America, but also Africa and Indonesia – were penalized by the acceleration of the coronavirus and the containment measures that followed.
What trend for Danone action in the coming weeks?
Since the beginning of the year, the Danone share has lost approximately 17% of its value. The stock fell heavily between mid-February and mid-March, dropping from € 73.4 on February 12 to € 52.9 on March 12.
Like the Paris index, it then managed to make up for part of its losses. Driven by its quarterly results, the action held firm despite the suspension of its financial objectives on April 21, to rebound to € 65.6 on June 19. In recent sessions, she had again given up some ground on the back of a general return of risk aversion.
The profit warning of its last general meeting and the new projections of the analyst offices suggest that the current consensus should deteriorate before the publication of its half-yearly results at the end of July. Consequently, the Danone share is not immune from further correction.
A short-term neutral graphic configuration
From a technical point of view, « the configuration of the Danone (BN) share is bearish over the long term as long as the price moves under the slant which comes to seek the highest since mid-2019 (in black in the graph) ”, observes Valentin Aufrand, independent technical analyst.
Danone (BN) stock daily graph, key levels
–
