Danone Expects Further Growth in 2014

20 Feb 2014 --- French food group Danone has reported sales were up for 2013 and it expects a return to ‘strong, sustainable, profitable growth’ through 2014, enhanced by stability in European dairy markets. Underlying sales for 2013 were up by 4.8% year-on-year to €21.3bn, according to the company, with a 10% increase in the CIS, North America and ALMA zones.

“Despite strong headwinds that took a toll on our business, 2013 was a year of solid growth and decisive progress in building Danone’s future,” said chairman Franck Riboud. “Several factors affected our results, particularly in the second half: currencies were volatile in emerging countries, milk prices rose steeply around the world, taxes went up sharply, and a false food-safety alert triggered by one of our suppliers had a marked impact on our Early Life Nutrition activities.
 
“Yet despite all that, we turned in a solid performance, with organic growth of nearly 5% driven by the success of many strategic projects. We consolidated our leadership in the US yogurt market, thanks to our Greek-style yogurt line. Our Russian platform—created by the successful merger of
Danone and Unimilk—experienced vibrant, profitable growth. And our Waters division reported strong, ongoing growth, thanks in particular to demand for aquadrinks.”
 
The growth areas in 2013 were the group’s waters division and dairy, which saw a 4.1% increase in value for the fourth quarter. Dairy sales in Europe continued to suffer but recovery is expected through 2014. Data from Spain confirmed a sharp improvement for dairy, said Danone, while market conditions in Germany and Italy remained difficult for the division. Meanwhile, the CIS region delivered an ‘excellent performance’ in dairy sales, buoyed by the Actimel, Danissimo and Tema brands, while flagship brand Prostokvashino continued to gain ground.
The Waters division continued to report rapid growth, with sales up +8.1% like-for-like in the fourth quarter of 2013, driven by a +6.0% increase in sales volumes. This performance was underpinned by steady growth in the plain waters segment, driven by flagship brands Evian and Aqua, as well as very strong pace in aquadrinks, in particular the Mizone brand’s gains in Asia, but also growth for Bonafont con Jugo in Latin America and Volvic Juiced in Europe. Growth in value was +2.1%, and continued to reflect mainly the positive impact of the product mix generated by aquadrinks.

The company’s Medical Nutrition business showed 6.4% growth in the fourth quarter after a 5.6% growth in the third quarter.

The company had to recall infant formula products in Asia last summer due to a false health scare. As a result, Danone reported its baby food sales fell 6.9% in the fourth quarter after falling 8.6% in the third quarter. Recovery plans to get back on track have been deployed, the company said.

“We also achieved major progress on initiatives that will make our group stronger starting in 2014: in Europe, we renovated our product portfolio and undertook ambitious cost-reduction and streamlining to boost our competitive edge; in Africa, we integrated Morocco's Centrale Laitière and acquired an interest in Fan Milk, operating in Ghana and Nigeria. Together these moves will drive our future growth,” said Riboud.
 
“We are holding our course, focused on building a solid group and returning to sustainable, profitable growth in the course of 2014. This is the goal I have set our teams, and it is in this spirit that we are heading into the current year.” 

By Sonya Hook