Thursday 24 January 2019

Danone's global sales growth slows but Europe's warm weather provides welcome boost

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Sales growth at Danone slowed in the third quarter, reflecting falling sales of its infant formula products in China and lost dairy sales stemming from a consumer boycott in Morocco.

Third-quarter sales reached €6.186bn, marking a like-for-like sales increase of 1.4pc, which is slightly above analysts’ forecasts for 1.2pc growth.

But this marked sharp slowdown from 3.3pc growth in the second quarter and 4.9pc in the first quarter.

In September, Danone announced measures in Morocco to regain consumers trust but sales in the region were still down 35pc.

However, Europe's warm weather helped raise sales at the French group' water division and, while sales in France were negative, the dairy division is making steady progress.

"Danone’s focus will remain on accelerating growth and maximising efficiencies...In 2018 the company will progress toward its 2020 ambition through further sales growth acceleration and an improved recurring operating margin," the company said.

Danone is the world’s largest yoghurt maker with brands including Actimel and Activia.

At the group's dairy and plant-based business in North America, where Danone is integrating organic food group WhiteWave, growth has accelerated.

Danone reiterated its expectation for a double-digit rise in 2018 underlying earnings per share (EPS), excluding the impact of the sale of a stake in Japan’s Yakult.

It is targeting an operating margin above 16pc and like-for-like sales growth of 4-5pc by 2020.


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