Danone reports 3.5% growth

25 Apr 2016

For 1Q16, Danone has reported like-for-like sales growth of 3.5%, with solid underlying trends in all four businesses. Reported sales growth was down 3.0% reflecting a negative currency impact of -7.2%.

Danone reports 3.5% growth

For 1Q16, Danone has reported like-for-like sales growth of 3.5%, with solid underlying trends in all four businesses. Reported sales growth was down 3.0% reflecting a negative currency impact of -7.2%. The company said it expected full year growth within a range of +3% to +5%.

“With +3.5% organic growth, Danone delivered a performance fully in line with our 2016 agenda and priorities.,” said Emmanuel Faber, CEO. This growth reflects stable or improving underlying trends across all our businesses, and positive results on key priorities. It includes progress on our Dairy agenda, with a confirmed re-acceleration in the United States, and sequential improvement in Europe. For Waters, it reflects broad-based growth in on all our platforms and the continued transition of the Mizone brand, and for Early Life Nutrition, ongoing actions to build a more sustainable growth model in China. As expected, Brazil presents complex challenges and we are still operating in a volatile environment. This strengthens our determination to remain disciplined and to focus on pace rather than speed when implementing and monitoring our growth agenda. After solid 2015 results, Q1 2016 results confirm my confidence that Danone, with our Executive Committee and all our teams, is fully engaged in the right direction to keep adapting our growth model to ensure strong, profitable and sustainable growth as we move towards 2020, and to deliver another year of success in 2016.”

The Fresh Dairy Products division reported sales up 2.3% like-for-like, supported as anticipated by strong growth in North America. Growth includes a decline in volumes (-2.1%) and a price-mix improvement of +4.4%.

In the United States, Danone reported strong growth, confirming the recovery observed in the second half of 2015. Sustained investments and successful innovations continued to drive gains in market share.

In Russia, Danone continued to show resilience in a persistently difficult consumer environment. Efforts to enhance its brand portfolio linked to a positive mix effect once again offset declining volumes in low value-added segments.

In Europe, Danone is continuing to make good progress in its transformation program, in line with its roadmap. Danone is pursuing a major renovation of its brand portfolio, and is planning relaunches throughout the year for Danonino, Actimel and Activia, with a view to stabilizing sales in Europe by the end of 2016.

In the ALMA region, Danone reported strong growth despite contrasting performances in Latin America. A slowdown in Brazil linked to difficult economic conditions was offset by solid results in Mexico and Argentina.

The Early Life Nutrition division saw sales rise a solid 4.8% like-for-like, reflecting a +1.3% volume rise and a +3.5% increase in value.

In Europe, the underlying trend is unchanged. As anticipated, the high base effect had a slowing effect on apparent like-for-like growth rates.

In China, Danone continued to build a sustainable growth model by reinforcing its international brands (Aptamil and Nutrilon), managing the conversion of indirect online sales into direct sales, and developing its presence in specialized stores. Locally, sales growth has turned positive, once again.

Lastly, sales in the rest of the world show good momentum, while some countries (Brazil and New Zealand) are significant growth drivers.

After delivering profitable growth in 2015, Danone said it will pursue its journey to meet its ambition for 2020, which calls for strong, profitable and sustainable growth.

Danone assumes that 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. Against this backdrop, it said it will continue to strengthen its model through a range of initiatives aimed at offsetting inflation and limiting its exposure to volatility.

Milk prices are thus expected to edge up, with variations from one geographical area to the next: - lower prices in Europe and the United States in the first half, with a possible rebound in the second half of the year, and - steady price increases in emerging countries all year long, particularly in the CIS.

Regarding its other raw materials, including plastics, sugar and fruits, Danone anticipates overall inflation in which the recent deterioration in emerging market currencies is an important factor. In this context, Danone will continue its transformation toward an increasingly balanced model, which makes perfect execution of its roadmap for growth and discipline in allocating resources its top priorities.

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