Danone Reports 15% Sales Growth in Q3

Consolidated reported sales rose 15.0% to €4,347 million in the third quarter of 2010. Excluding the effects of changes in exchange rates (+7.9%) and the effect of changes in the scope of consolidation (+0.2%), sales growth stood at 6.9% on a like-for-like basis.

Oct 21 2010 --- Danone has reported that sales increased 6.9% in both the 3rd quarter and in the first nine months. Volumes rose 6.3% in the 3rd quarter and 8.6% in the first nine months, with continued momentum reported for the Fresh Dairy Products, Baby Nutrition and Medical Nutrition divisions, reporting sales growth of 5.5%, 8.6% and 8.4%, respectively. There was vigorous growth in the Waters division, with sales up 8.7% in the 3rd quarter, partly due to favorable weather in Japan and Europe. Full year targets were confirmed, calling for sales growth of at least 6%, stable operating margin] and a rise of at least 10% in cash flow from operations.

Commenting on Danone’s third-quarter performance, Chairman and CEO Franck Riboud said: “Our third-quarter results confirm the strong performance we reported in the previous months of 2010 and the solidity of Danone’s business model. We are keeping up the pace and expanding our four business lines in all parts of the world. These positive results, achieved in the face of difficult economic conditions marked by weak consumer demand in Europe and rising raw material prices, enable us to confirm our full-year targets for growth and value creation. They also provide added support for our decision to continue investing in the emerging markets that are our priorities as drivers for both present and future growth.”

Consolidated reported sales rose 15.0% to €4,347 million in the third quarter of 2010. Excluding the effects of changes in exchange rates (+7.9%) and the effect of changes in the scope of consolidation (+0.2%), sales growth stood at 6.9% on a like-for-like basis. This sales growth reflected a 6.3% rise in volumes combined with a positive value effect of +0.6%.

Fresh Dairy Products sales showed a like-for-like rise of 5.5% in the third quarter of 2010, with a 5.6% rise in volumes and a value effect of -0.1%. A year after the implementation of the Reset program, this performance reflects the continuing strength of volume growth in all regions, despite an unfavorable basis for year-on-year comparisons and difficult economic conditions in Southern Europe. The main source of momentum remained priority markets, among them the US, Brazil, Russia, Saudi Arabia and Mexico. The Activia brand was once again the main driver, accounting for nearly half of the rise in division growth. As expected, value effects moved towards neutral (-0.1%), with average prices per kilo steadying from the second half of 2009.

Sales in the Waters division reported an 8.7% like-for-like rise in the third quarter of 2010, the strongest since the fourth quarter of 2007. A steep 7.6% rise in volumes reflected continued double-digit growth in emerging markets combined with positive performance in mature markets, which were mainly attributable to favorable weather in Japan and, to a lesser extent, in Europe. This situation on mature markets made a temporary contribution to a positive value effect of +1.1%.

The Baby Nutrition division again reported solid growth, with a like-for-like rise of 8.6% reflecting a 6.7% rise in volumes and a positive value effect of +1.9% in the third quarter of 2010. Sales increased in all regions, with China, Indonesia, and the UK still the main drivers. Growth in the milks category was again in double digits, with growing-up milks doing particularly well. Products in the weaning food category lost a little ground due to negative trends for this segment in Southern Europe.

Third-quarter sales of the Medical Nutrition division were up 8.4% like-for-like, driven by a 7.8% rise in volumes. Performance was geographically balanced, with Western Europe and new geographical markets contributing equally to growth. All product categories scored gains, with above average-gains once more for products in the pediatric and gastro-intestinal allergy ranges.