Danone 3Q sales rise on baby food sales

20 Oct 2015

PARIS - French dairy giant Danone on Monday posted a 4.6 percent rise on a like-for-like basis in third-quarter sales, outstripping analysts' forecasts.

Shares in the world's largest yogurt producer rose 2.52 percent on the Paris exchange on three-month sales of 5.6 billion euros ($6.3 billion) aided by strong baby food sales as the company saluted what it termed solid organic growth.

Reported sales were up 4.2 percent but the like-for-like improvement was above forecasts of 4.3 percent amid European growth of 5.1 percent for the strongest regional performance since 2009, said financial director Cecile Cabanis.

CEO Emmanuel Faber said the showing "confirms our progress towards sustainably anchoring a balanced profitable growth model for Danone".

Underpinning the rise were an 11 percent increase in infant nutrition sales compared with a predicted 7.5 percent as well as Chinese sales of infant formula in a market spurning some local brands.

The results came in "above our expectations and underpin the group strategy to gain market share," said a Paris broker, calling the strong sales of baby food with brands such as milk formulas Aptamil and Nutrilon "a healthy surprise".

Danone said its China baby market share stands at 15 percent, equivalent to where it was before a 2013 false alert over botulism-causing bacteria from New Zealand supplier Fonterra sparked a multimillion-dollar recall.

The firm revised downward by 398 million euros the value of infants' and children's nutrition wing Dumex after 2Q changes in distribution strategy but saw water sales rise 12.3 percent.

That equated to a 6.8 percent increase on a like-for-like basis to 1.3 billion euros despite identifying a "more moderate growth period" in China, given that country's "more complex business environment".

Source: AFP

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