Danone Sales Up 18.7% in Q1

14/04/08 Danone has reported like-for-like sales growth of +11.4% in Q1 and says it is fully on track to meet full year targets. There was continued double-digit growth in Dairy at +10.5% and solid growth of +7.0% in Waters confirming healthy underlying trends. Baby Nutrition continues its historical strong growth track record at +18.8%, while there was superior growth sustained in Medical Nutrition at +14.6%.

Consolidated reported sales increased by 18.7% to € 3,760 million in the first quarter of 2008.   Excluding the effects of changes in exchange rates (-4.1%) and in scope of consolidation (+11.4%), total sales increased by +11.4% on a like-for-like basis.  This like-for-like sales growth was driven by a +3.0% rise in volume and a +8.4% rise in value. 

Commenting on the Q1 08 sales, Franck Riboud, Chairman and CEO of Groupe DANONE said: “The first quarter of 2008 has witnessed a very solid financial performance across all our divisions.  We are specifically pleased with the developments in our two new divisions Baby Nutrition and Medical Nutrition as their particular strong performances illustrate the quality and the speed of the integration process since the completion of the Numico acquisition.  Based on the group's overall performance in the first three months of the year, we are confident to achieve our targets for 2008 both in terms of growth as well as profitability.”

The Fresh Dairy division delivered its fifth consecutive quarter of double-digit growth (+10.5%) despite high comparables in Q1 2007.  This quarter's organic growth consisted of stable volumes (-0.2%) and +10.7% value growth.  The blockbuster brands continued to drive the growth of the division, growing at +15%.  All major geographies have implemented the necessary price increases to offset the negative effects of the increases in commodity prices in 2008.  France and Spain experienced slower growth as the two businesses reflected very strong prior period comparables.  The rest of Europe generated solid growth, with particularly strong performance in Russia showing growth rates above 30%.  Latin America continued its growth path in the mid-teens.  North America accelerated its growth into the high-teens on the back of very strong performance of Activia and the introduction of Danactive (Actimel) in 2007.

The Waters division confirmed its strong underlying trend (+7.0%) built mainly on strong volumes (+6.8%) and limited pricing (+0.2%).  Latin America drove the growth with a continued strong performance of +19% supported by Mexico and Argentina, while growth in Asia of +10% was driven by Indonesia and China, where the spring water brands performed particularly well.  Growth in Europe was more modest (+1%) and was impacted by fewer selling days than last year, as a result of an earlier Easter season and by softer market conditions in France.

Baby Nutrition delivered an excellent quarter at +18.8% sales growth with all categories and geographies contributing to this performance.  The strong value effect (+12.5%) results from the full impact of successive price increases taken as from the second half of 2007.  The resilient volume performance (+6.3%) shows the strength of our brands and the loyalty of our consumers.

Medical Nutrition continued its excellent performance attained in 2007, witnessing +14.6% sales growth in Q1 08.  All regions contributed to the growth with particularly strong performance coming from Southern Europe.

Based on the strengths of its business model and the strong potential of the markets in which Danone operates, the group confirms its targets for 2008:
• sales growth between +8 and +10%;
• improvement of the operating (EBIT) margin by at least 30 bps;
• underlying earnings per share growth of at least 15%.

The sales and EBIT margin targets are based on constant scope of consolidation and constant exchange rates. 

Meanwhile Danone announced that Pierre-André Terisse, Chief Finance Officer, becomes part of the Executive Committee of Groupe Danone, starting April 14th 2008. Pierre-André Terisse has joined Groupe Danone on March 1st 2008 as Chief Finance Officer. Pierre-André Terisse, aged 41, is a French citizen, graduate of EM Lyon. He started his career at Groupe DANONE in 1992. Following several positions in financial departments in Belgium, Italy, Singapore and France, in 1999 he was appointed Corporate Finance Manager within the General Finance & Strategy direction of the Group in Paris. In 2003, he joined Altadis Group as Treasury director. He was appointed CFO in 2006.