Overall sales were $24.65bn (€22.4bn) in 2015, compared to $23.26bn (€21.14bn) in 2014, a growth of 6% (4.4% like-for-like).
Fourth-quarter sales rose 2.2%, with Danone saying that this includes changes in exchange rates (-1.3%) and in the scope of consolidation (-0.1%).
It noted that the exchange-rate effect reflects negative trends in currencies including the Russian ruble and the Brazilian real. Changes in the scope of consolidation, the report said, result primarily from the deconsolidation in July 2014 of fresh dairy products operations in China, and the sale in December 2014 of the fresh dairy products business in Indonesia.
Danone CEO Emmanuel Faber said, “With organic growth of 4.4% and trading operating margin up 17 basis points like-for-like, our results are very solid and perfectly aligned with our objectives. They confirm that we have taken this mission to a new level, paving the way for strong, profitable and sustainable growth by 2020.
“Our choices in 2015 delivered these solid results, which came from the combination of our businesses in both developed and emerging markets across all four of our categories.”
Results for fresh dairy products
Fresh dairy products sales for the fourth quarter were $2.89bn (€2.63bn), down from $2.96bn (€2.69bn) in the corresponding quarter for 2014. Overall sales for the year for the sector were $12.17bn (€11.06bn), down slightly compared to $12.25bn (€11.13bn) in 2014.
Of the four sectors (the others being Waters, Early Life Nutrition and Medical Nutrition), fresh dairy products was the only one to see a drop in volume growth, of 3%.
Danone said that its ALMA region (Asia-Pacific, Latin America, Middle East and Africa) reported a marked rise in sales in Q4, reflecting contrasting performances in emerging countries, with positive results in Argentina, Mexico and Japan, and a slowdown in Brazil.
Yogurt doing well in the US
Danone noted that sales were up 2.6% like-for-like for the fourth quarter, with renewed growth in North America. Growth includes a 0.6% decline in volumes and a 3.2% rise in value.
Faber said that, “Dairy is recovering in the course of the year 2015, coming from a negative H1, and many more negatives before that, to a positive in H2, which gives us confidence that dairy is gradually coming back to where it needs to be for us.”
He added that the US market for us is a major driver of growth for the dairy division.
“It’s one of the key engines to reaccelerate growth of the division,” he said.
“After a plateau, growth has started again. Danone ended [the year] the co-leader in the Greek segment, by far the leader in the traditional segment.”
Faber said that Danone has for the first time ever become the leaders in the US in the kid’s segment. “We’ve never been there before – we intend to stay.”
Early life nutrition
For the early life nutrition division, fourth quarter sales were up 6% to $1.46bn (€1.33bn), from $1.36bn (€1.24bn) in Q4 2014. For the full year, sales of $5.49bn (€4.99bn) were up 9.8% on the previous year, when sales stood at $4.84bn (€4.4bn). This represents a volume growth of 4.7%.
Faber noted that there had been three points of market share gains in two years in the segment.
In Europe, Danone said sales were boosted by Chinese consumers’ demand for international brands Aptamil and Nutrilon, through exports to China.
In China, Danone said, it has pushed ahead with efforts to build a sustainable model of growth by continuing to invest in the Aptamil and Nutrilon brands, and by forging a structure for its local internet offering using a direct distribution model, while developing sales through specialized stores.
Sales trends for the Dumex brand (China) have not changed from previous quarters. The company said that Dumex’s future tie-up with Yashili will let Danone take part in the creation of a platform of strong local brands in a market that holds significant potential.
Danone said that there was double-digit growth in sales in both Latin America and Africa.
Medical nutrition division
The medical nutrition division reported like-for-like growth of 6.8%.
Danone stated that the division did well in all geographical areas, in particular in ALMA, driven by growth in Brazil and China, and in Europe, with very good performances in the UK, the Benelux and Germany.
It said that all segments contributed to growth in the fourth quarter, with the pediatric range (Neocate and Nutrini) and Nutrison brand within the adult range doing particularly well.
The Waters division reported sales up 1.9% like-for-like.
In Europe, Danone noted that the division generated solid growth thanks to strong performances for the evian and Volvic brands.
It said the ALMA region (excluding China) performed well, and there was strong sales growth in Latin America (including Argentina and Mexico). In China, it said, sales retreated as anticipated.
Danone said that it is also continuing to expand in Africa, which it calls “a strategic region with scope for new sources of growth.”
In June 2015, Danone DjurDjura acquired assets from the Algerian company Trèfle, the country’s third largest fresh dairy products player.
Danone acquired an additional 5% equity stake in Centrale Danone in Morocco in December 2015, following two earlier transactions in 2013 and 2014. This gives Danone more than 95% of the company’s capital.
It also increased its equity interest in Fan Milk from 49% to 51%, a controlling stake, in February, 2016. In the same month, Danone acquired the Egyptian company Halayeb for dairy products and juice.
Milk price changes expected
Danone’s forecast shows that it expects milk prices will edge up, with geographical differences.
It anticipates lower prices in Europe and the US in the first half of 2016, with a possible rebound in the second half of the year, and steady price increases in emerging countries all year, particularly in the CIS (Commonwealth of Independent States).
The company said it assumes economic conditions will remain volatile and uncertain overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets, in particular the CIS, China and Brazil.
In 2016, Danone also anticipates upward trends in the cost of its main strategic raw materials. Danone said it will continue to strengthen its model through a range of initiatives aimed at offsetting inflation and limiting its exposure to volatility.
Danone said its 2016 targets include sales growth of 3 to 5%, and a solid improvement of trading operating margin.
Faber said, “In 2016, in a global context that remains volatile, Danone will continue to invest behind its brands and will mark a further important step to develop a balanced model of strong, profitable and sustainable growth.”
Goals set for 2020
Danone said it is looking for strong, profitable and sustainable growth up to 2020.
Danone’s goal for 2020 is for growth of at least 5%, with 3 to 5% in the fresh dairy products division, between 7 and 10% in the water and early life nutrition divisions, and 6 to 8% for the medical nutrition division.