Danone cements position as world leader

By Anita Awbi

- Last updated on GMT

Number one dairy producer Danone has recorded strong results for
the first quarter of 2006, bolstered by a focused leadership and
continuing record sales in Asia.

Despite the difficult European trading environment and escalating energy and ingredients costs, the French firm today announced first quarter consolidated sales of €3.5bn, up 14.9 per cent on last year's Q1 sales of €3.07bn.

Like-for-like sales growth for the first quarter of 2006 was nine per cent, helped by positive changes in exchange rates and a successful business consolidation policy.

Asia and Rest of World areas enjoyed 17.9 per cent and 16.5 per cent rises in first quarter sales respectively. And while Europe lagged behind with a sales growth of 4.3 per cent, the company said all results were satisfactory.

"The first quarter performance is in line with the group's overall expectations and is a result of both continuing robust sales growth in Asia, Americas and Eastern Europe, and from an improvement of sales in our French business,"​ it said in a statement.

Danone has fought to be ahead of the game in emerging markets, selling its New Zealand biscuit firm Griffin to concentrate on the higher growth markets of China, India and Indonesia.

And reports in French daily Le Figaro yesterday suggest the world's number two biscuit producer will sell its Lu biscuit factory in the Dordogne region of France to a food company owned by Alain Teot.

Strategically the company is aware of regional restrictions that limit consumption of its products, and has launched 'affordable nutrition' initiatives in the developing world.

It will open a new dairy plant in Bangladesh to provide nutritious foods to low-income consumers, following successful entry into a number of similar emerging markets.

Expansion into the region will see the dairy producer join forces with Grameen bank, run by local tycoon Professor Muhammad Yunus.

Danone also indicated earlier this month it has paid CNY358 million (€36.8m) to increase its stake in Bright Dairy, China's number three dairy company, to 20.1 per cent.

Danone already had an 11.55 per cent share but increased its stake after buying a combined 88.2 million shares from S.I. Food Products Holdings and Shanghai Milk Group.

Danone's stake in Bright Dairy, which uses the Danone brand name in China and factories formerly run by Danone, has already helped it build up a lead in the rapidly growing added value yoghurt business.

All these moves look set to position the firm in lucrative emerging markets, enabling Danone to confirm this year's like-for-like sales growth of between five and seven per cent, and an operating margin growth of between 20 and 40 points.

Related topics: Manufacturers, Danone

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