Danone Q3 Revenue Rises on Bottled Water, Baby Food

In particular, the Group is winning further market share in the very fast-growing Greek yogurt segment with its Oikos and Light&Fit Greek brands, benefiting from new production capacity added on July 1.

17 Oct 2012 --- Danone has reported that consolidated sales increased +9.4% to €5,257 million in the third quarter of 2012. Excluding the impact of changes in the basis for comparison, including changes in exchange rates and scope of consolidation, sales were up +5.0%. This organic growth reflects a +1.6% increase in sales volume and a +3.4% increase due to the price/mix effect. The +4.3% exchange-rate effect reflects favorable trends in currencies including the US dollar and the Chinese yuan.

Fresh Dairy Products division sales were up +0.7% like-for-like in the third quarter of 2012, reflecting a slight -0.7% easing in volume and a +1.4% increase in value. Sales in Latin America and the Africa-Middle East region remained extremely buoyant with continued double-digit growth, while the CIS region and North America are performing according to plan, with sales growing at a faster pace each quarter.

The CIS region has thus continued to grow since the beginning of the year and is on track to meet growth and margin targets. Unimilk’s priority brands continued to report double-digit growth this quarter, following the example of Prostokvashino—still the top contributor to growth in this area— as well as the Bio Balance and Tëma brands. Integration of Danone-Unimilk’s operations is moving ahead, with shared systems being deployed and a gradual merger of logistics and sales force resources. Sales have also continued to gather pace in the United States, strengthening Danone’s leading position in a market that has grown more competitive than in the first half. In particular, the Group is winning further market share in the very fast-growing Greek yogurt segment with its Oikos and Light&Fit Greek brands, benefiting from new production capacity added on July 1. Operations in Europe fell back more sharply this quarter as conditions deteriorated in Southern Europe, particularly Spain and Italy, where sales declined by over -10%.

The Waters division reported strong third-quarter growth, with a +12.3% like-for-like increase driven by a +5.4% rise in sales volumes and a +6.9% rise due to the price/mix effect. Strong growth in emerging markets continues to drive the division’s performance. In Western Europe, sales benefited from a favorable basis of comparison with Q3 2011, which helped offset adverse weather conditions that prevailed in July 2012. Growth in value continues to benefit from aquadrinks and their positive price/mix effect, and also reflects the strong performance in Western Europe this quarter. The impact of price increases introduced in emerging countries in 2011 is tapering off.

The Baby Nutrition division reported robust growth in all geographical markets, with sales up +11.5% like-for-like in the third quarter of 2012. This includes a +3.6% rise in volume and +7.9% growth in value. Key to the division’s success is a very strong performance in Asia, particularly China, where the Dumex range—Danone’s flagship brand for baby nutrition in this country—has been completely revamped. As before, changes in the division’s product mix made a positive contribution to performance, while the growing-up milk segment again reported double-digit growth and weaning foods continued to decrease.

Medical Nutrition sales increased +4.9% like for like in the third quarter of 2012, driven by volume growth of +5.9%. Slowing growth reflects deteriorating conditions on some markets in Western Europe. In contrast, China, Turkey and Brazil maintained their momentum, driving strong growth for key brands like Nutrison, Nutrini and Neocate. In October, the Group introduced its new Souvenaid product on four markets: Germany, Belgium, the Netherlands and Brazil.

Chairman’s comment “Danone reported solid growth in sales for the first nine months of 2012, in line with full-year targets, thanks to very strong momentum continuing worldwide except in Europe. Emerging markets and North America posted further strong growth in the third quarter. Oikos scored additional gains in the United States, while in Russia Danone-Unimilk continued to build its product portfolio. In Asia, Africa-Middle East and Latin America, operations expanded very rapidly in all product categories. Yet pressure on consumer spending in Europe continued, and the situation deteriorated further in Southern Europe, affecting sales for the business lines most exposed to this region. Against this backdrop, our priorities are clear: we will continue to deploy our model in growth regions by investing in our product categories, our brands and our people. In Europe, we need to adapt our model to the slump in consumption and to the needs of our consumers, while building new sources of growth. Our teams will pursue these priorities with determination.”