Danone Posts Sales Growth of 7% in First Nine Months

17/10/07 Danone has reported like-for-like sales growth of +3.9% in Q3 with continued strong growth in Fresh Dairy (+11.9%). Biscuits grew by +6.6% in the quarter, Beverage Q3 sales were impacted by poor weather and a decline in China (-11.7%) the company reported.

Commenting on the third quarter sales, Franck Riboud, Chairman and CEO of Groupe DANONE said: “The double-digit growth, quarter after quarter, of our Fresh Dairy business, the capacity of our teams to proactively manage the unfavourable impact of increases in raw material prices, and market share gains in all major geographies are  strong indicators of the resilience of our growth model. This quarter’s performance was indeed impacted by the unusually poor weather conditions in Europe, and continues to be affected by our dispute with one of our partners at Wahaha; however, the strength of our growth model is remarkable. I therefore remain very confident that our Group will, once again, meet its annual financial targets. This gives me additional confidence in our business prospects as we prepare to welcome Numico into the Group by year-end.”

Consolidated sales amounted to €11,241 million in the first nine months of 2007, increasing by +4.4% on a historical basis. Both changes in exchange rates and the scope of consolidation negatively impacted sales by -2% and -0.6%, respectively.

On a reported basis, 3rd-quarter sales increased by +3.7%. Changes in exchange rates had a negative impact of -1.8% and changes in the scope of consolidation a positive impact of +1.6%.

Like-for-like sales growth of +3.9% in the 3rd quarter derives from a +0.7 % rise in volume and a +3.2% rise in value. 

Fresh Dairy continued on its steady double-digit growth trajectory (+11.9%) with blockbuster brands growing at +20%, and with all major geographies having put through price increases linked to input cost inflation.  France and Spain experienced slower growth as the two businesses reflected very strong prior period comparables.  The rest of Europe maintained double-digit growth, with Russia showing growth rates above 30%. Latin America saw mid-teens growth rates, supported by very strong growth in Argentina. North America accelerated its growth into the mid-teens thanks to continued strong growth of Activia and a favourable impact of the Danactive (Actimel) launch earlier this year.  Bledina grew at above +10%.

Beverages performance (-11.7%) suffered from poor summer weather in Europe and from the loss of all co-packed sales at Wahaha.  The French bottled water market declined by approximately -20% in value, with Group brands maintaining share. The rest of Western Europe saw similar trends with share gains in Spain, Belgium and Poland. Latin America maintained its superior sales growth achieving an uplift of +20%.

Biscuits grew at +6.6% support by robust growth in Europe close to +5%, and by continued superior growth in Asia. 

The sales figures of the third quarter 2007 (Beverage – Asia) include EUR 232 million relating to the Wahaha business. This figure is an estimate based on information available to the Group. As a result of the dispute between the Group and one of its partners in Wahaha, access by the Group to financial information of this company remains constrained. Excluding the entire Wahaha business from the 2006 and 2007 figures, the Q3 2007 sales growth would have been -3.3% in Beverages, and +14.5% in Asia, for a +7.5% at Group level.

Groupe DANONE confirmed its full-year 2007 objectives of: like-for-like growth between +6% and +8% (at the current scope of consolidation) and trading operating margin progression of at least +20 bp on a like-for-like basis (at the current scope of consolidation), and this despite significant input cost headwinds.