French dairy Danone forecasts 'difficult and unstable' year ahead

By Mark ASTLEY contact

- Last updated on GMT

French dairy Danone forecasts 'difficult and unstable' year ahead

Related tags: Organic growth

With economic conditions expected to "remain difficult and unstable" in 2015, Danone has forecast organic sales growth of no more than 5% for the year ahead.

As detailed in its 2014 results, published earlier today, sales across the French dairy giant's four business segments - Fresh Dairy, Waters, Early Life Nutrition, and Medical Nutrition - totalled €21.14bn, down from €21.3bn in 2013.

Operating income was also down, from €2.8bn in 2013 to €2.66bn.

On a like-for-like basis, however, Danone revenue increased 4.7% - finishing at the lower end of its 2014 forecast of between 4.5% and 5.5%. 

Following what Danone chairman, Franck Riboud, called a "year of political and economic turbulences, not to mention severe volatility", ​Danone has set itself the target of between 4% and 5% organic sales growth and "slight growth"​ in operating margin. 

"Danone assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationary consumer trends in Europe, emerging marketing undermined by volatile currencies, and difficulties specific to a few major markets, in particular,"​ said Danone.

"Against this backdrop, Danone will focus on developing its product categories and winning market share."

Segments

Fresh Dairy, Danone's largest business segment, recorded 2014 sales of €11.129bn, down from €11.79bn in 2013.

As "observed in previous quarters",​ European Fresh Dairy sales fell around 4% in 2014.

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Danone experienced "weakened" consumer demand for its products in Russia in 2014.

Danone also experienced "weakened"​ consumer demand for its products in Russia.

Meanwhile, its US yogurt sales "levelled off after several years of strong dynamics, driven by Greek yogurt." 

Danone's Early Life Nutrition business reported 2014 sales of €4.397bn, up from €4.26bn in 2013 - a performance "buoyed"​ by recovery in the eight Asian markets affected by the 2013 Fonterra botulism scare. 

Most of these markets are "now back to pre-crisis levels,"​ said Danone.

Revenue from its Medical Nutrition division, the subject of sale speculation for much of last year, also increased - from €1.342bn in 2013 to €1.432bn - despite once again adversely affected by pressure on healthcare spending."

Sales from its Waters division also increased, from €3.9bn in 2013 to €4.186bn in 2014.

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