Food group Danone confident over 2026 after China drives 2025 sales beat

PARIS, Feb 20 (Reuters) - French food group Danone DANO.PA said it was starting 2026 with confidence after it delivered 2025 sales and cash above analysts' expectations, and improved its profit margin thanks to cost cuts.

Danone, which like rival Nestle NESN.S faces investor pressure to spell out the financial impact of infant formula recalls tied to a contamination scare with the toxin cereulide, also said that at this stage that impact was "not material".

"Impact assessment will be finalized once the recalls have been completed," it added

The consumer goods giant, whose brands include Evian and Badoit water and Activia yoghurt, reported 2025 sales of 27.28 billion euros ($32.07 billion), a like-for-like rise of 4.5%, compared with analysts' expectations of 4.4% in a company-provided consensus.

The performance reflected sustained demand for medical nutrition and baby food in China which largely offset weakness in coffee creamers in a competitive U.S. market.

The recurring operating margin for 2025 rose to 13.4% of sales from 13% in 2024, bang in line with expectations of 13.4%.

Free cash flow reached 2.8 billion euros, above analysts expectations of 2.5 billion euros.

For 2026, Danone said its forecast was in line with its mid-term ambition of like-for-like sales growth of 3-5%, with recurring operating income growing faster than sales.

($1 = 0.8508 euros)