Healthy half year for Danone's nutrition ambition

By Neil Merrett

- Last updated on GMT

Related tags: Cent, United states, Danone

Danone has increased like-for-like sales by 8.2 per cent to €7.5bn
during the first half of the year as it continues to refocus its
operations towards health and nutrition.

The company said yesterday that income was also up 8,2 per cent to just over €1bn for the period ending 30 June 2007, while operating margins had improved slightly to 13.97 per cent from 13.67 per cent over the same period the previous year. With an increasing focus throughout the food and beverage industry towards health and nutrition benefits, Danone hopes to restructure its operations to becoming a major produce of added-value goods. Company chairman Franck Riboud therefore praised the results as an indication of the companies ability to adapt to market trends. "In the context of our recently announced strategic moves, this performance places us in a robust position as Danone enters the next exciting phase of development,"​ he stated. "A Danone which will be fully focused on health, totally international in character and which has an even stronger growth profile." ​ The company earlier this month agreed a €12.3bn deal for nutrition group Numico in a bid to dominate the growing market for high margin, added-value products. With completion of the deal later this year, the acquisition will allow the group to divide its operations into three key divisions, albeit at the expense of biscuit production, with the addition of nutrition products to its portfolio. Of it three currnet business segments, Dairy continued to dominate the companies operations, with like-for-like sales increasing 11.6 per cent to €4.3bn during the half year. The growth was attributed to sales growth in its key brands throughout its international markets. In Europe, Russia and Poland, along with Spain lifted regional sales by about 10 per cent for the period. It in native France, the company said it had also had strong growth through its Blendina infant nutrition range. Latin America showed the greatest potential for the group's dairy products, with sales increasing by about 20 per cent, helped by particularly strong sales in Argentina and Brazil. Mexico also made a notable contribution to the division's growth, with an increased market share in the country. Sales in North America also grew above 10 per cent following the launch of its Actimel brand and continued interest in probiotic products. Following difficulties with some of its joint-venture partners in Asia, the company said it beverage operations had been hit significantly. An ongoing dispute with Chinese drink partner Wahaha in particular, resulted in a sales drop of 6 per cent through the venture. Sales in the segment were up by 4.7 per cent to €2.1bn nonetheless. The company said it remained optimistic over the future of the segment, suggesting that it expected sustainable growth in the near future. The claim was boosted by mid single-digit sales growth in Europe and more than 20 per cent increase in Latin America. Like-for-like sales of its biscuit brands had increased 5.3 per cent to €1bn from strong growth. Mid single-digit growth and an increased market share in France. Danone's operations in Spain also posted sales growth helping to offset marginal growth for the division in Eastern Europe. Asia also made a significant contribution to the growth in biscuit sales with a double-digit increase helped by strong performances in its Chinese and Malaysian operations. Biscuits are expected to contribute to the company's expectations for the year, despite the majority of the division, excluding its operations in Latin America, being sold to rival Kraft for €5.3bn over the coming months. In looking ahead, the company said it was aiming for a six per cent to eight per cent like-for-like sales growth for its full year guidance, with operating profit up by seven per cent to ten per cent. Danone accepted that these estimates could yet be affected by ongoing discussions with Wahaha over their Chinese venture dispute. The company added that it would make further announcements regarding its objectives for the newly acquired nutrition division in the final quarter.

Related topics: Manufacturers, Danone, Dairy Health Check

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