Danone Posts Positive Results, Optimistic for 2015

20 Feb 2015 --- French dairy company Danone today posted positive full year results, and remains cautiously optimistic for the future after several years of turmoil. It expects 2015 to deliver 4-5% organic growth.

Trading against the backdrop of volatile milk market, difficult economic conditions in Europe, a food safety scare in Asia and trouble on the Russian market, Danone’s biggest market, the company reported organic sales growth of 4.7%.

Like for like sales fell slightly from €21.3bn to €21.14bn, while overall profit fell 21% to €1.12bn.

Chairman Franck Riboud said: “2014 was a year of political and economic turbulences, not to mention severe volatility—a taste of what awaits us in the years ahead. Yet despite all that, we met our targets and I would like to congratulate all of our people for their remarkable achievements. Against this backdrop, I have great confidence in the future of Danone, which now has the resources and structure to meet new global challenges.

Fresh dairy products represented the largest proportion of sales, but also the slowest growth, at €11.13bn, compared with €11.79bn in 2013, while waters, early nutrition and medical nutrition all showed strong growth.

Looking to the future, Danone assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets, in particular the CIS.

In 2015, Danone also anticipates marked but varied trends in the cost of major strategic raw materials, particularly milk: - lower prices in Europe and the United States in the first half, with a rebound likely in the second half of the year, and - gradual price increases in emerging countries all year long. Altogether, Danone anticipates a moderate rise in the cost of main raw materials and packaging in 2015. Against this backdrop, Danone will focus on developing its product categories and winning market share.

After delivering profitable growth in the second half of 2014, Danone aims to generate organic growth in sales and in operating margin in 2015; its 2015 targets include: organic growth in sales of between +4% and +5%; and slight growth in trading operating margin.