FRANCE: Danone Disappoints With Q3 Results

Danone has reported a weak set of results for its fiscal third quarter, hurt in particular by a slowdown in demand for its baby food products.

For the quarter, sales grew by 2.1% on a like-for-like basis to €5.53bn (-1.8% reported), with overall volumes down 0.7%.  Its core Fresh Dairy unit saw LFL sales grow by 2.2% to €2.68bn (-1.1% reported), on a 2.3% volume decline; while the Waters unit saw LFL sales decline by 0.1% to €1.24bn (-5.7% reported), on flat volumes. However, the Early Life Nutrition unit saw LFL sales grow by 1.7% to €1.2bn (-1.1% reported), although volumes were down 0.4%, and the Medical Nutrition unit reported a 9.7% jump to €414m (+3.6% reported), on volume growth of 6%.

Despite the results, CFO Cecile Cabanis said the group expects full-year profits to be at the high end of its target range, helped by price hikes, cost cuts, and other efficiency measures. For 2016, Danone is aiming for LFL sales growth of 3%-5%, and an operating profit margin increase of 50bps-60bps. 

Cabanis admitted that its performance in China is struggling, but added: “We’re not looking for short-term sales growth at any price. “We’re looking to strengthen our model and improve our margin before we look to accelerate our growth.”  She noted: “We will deliver in a consistent manner despite the persistent volatile environment”.