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Danone looks to growth through WhiteWave acquisition

By Jim Cornall+

21-Apr-2017

Danone has created a new strategic business unit in North America, DanoneWave.
Danone has created a new strategic business unit in North America, DanoneWave.

Danone has published its first quarter results, and forecast improvements due to completion of the WhiteWave acquisition.

Danone and WhiteWave will combine activities for North America to operate as a new strategic business unit, DanoneWave.

Danone said DanoneWave is scaled to accelerate Danone’s growth journey towards 2020 and is specifically designed to immediately set the operational business back in motion after the impact of a lengthy process of closing, while preserving WhiteWave’s “entrepreneurial spirit and its innovation capacity.”

Danone said the transaction will improve Danone’s full year like-for-like sales growth profile by an extra 0.5% to 1%.

For 2017, Danone has upgraded from “solid” to “strong” the expected recurring EPS accretion from the WhiteWave acquisition.

Sales decline

Geographically, sales declined by 4.3% in Europe, but rose by 12.3% in the CIS and North America.

The fresh dairy products division reported sales down 2.3% like-for-like, including a 5.3% decline in volume and a 3.0% rise in value.

In Europe, Danone said sales were impacted by difficult market conditions and Activia’s performance.

Within the CIS and North America region, Danone said it generated stable growth.

In Russia, Danone said the enhancement of its brand portfolio’s value through rising prices and positive mix management continued to offset a decline in volumes in lower-end segments.

The ALMA (Asia-Pacific, Latin America, Middle East and Africa) region reported a slightly negative performance, as consumption trends in Brazil worsened.

Boost from China

Early Life Nutrition sales rose 4.1% like-for-like, including a 0.1% rise in volume and a 4.0% increase in value.

Danone attributed the performance to gains in developing a direct distribution model in China, where “direct” sales showed double-digit growth, supported by a growing presence in specialized stores and direct e-commerce, and the recent launch of Aptamil Platinum.

It also announced it anticipates a steep rise in milk prices over the year, with variations from one geographical area to the next: a low to mid-single digit increase in Europe and the US; and a strong rise in emerging countries such as the CIS and Latin America.

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