Profits at Danone More Than Double as Dairy Sales Improve
28 Jul 2016 --- Profits at Danone more than doubled to €880m ($976m) in the first half, helped by an improved sales of dairy products in the US and Europe. The world's biggest yogurt maker, which recently announced a $15.5bn deal to buy US company WhiteWave Foods, reported its sales were down three percent to €11.1bn ($12.3bn) in the first half.
But like-for-like sales – which takes out current movements-were up 4.1 percent in Q2, better than the 3.5 percent increase in Q1.
Broken down by division, sales across dairy were up three percent on a like-for-like basis to €2.7bn ($3bn) in the first half.
Sales in dairy, which includes brands such as Activia, were helped by an improved performance in Europe and "solid momentum" in North America. Russia remains a "persistently difficult market," though Danone generated a positive growth in dairy sales.
In Europe, Danone said its relaunch of its Danonino and Actimel brands was beginning to pay dividends. Pricing rose by 5.2 percent in the quarter helping drive sales across dairy.
Across its waters division, which includes Evian, sales were up 2.7 percent on a like-for-like basis, driven by growth in plain water and in aqua drinks.
In Europe, Danone said it continues to win market share in the key markets of France and Germany.
Across ALMA (Asia Pacific, Latin America, Middle East and Africa)sales were strong, driven by its Aqua brand in Indonesia and Bonafont brand in Mexico.
Emmanuel Faber, chief executive, said: “With organic sales growth above 4 percent in the second quarter and a very strong improvement in margin and EPS this semester, Danone demonstrated once again its capacity to successfully rebalancing its growth model and transforming its way to operate to deliver immediate key priorities while ensuring progress on its journey towards Strong, Sustainable and Profitable growth by 2020.”
“We continue to implement our agenda to transform the company and increase the resilience of our business model. Our decision in June to upgrade the margin guidance for 2016 is further evidence of Danone’s attention to ensure that any decision of investment enables to reach short and long-term objectives in a disciplined manner.”
"With fast-evolving dynamics in some emerging markets and an environment that remains complex, we are sticking to our priorities and the Q2 results reflect key steps in our journey, notably in Dairy with confirmed success in the US and sequential improvement in Europe."
"It is the case, as well, in Early Life Nutrition with significant progress in sustainable channels. I am truly grateful to everyone at Danone for working together in a way that has delivered important transforming achievements at a time the company adapts itself to take up challenges and opportunities for its future and, carry out its mission by actively encouraging healthier eating and drinking habits."
by John Reynolds
