(Boursier.com) — Danone rises 1.2% to 49.8 euros this weekend and ends four consecutive sessions in the red. Operators appreciate the latest announcements from the agribusiness giant, which said last night that it was exploring various strategic options, including a possible sale, for the organic dairy activities of Horizon Organic and Wallaby in the United States. “This announcement marks further progress in the portfolio review and asset rotation program announced by the company in March 2022 as part of the Renew Danone strategy,” Danone said.
Horizon Organic and Wallaby are strong brands in the organic dairy products category in the United States (milk, coffee creamers, yogurts, cheese and butter). These brands represent approximately 3% of Danone’s overall sales, and had a dilutive impact on the group’s organic sales growth and current operating margin in 2022.
With a PE2023 estimated at less than 14, the title is the least expensive of the hybrids (strategic dispersion and unbalanced operational footprint), indicates Oddo BHF. The strategic review of Horizon and Wallaby following the announced decision in October to exit the Dairy in Russia lends credibility to its investment thesis. As evidenced by the stock’s underperformance since last summer, some investors were showing signs of capitulation to the lack of announcements and the inflation environment which is not buoyant for groups whose portfolios need to be revived and repositioned. It is therefore likely that this strategic review will be well received even if it relates to assets of modest size, specifies the analyst, to ‘outperform’ on the file.
Stifel (‘buy’) welcomes these announcements as the company continues to strictly execute its strategy. Sale of underperforming business operations, renewal of core portfolio and reduction of SKUs hurt net sales and margin in the short term, but should support LFL growth and margin development in the medium term term.
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