Sunday 25 March 2018

Currency volatility weighs on Danone's global revenues

A model poses for Evian’s ‘Live Young’ campaign
A model poses for Evian’s ‘Live Young’ campaign
Michael Cogley

Michael Cogley

Danone says it is confident of delivering another year of strong growth despite overall sales falling 3pc in the first three months of the year.

Danone has four companies in Ireland including Danone Waters, which sells both Evian and Volvic. Sales volume at the firm's waters division increased by 6.4pc, however the value of those sales fell by 4.2pc to €1.02bn.

The French-headquartered firm said fluctuations in currencies including the Argentine peso, the Brazilian real, the Mexican peso, and the Russian rouble had negative effects on sales value.

Danone chief executive Emmanuel Faber said the company was in line with its targets for 2016 after it reported total sales of €5.31bn in the opening quarter.

"After solid 2015 results, Q1 2016 results confirm my confidence that Danone, with our executive committee and all our teams, is fully engaged in the right direction to keep adapting our growth model to ensure strong, profitable and sustainable growth as we move towards 2020," he said.

Sales in Danone's dairy arm fell by 4.7pc to €2.68bn, however strong growth in North America means it remains on track with targets set for 2020.

Dairy revenue increased by 2.3pc to €2.68bn on a like-for-like basis with Danone citing sustained investment as a cause for an increase in market share in the US.

Analyst at Goodbody Liam Igoe said volume growth in the first three months of the year represented a "slight regression" from the last quarter of 2015.

"The waters and medical nutrition division grew volumes strongly, up 6.4pc and up 5.2pc respectively," Mr Igoe said.

Shares in the company had risen by 3.27pc to €64.3 at 2pm on Tuesday.

Danone has planned a major renovation for its European brand portfolio later this year, including relaunches of Danonino, Actimel and Activia.

The company is predicting milk prices to remain low in the first half of the year but expects a rebound in the European and US markets in the last six months of the year.

Among the firm's targets for 2016 is overall sales volume growth of between 3pc and 5pc as well "solid" like-for-like improvements in its trading margin.

Irish Independent

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