Danone Q3 2017 results accelerated by specialized nutrition segment in China

By Mary Ellen Shoup

- Last updated on GMT

Danone saw significant growth in its early life nutrition division with sales of infant formula products increasing by 50% in China. ©GettyImages/prince32
Danone saw significant growth in its early life nutrition division with sales of infant formula products increasing by 50% in China. ©GettyImages/prince32

Related tags Infant formula Milk

Danone’s third quarter sales in 2017 grew by 4.7% to roughly $7.5bn, driven by its booming specialized nutrition business in China, which increased 17.8% in reported sales compared to the previous quarter.

“This reflects the strength of our portfolio of cohesive consumer health-focused brands and a solid execution against our strategy, with a step-up in innovation and activation plans,”​ Danone CEO, Emmanuel Faber, said. 

“The increase in like-for-like sales has been underpinned by the allocation of additional resources to serve rising demand in specialized nutrition, especially in China.”

Continued investment in China

Early life nutrition generated most of the growth (20%) in Q3, 2017 due to high demand for Danone’s brands in China, particularly infant milk formula brand Aptamil Platinum, which launched nationwide earlier this year. 

Aptamil Platinum had a successful launch in China, according to Danone.

“China is the biggest infant formula milk market. It represents more than 40% of the overall worldwide market,”​ Danone CFO, Cécile Cabanis, said during the company’s quarterly earnings call.

Danone also launched its infant formula brands on the popular ecommerce app “Wish”​ to connect with millennial parents in China, according to Cabanis.

“Wish app is one of the most frequently used apps with more than 800m users actively using the platform," ​Cabanis said.

This will accelerate the use of social ecommerce and engage with consumers in a direct manner.”

Additionally, Danone’s early life nutrition portfolio reported a solid performance across other markets including Europe driven by the UK, Germany, and Poland, as well as North America where the Happy Family brand continued to gain market share, posting sales growth of over 20%.

Also under its specialized nutrition division, the company’s advanced medical nutrition portfolio generated high-single-digit sales growth from Europe and the fast-growing Chinese market accounting for nearly 15% of the business.

US shows retail resilience

In the US, Danone has faced a slowdown of yogurt sales, which it attributed to the highly competitive nature of the category, but its Q3 sales showed signs of a rebound with strong growth coming from plant-based yogurt and Greek brands.

The company pointed out the premium dairy business struggled the most during the quarter.

“The premium dairy business continues to be pressured by the industry’s oversupply of organic milk. We continue to take steps to reduce our organic milk supplies,”​ Cabanis said, adding that the company will focus on reallocating its organic milk supply to emerging growth areas like organic yogurt, cheese, creamers, and value-added dairy beverages.

On Danone’s acquisition of WhiteWave completed in April 2017 Cabanis said: “The integration of WhiteWave is progressing well and we are today expecting, for the full year, to deliver cost synergies faster than we originally planned.”

Danone expects its full-year sales to be above 12% sales growth, Cabanis added. 

Related topics Manufacturers Nutritionals Danone

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