Danone Reports Slow First Quarter Sales
16 April 2014 --- Danone has reported slow underlying group sales growth in the first quarter of 2014 due to price increases in Russia and continued challenges in China following the infant formula product recall in Asia last year. The dairy expert, which has brands such as Actimel and Activia, said it achieved 2.2% organic growth in the first quarter of 2014, which is in line with its roadmap.
A spokeswoman for the company told Food Ingredients First that the company anticipated continued volume sales decreases for the next quarter as the market is sluggish. However, in its statement Danone said it would be targeting a return to “strong, sustainable, profitable growth” from the second half of the year, and it would be keeping its full-year sales and profitability goals.
The spokeswoman said Danone would continue to invest in its products and it will focus on its consumer roadmap. “We have identified four main priorities on our roadmap, starting with plans to keep adapting and investing in its products in Europe,” she said. “Secondly we will grow our ALMA division in emerging markets, such as Mizone in China and brands in Brazil. Third on the list is that we want to continue our focus on the North America and CIS areas, which are strong growth markets, and finally we will continue to work on turning around our Early Life Nutrition division, especially in China.”
The company’s chief financial officer, Pierre-Andre Terisse said the launch of the new Dumex infant formula brands was one example of the company’s efforts to reinvigorate this market in China.
Like-for-like group sales adjusted for currency effects and acquisitions grew 2.2% year-on-year in the quarter, which was a slowdown from the 2.9% growth seen in the fourth quarter of 2013. Total sales reached 5.06bn euros, which was a decline of 5.2%.
Fresh dairy sales for the group grew 3.9% against 4.9% in the previous quarter, which Danone said was due to a 3.7% drop in dairy volume sales and a 7.6% rise in prices. Higher milk prices in Russia were particularly instrumental to this volume drop.
In the United States the category got off to a slow start but accelerated in March. In the Greek yoghurt sector in particular Danone’s market share pulled even with that of its main competitor this quarter.
The Waters division reported vigorous growth again with Q1 2014 sales up 8.9% buoyed by a 5.4% rise in sales volume. This was driven by robust demand in emerging markets, especially in Asia, with strong growth for the Mizone brand and Aqua.
“In an environment that has proved highly unstable in many parts of the world, Danone’s teams are focusing on our top priorities; continuing to adapt our products and organization in Europe; continuing to grow our categories and brands in North America, CIS and emerging countries, while taking volatile market conditions into account; and, finally, rebuilding a strong, solid portfolio in early life nutrition in Asia,” said the company’s chairman Franck Riboud. “These priorities are essential to achieve our goal of strong, sustainable and profitable growth beginning in the second half of this year.”
By Sonya Hook
