Danone sees 2018 sales dip, but ends fourth quarter on a high note

By Beth Newhart contact

- Last updated on GMT

“In 2019, we expect growth and margin to accelerate throughout the year."
“In 2019, we expect growth and margin to accelerate throughout the year."

Related tags: Fiscal year, Danone, Danone North America, financial report

Danone reported a total 2018 net profit of €2.35bn (US$2.66bn), compared with €2.45bn in 2017. But its fourth-quarter performance was better than expected after a tough global year.

Full-year sales were down for the French dairy company by 0.7% compared to 2017. Danone pointed to a negative currency impact as a reason after the euro appreciated against the US dollar and other currencies.

Danone is also facing an ongoing consumer boycott in Morocco that began in April 2018 following price hikes, which ultimately hurt its year-end bottom line.

“The impact of the consumer boycott in Morocco on the recurring operating income of Danone in 2018 was a decrease of €43m versus 2017, including remediation measures,”​ Danone said.

But overall it saw positives in its plant-based division, with a net sales growth of 1.5% in North America in 2018. The changing consumer landscape is encouraging the company to further invest in its non-dairy brands.

Emmanuel Faber, chairman and CEO of Danone, said, “With Specialized Nutrition, Waters and our global plant-based brands from WhiteWave continuing to post strong growth despite a very volatile environment, the year has seen the encouraging progress of our Essential Dairy and Plant-based business in Europe, which stabilized in the fourth quarter last year.”

Europe sales were up for the plant-based division in Q4 by 2% and in North America by 2.2%. Danone said the plant-based segment’s performance was solid and driven by the nut-based segment. Their soy category is declining, and coffee creamers continued to deliver strong growth.

He also credited the ‘reinvention’ of the Activia brand for company success, praising an effective turnaround after years of decline for the probiotic yogurt.

Danone pledged to be carbon neutral by 2050 and has set intermediate greenhouse gas (GHG) reduction targets for 2030 to achieve this. The year-end report shared that “by the end of December 2018, Danone had reduced its GHG emission intensity by 15.6% on its full scope since 2015.”

Cécile Cabanis, CFO of Danone, said, “In 2019, we expect growth and margin to accelerate throughout the year, as the unfavorable base of comparison in the first half of the year unwinds, exiting the year at a growth rate consistent with our 2020 topline objective.”

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